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That's not what shERPA said. The PLAN was supposed to be the owner and the check payable to the Trustee of the plan. If the owner of the policy was the participant, that means the policy was never actually part of the plan. That is an issue.

If the life insurance was properly owned by the plan (a BIG if), then the payout from the insurance company should have been payable to the plan trustee fbo the plan. Maybe the owner is also the trustee, in which case it was "payable to him" as trustee. So it represents plan assets, part of his plan account balance, and is eligible for rollover. If the policy was not properly owned by the plan then there are perhaps a number of problems, the rollover aspect just being one of them.

Check plan language, my recollection was that an irrevocable waiver could be rescinded by the employer if necessary to satisfy coverage. Of course for 401(k) coverage, this was evident from the start and you're likely looking at QNECS for these people whether they want them or not.

See this thread for more information.

My reply was just that the owner is the trustee. But yes, the owner of the policy was the plan. The check was payable to the trustee. The policy was part of the plan assets.

I don't think legal and appropriate are the same Luke. The waivers I'm sure are perfectly legal, but in a small plan setting they are rarely appropriate.

I think the IRS position is still that "scriveners errors" doesn't exist. If the amendment was adopted you've already granted the service for vesting, it is likely that trying to unwind that would be viewed as a prohibited cutback by the IRS. You might want to check VCP to see if there is a correction for your issue if you can show what the intent was through corporate minutes and that the amendment was a drafting error.

For 2020, any one who made more than $125,000 in 2019 is an HCE for 2020. This list can be restricted to the top-paid group with an election. In addition, anyone who owns more than 5% of the business at any time in 2019 or 2020 is also and HCE regardless of compensation or TPG status.

Why not?

We take the position that a bene form is of no value until it becomes operative (i.e. when the participant dies.) It is then, and only then that anyone reviews the document - and anything that happened before that is of no consequence. Not saying someone doesn't take a glance at it and help the participant on occasion, but not as a fiduciary to the plan or the participant. Too many possible intervening issues that can render a bene designation invalid (death of a bene, divorce, law change, plan change, etc.) We recently had TWO bene forms that names their "fiancé" as a bene (by specific name). In one case, they got married, then divorced, then the participant dies. Divorce intervened and the bene naming the "fiancé" is invalid. In the other case, they never married, split up (up a decade ago) and the kids (from a prior marriage) are questioning why the ex-fiancé is getting 25%. Sorry. No intervening event, and we think the bene form is valid. Long story short - not a good idea to police something not necessarily operative - BUT, not a breach of a fiduciary duty (to whom? - the bene's were only contingent (speculative) recipients of plan assets). When in doubt, interplead the money to the court and let them sort it out.

I take it that ABC is not adopting or merging into its own K plan any of the plans that covered the employees in the bankrupt business? If you merge those in, you will probably have to recognize service for vesting. Also, I assume these were asset purchases, not purchases of stock? Finally, Ahuntingus, you do not explicitly state whether the amendment was adopted. Was it? That is the key, I think, to whether it can be undone, not whether the employees have been informed about it yet.

Let me try to put the two above comments, which both seem correct to me, together. I certainly wouldn't make them after-tax unless the plan and deferral election form specifically provide for that, which is extremely unlikely. And also, if the 402(g) limit has not yet been hit, then unless the plan specifically provides otherwise, you should probably continue to treat as pre-tax, even if the person's compensation already "taken into account" under the plan exceeds the 401(a)(17) limit. True up at the end of the year, at least for deferrals, which is essentially what the IRS says on its website, as MWeddell points out. Match is a creature again of plan language. FYI, I have seen one preapproved plan of a very large provider a few years ago that did not explicitly provide for this, but had a very round-about way of dealing with it. Another plan of a similarly large provider that I just reviewed had language specifically along the lines of the IRS website comments that MWeddell points out, addressing and neutralizing the technical problem to the benefit of the participant. The problem has been around for years and is somewhat baffling when first encountered, if the plan document does not address it.

You have a demographic failure that is likely to always exist with no good way to correct it that I can see. Either the waivers should not have been allowed or the plan should not have been implemented. I'm not sure what the correction is but it likely involves taxable refunds of deferrals and termination of the plan. Hopefully there haven't been any employer contributions yet.

I hope I am not too annoying by hijacking the other thread and creating the poll. It is one of those Monday's however.

100% this! Of course it is taxable. If there was no withholding you report no withholding. Lets go back to the ABCs of CRDs, ANY DISTRIBUTION (with a few exceptions like corrective distributions) can be a CRD. The 1099-R reports the transaction. The tax treatment of the distribution will be determined based on the taxpayer's filing of Form 8915-E. You can have a CRD from the plan with no withholding, but unless the taxpayer makes certain elections and files Form 8915-E, it is taxed like any other distribution. BTW, marking it with code 2 on the 1099-R will mean absolutely nothing unless the taxpayer also files Form 8915-E. And if they do file Form 8915-E, it doesn't matter if the 1099-R is coded as a 1 or a 2. Finally, imagine the following scenario: Taxpayer is a participant in two plans, and takes a $100,000 CRD with no withholding from each plan. Both plans have followed the rules, and will need to report the distributions accurately. Taxpayer can only treat $100,000 as CRD for preferential tax treatment, and treatment that treatment is entirely up to taxpayer. Why in the world would either plan report anything other than what happened?

I would use the EIN that was used to deposit the withholding. It is my understanding the IRS computers will try to reconcile the deposits they got to the amounts listed as withheld on the 1099-Rs. To not have the 945, 1099-R and 1096 not all sync I think could cause letters from the IRS about their inability to reconcile the amounts later in the year. I will warn you I am not an expert on the topic but that has been my understanding for years. Anyone want to confirm or deny what I said would be great. I would think that is the broker's EIN but if they made the trust deposit the withholding with its EIN I would give serious thought to using that EIN.