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Sorry pet peeve but it comes up on this board all the time. There is no such thing as a 1099 employee. An employee is reported on a W-2. An independent contractor is reported on a 1099. I would add this isn't something that can just be decided. Either a person is an employee per the rules (they are vague rules but there are rules) or they are an independent contractor. I also can't help but note that the last time I checks (which was many years ago) most bookkeeping software for small businesses have the ability to compute a paycheck, withholding.... and a W-2 at year end. I just can't imagine this is the reason that stops the spouse from being made an employee.

Yes, but if they want to roll over the balance now that would accelerate their 2021 RMD to time of the rollover. And if they do defer their distribution to first quarter of 2022, they will need to take the 2021 and 2022 RMDs in 2022 (prior to any rollover)

If the 2020 5500 has been filed I would be very scared that the 2019 late letter would be imminent and suggest biting the bullet to incur the cost and file DFVC ASAP. Otherwise you risk a much larger penalty, which you've already copped to, that no manufactured excuse is likely to abate.

Isn't there a simple payroll software program out there that can do this? I bet there's even an app. Something like Intuit? Does Quickbooks do that? Even if the cost was $1,000 for the year, wouldn't it be worth it if the spouse could get $10,000 into the 401(k) piece of the plan?

A participant who is not a 5% owner, who was born on or before December 31, 1949, and who terminated employment during 2021, would have a required beginning date of April 1, 2022.

These situations often involve an awkward dance or standoff about whether the inquirer engages the lawyer. An inquirer is reluctant to engage the lawyer unless the inquirer believes the lawyer will render the conclusion the inquirer desires. But a lawyer is reluctant to accept a client unless the lawyer is confident the client will pay, even if the advice is not what the client wanted to hear. (Some of us would require an advance-retainer payment in an amount the lawyer estimates as more than enough to pay the likely full fee. And that security to aid collection is not, by itself, enough to overcome other burdens and risks about accepting a new client.) I no longer waste a half-hour consultation unless the inquirer is introduced by a lawyer or other professional who gives me comfort that the prospective client is a good fit (or who gets my professional courtesy). On the later side of these situations, I get plenty of clients who want me to guide the undo of a nonexempt prohibited transaction. I never have any trouble with those clients. And they usually remain continuing clients who bring a stream of good work.

Correct, the starting point here is that it is a PT to go into an investment with himself and the plan as co-owners. Then there are the potential issues of UBTI with a debt-financed property, and valuation. I don't think it's a crime to say "this is over my head - I say you can't do it but if you want details on why not or some possible way that it can be finagled, I can put you in touch with an ERISA attorney (who will tell you the same thing but charge a lot for it)."

I do

The client needs to engage somebody to interface with the IRS that brings more lumber to the plate than they currently have.

Luke, if you perform a diligent search and are unable to determine the beneficiary of a decedent by the time you file the Form MP you would list the benefit under the deceased participant's information. (For example, let's say you find out the participant died years ago when processing the plan termination, you have no beneficiary designation form on file, and you either can't determine who the participant's survivors were based on the default beneficiary hierarchy in the plan document, or you can't find an individual administering his estate if the benefit is payable to the participant's estate), The preamble to the 2017 PBGC missing participant regulations under section 4050 stated the following: "PBGC expects that there will be instances where a DC plan knows a participant is deceased but has little or no information about a beneficiary. Where an unknown beneficiary of a deceased participant is missing, as defined in the final regulation, the account balance of the deceased participant may be transferred into the missing participants program. PBGC will take into account the fact that there is no known person to search for in evaluating the plan’s fulfillment of the diligent search requirement for any such distributee. Plan fiduciaries and QTAs would file in accordance with the forms and instructions for DC plans what information they have about the participant and beneficiary."

If the participant was born on or before 12/31/1949, and they terminated employment in 2021, then 2021 is their first distribution calendar year and they must take an RMD before they can roll over their account balance in 2021. "Before" can really mean "simultaneously;" basically you just have to make sure that the RMD is distributed if you are paying out the entire account.

I would suggest talking to an ERISA attorney. There appears to be a Plan Qualification defect discovered on Plan Audit from the information you have provided. That can get expensive beyond just funding the the missing benefits if the IRS wishes to play hardball. It sounds likely you are looking at some sort of EPCRS correction with the IRS under audit-CAP. I'm guessing the Retired Owners were likely the Plan Sponsor and Trustee of the Plan?

Another suggestion: Charge these terminated Participants an annual administration fee and make sure to tell them and remind them of this. This is legal and motivates them to roll the money over or just take the distribution.