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Assuming your facts presented are complete (not being snarky, many postings here are "too brief"), she gets re-instated in the DB plan and offered whatever payment options the plan includes. The plan might not offer a lump sum option. BTW, if she was "...paid a monthly benefit..." and "...checks were never cashed...", that implies she (or someone) made an election to commence and also communicated a correct mailing address. Forgive me, but I'm suspicious; maybe the EE ignored the requests to complete an election form? First question might be, "What happened with the 401(k) plan?"

No need, unless there is something in the plan document that says self-employed individuals are excluded. And if that is the case, it's probably easier to amend the plan document than to set up a new entity.

Clarification: you can't change the plan year after the end of the short plan year (ie, 12/31 in this example). BTW, if you want to show some consulting chops, you will ask the client why. Sometimes, there can be good reasons to leave the plan year unchanged even when the company fiscal year changes. (Asking why does not mean you are taking a position or being accusatory, just trying to help.)

seconded

If the partner were being treated as a W-2 employee, it is almost certain that their compensation was being calculated wrong. Even if their net earnings from self employment happened to be exactly equal to their guaranteed payments, that amount still needs to be adjusted for 1/2 self-employment tax and employer contributions made on behalf of the partner in order to obtain compensation for plan purposes.

Yeah, this is a great question. I can argue both sides as well. Unfortunately I'm a TPA, not a lawyer, so no one expects to pay me to do so. My own opinion is if it is an irrevocable, legally binding order, it should count a/o the date of the order, much like mailing a valid check by 12/31 counts as a payment. But the reality is recordkeepers' systems are programmed in a certain way, and the 1099-R will be driven by the system. And it's pretty much impossible to get them to override this process or revise a 1099-R.

Why? If this was a suspension under the CARES Act then you can extend the term of the loan by up to 1 year. See section 5 of Notice 2020-50. If you're not extending the term of the loan then it makes perfect sense. Let's say the outstanding balance when the suspension started was $25,000 with 57 payments remaining. Then you decide to eliminate 9 of those payments. Even if it wasn't increased with interest, dividing the balance by a smaller number of remaining payments is going to result in a larger installment amount. I believe it would. However if the plan permits participants to refinance their loans it may be possible for them to replace the loan with a new loan that has a different interest rate.

Maybe this is a silly question, but why don't we know the 2016 ADP? Last I checked we are past 12/31/2016. But for the sake of discussion I will assume it isn't known at the time the correction is being made. When EPCRS does not specify a correction method for a given situation, you should do something reasonable under the circumstances. Any of the following might be reasonable: Use the 2015 ADP Use the average ADP from 2010-2015 Use the highest ADP from 2010-2015 Use the deferral percentage that was actually elected effective 2/15/2016 There are doubtlessly other reasonable methods as well. If you are filing VCP because this is a significant failure then you will have the opportunity to get affirmative approval for your correction method from the IRS.

What I'm saying is - you jaywalked, in the middle of the night, on a country road when nobody was around. Now you want to report yourself to the police and pay a fine. I will spell it out for you. You enter the person on a 2020 8955-SSA. Nothing bad happens. It's not like anyone knows that the person should have been reported in 2014, 15, or whenever.

No, that's not what I'm saying. I'm not talking about a "draw." I'm saying that "guaranteed payments" are not the definition of compensation - I am saying they would normally be included in arriving at net earnings from self-employment. However, it is possible for NESE to be less than the guaranteed payments. So if deferrals were being made based solely on guaranteed payments, and it turns out that NESE is less than the guaranteed payments, then you have a problem. Again, I suspect we are all agreeing on the final result, and it is just semantics in arriving at the final result.

Luke - maybe a matter of semantics, but I read C.B.'s statement as meaning that "guaranteed payments" - in and of themselves, are not the measuring compensation. Rather I understood him (her? Can't tell gender from initials) to be saying that you use net earned income - which is correct. The guaranteed payments are generally (but not always) used when arriving at earned income. So I suspect we are all agreeing, albeit stating it a little differently.