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I was just dealing with Schwab on this week. All you need is a letter of instruction signed by the trustee to transfer the assets into another 401k brokerage account. This will not generate a 1099-R.

But that doesn't mean they are exempt from the minimum funding requirement.

Well, as long as the owners won't hit the 1000-hour mark in the next 15 days after you deliver their 204(h) notice. (Of course I'm assuming that's their plan's accrual requirement for a year.)

The issue would be if the owners already worked 1,000 hours (which is likely as Bri mentioned) you cannot amend to reduce their benefits at this point.

We have a client who has real estate income and considers some of it self-employment income since they are managing the properties. I think that is reasonable and appropriate. It depends.

Depends on the funded status of the plan, but generally yes.

I just went to the DOL's fact sheet: Q2: For non-participant-directed plans, what is the earliest statement for which the lifetime income illustrations are required content? For plans under which a participant or beneficiary has his or her own account but does not have the right to direct the investment of assets in that account, the lifetime income illustrations must be on the statement for the first plan year ending on or after September 19, 2021. For most such plans, this will be the statement for calendar year 2021, which would be furnished no later than the last date for timely filing of the annual return for that year for a calendar year plan (Oct. 15, 2022). See Field Assistance Bulletin 2007-03 (Oct. 12, 2007) for timing requirements for statements for plans subject to ERISA section 105(a)(1)(A)(ii). This at least suggests you still have time, no?

Plan Administrator overrides Schwab by issuing its own 1099-R amending the distribution value to $0. Easier if plan has its own tax ID, of course. (Really, I'm in one of those "I'll show YOU who runs this plan" sort of moods late on a Friday.)

You need to reiterate that they are transferring the assets in a TRUSTEE TO TRUSTEE transfer and the is NO DISTRIBUTION as the participant does not have a distributable event. That is you are simply replacing the asset provider of the Plan and that they are no longer responsible for maintaining the plan after the transfer. It often helps if the new account has the same name and EIN as the old and you can get a letter of acceptance from the new custodian. Of course if it's going from Schwab to Schwab and they still won't do it, I don't know what to tell you.

A lot to consider. Is the Plan PBGC? The Minimum Required Contribution is not the same as the contribution credit under the Plan document. As others have noted the Contribution credit will depend on whether or not participants have meet the accrual requirements in the document before the freeze and/or termination date, with 204(h) notice of course. The Minimum Required Contribution for the year will be dependent on the funded status of the Plan and would be prorated if the termination creates a short plan year.

Even if owners accrue, as 50/50 partners I believe they can elect (with spousal consent if married) to forego the portions of their benefits necessary to fully pay all other participants upon plan termination.

If there won’t be time to furnish the lifetime-income illustrations (or the individuals’ account statements) by October 17 but you’re confident the individuals’ December 31, 2021 accounts can be determined by late October, the plan’s administrator might consider then running the illustrations and furnishing them no later than with the summary annual report on 2021. If the lateness is a month or two in this first cycle, how likely is it that EBSA will pursue enforcement? A participant’s, beneficiary’s, or alternate payee’s enforcement might be remote. Furnishing illustrations run with December 31, 2000 account balances, 2000 mortality assumptions, and the December 1, 2000 interest rate might be a way to meet the ERISA § 105 command by a compliance date. But a plan’s fiduciary might evaluate whether such an outdated illustration would confuse some participants, beneficiaries, and alternate payees even more than an on-cycle illustration confuses them. Whichever, the plan’s administrator should choose and own the responsibility.

It's a 401k plan, so you can't have another plan in less than 12 months if you create plan 002. At least I don't think you can. It's frustrating because it is NOT a successor plan, it's the same plan. Schwab just won't let go of the money in the account, even to transfer it within Schwab. Seems wrong to me. A trustee should be able to move their 401k to another custodian if they want to.

I'm thinking lots of people may have hit 1000 hours already....

The other option is to simply make the restated plan "002" as a successor plan and have them transfer the assets. No distributable event, but gets the assets away from their locked in product.

It's not Mr. to begin with. And I cannot wade through your post for fear I shall be put to sleep. Yikes!! And I'm not sure what you are trying to say with your first sentence. Yes, the plan document does indeed say exactly that.

Well done, Peter!

I think you would account for any such contributions in the current year (year made).

You'll always need a Schedule SB for the contribution year, signed and delivered to the Plan Sponsor. If it's an EZ the SB isn't filed with IRS but is maintained and subject to audit. If it's adopted in 2022 for 2021 under the SECURE Act your first required filing is 2022 Plan year (assuming you are over $250K) in which case you attach the 2021 and 2022 SB to the 2022 filing but if it's an EZ you don't attach the SBs. In your last example, it would depend if you are filing on a cash basis or accrual basis whether or not you are over $250,000 for the 2022 plan year for purposes of required EZ.