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I don't think you're going to find it in black and white anywhere, but it comes from the definition of deferrals. Only deferrals can be classified as catchup. In order to be a deferral, the amount has to have been payable to the employee as cash, if not for the deferral election. If the amount exceeds your earned income, then it wouldn't have been payable to you in cash, hence it couldn't be a deferral.

"I don't know why. What did you do with the money after you got the check?"

You can't defer what you don't make and 401(k) deferral (including catch-up) have to be deferred from your current year income. You can be allocated 100% + catch-up but it requires a combination of having enough deferral to reach at least the catch-up and then employer contributions that push you over 100% of pay but below the 415(c)(1)(A) limit. In your scenario you could defer 100% of your $19,500. You can't defer more than 100% of your income. If the employer then made a $6,500 employer contribution on your behalf than $6,500 of your deferral would be recharacterized as catch-up since it otherwise would put you over the 415(c)(1)(B) limit.

Did you acquire the assets of B or the stock of B? If just the assets, then I don't think you have any obligation. If it's the latter, you assumed all assets AND liabilities of B, including the pension plan and obligations related thereto. If those liabilities were indeed satisfied before the acquisition then maybe no issue for you - but that is the underlying question here. If the pension plan was covered by the PBGC, plan termination records are required to be maintained for seven years, so those should have been turned over. They may not be of any help here but it's worth having if possible. These records might also show that an annuity was purchased, the benefit was paid in a lump sum, or turned over to PBGC. A likely scenario is this person making a claim because they applied for Social Security and SSA gave them a letter saying they may have a benefit from this plan. Many people who were paid out their benefits years ago get these letters, forget they got paid (or think they have more coming) and come looking for their benefit. Plan sponsors are required to report deferred pension benefits to SSA (which is why this letter gets triggered) but it is an option to subsequently report a deletion to SSA when someone gets paid that benefit and laziness by plan sponsors and/or TPAS years ago results in these sorts of headaches now. We would have our clients respond in such an instance as follows: The plan was terminated as of XXXXXXX and all benefits were paid out and/or annuities purchased and/or turned over to PBGC in the case of missing or unresponsive participants. If you did not receive a significant volume of notices and forms during that time period then you had no accrued benefit in the plan at such time and your benefit was either previously paid to you in a lump sum or forfeited if you were not vested. Please check your prior financial records (bank, brokerage, IRA, etc.). If you still believe you are entitled to a benefit, please provide information to substantiate, such as a benefit statement. If a plan had small benefit cash-out provisions, general lump sum provision, or offered lump sum windows periodically, we would make note of those as well. You likely do not have that sort of information either. Usually this is sufficient to jog their memory or otherwise make them go away. Sometimes we have to dig through historical records to find a proof of distribution, but that is the rare case. Hope this was helpful, good luck.

There are a couple of places. Deferrals can only be made from Section 415(c) compensation and deferrals including catch-up can't exceed Section 415(c) compensation. And

PPA sec. 1103 directed the IRS to modify the requirements for filing a 5500-EZ to define the term "partner" as including a 2% shareholder in an S-corp, as defined in 1372(b). 1372(b) references 318 for attribution of ownership. That change finally made its way into the instructions for the 5500 series starting with the 2020 forms. PPA did not modify the definition of employee benefit plan in Title I of ERISA. So the daughter is still considered an employee for all other purposes under Title I. It was @RatherBeGolfing who pointed this out to me in the first place, so maybe they would be willing to chime in as well.

That's a great idea! I'll try it. The kicker of all this is that the person I'm assisting is the CFO of the company. Thanks for the assist!

Just a note that while this company would file 5500-EZ, they are still subject to all the other requirements of Title I - bonding, SARs, etc.

The loan is the investment. When I take a loan from my plan, the money does not leave the plan; I am just liquidating $50k from ABC Mutual Fund and moving it into a different investment. Instead of moving it into XYZ Mutual Fund, I am moving it into a note that promises 4% interest per year. Repayments are transfers from the loan investment back into ABC Mutual Fund. I hope that makes some sense. Although, it sounds like this individual is struggling with some basic concepts about what a loan is. If I borrow your car for the weekend, can you go for a drive on Saturday night? No, because I have your car. Does the car still belong to you? Of course it does.

FWIW - As prior posters have stated on this board, there is no such thing as a solo 401k plan. It is simply marketing gimmick created to sell plans. A "solo 401k" is simply a 401k plan with one eligible participant. "Solo 401k" plan documents still have eligibility provisions, allocation formulas, vesting schedules, etc. Why was the plan terminated? The new employee would have simply become eligible to participate under the terms of the current plan. The plan goes from filing a 5500EZ to a 5500SF. I don't understand the thought process with terminating an existing plan and starting a new plan.

Not that I know of, but yuck.

The 401(k) plan cannot count contributions made to the SEP when running the 401(a) tests for the 401(k) plan. Good: owner contributions in SEP aren’t in the test. Yay! But, too bad: employees allocations are also not in the test, not for helping with top heavy, they don’t count toward the minimum gateway, etc.

Successor plan issues aside, there may be a nondiscrimination issue if the timing of the plan termination was such that the NHCE would not benefit. See the rules under 1.401(a)(4)-5.

We had a similar situation. Our attorney said the partial withdrawal option (i.e., a lump sum withdrawal at any time) could only be eliminated prospectively and had to be retained for the transferred accounts; however the installment form of payment could be eliminated per the reg cited above.

The reg section you cited is below. The example should be helpful. In short, if the lump sum available after the amendment is available with the same timing (and other terms) as the partial distribution, the removal of the partial distribution doesn't violate 411(d)(6). Likewise, if the lump sum after the amendment is available with the same timing as the the start of the installment payments being removed, the removal of the installments doesn't violate 411(d)(6). In most cases, the lump sum and other optional forms of payment are already available with the same timing and under the same terms, so eliminating the other optional forms of payment is not a problem. Of course, if the plan has any money purchase amounts in it, they can't eliminate the annuity option for those MP amounts.

Just as BenefitsLink people say about an employer-sponsored retirement plan, Read The Fabulous Document, one might follow that idea also for an Individual Retirement Account agreement. An IRA agreement’s beneficiary provisions vary with different providers, and sometimes vary even within one provider. But perhaps potentially differing provisions might not matter much if the husband’s might-be beneficiaries (whether contingent or default) are the same children as the wife’s beneficiaries.