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And while I concede the law has the 50% requirement the whole requirement is senseless in almost all plans. As long as the loan is just a sub-account of the person's total account and not a general asset in a pooled plan (in all my decades of doing balance forward PSP and 4k plans I saw this maybe 3-5 times) the loan is self securing. If the person defaults you don't take the person's other assets to "pay" the loan. You simply write the loan off and 1099-R the person. Simple example: A has $10k in plan. A takes $5k loan. So account now has $5k in cash investment and $5k in loan balance. The next day (I know it can't happen this fast) A defaults on the loan. It isn't like take the $5k in cash assets to pay the loan off leaving the person with a $0 balance. You simply say their balance is $5k which is what the cash investments are worth. The idea you need to secure a plan loan is just plain silly unless you have a balance froward pooled plan where the loans are part of the general investments.

Well, assuming no weird gotcha provisions like this being a 2/28 plan year end with a 10/31 tax year and no extension on their return, or that their 404 deduction max is only 50,000... Then this should be fine. (Would this pop up on your radar if the 700K and 300K had been done via separate checks?) I think as long as the sponsor designates the amount by year - that should be part of it.

That is what we like to see as well.

plus they are so easy to file, why not?

Bill is 100% correct of course - however this is such a common misconception that I must comment too. What would you do if the market goes way down and the participant no longer has 50% of the loan amount that was security? They can certainly take the hardship if the plan allows and they meet the criteria.

I agree the contributions have to be made. We did have a situation like this and were able to get the participant to agree to pay back some of the stolen money with plan money. It was done right in the courtroom. Part of the deal for a more lenient sentence.

Agree 5558 is the best option for extensions, especially since it often adds a month versus the tax return extension. Since return due dates are tied to year-end (fiscal and/or plan) I would think having the same year-end would suffice rather than requiring the entire plan and fiscal years to be identical, but I do not know that for certain.

I don't have any experience with this exact situation, but I wonder if you could accomplish it using an automatic contribution arrangement? Obviously it wouldn't meet the requirements for an EACA or QACA but that wouldn't be the goal anyway. The ACA would only apply to the employees acquired as part of this transaction, and the default contribution rate would be equal to the employee's last contribution rate in effect in the acquired company's plan. It might be an issue if anybody in the prior plan had a dollar amount election instead of a percentage of pay election, since I believe an ACA has to use a percentage of pay and not a dollar amount as the default. You might also have to generate customized notices for each employee to specify their default contribution rate. I think you would also be forced to put them in a QDIA, if that wasn't already the plan.

Was form 5558 filed? I believe the Ida extension applied to plans that were due after 9/1 - if an extension was not filed, you're out of luck.

Problems? Who is doing the "assigning"? Minimums? Maximums? Corporate resolution? As always, put on your consulting hat and ask the other questions: what is going on? what are you trying to accomplish?

If you use a Third Party Administrator (TPA) to help you run the ESOP talk to them. Most of them work with someone as a paying agent. We use Reliance Trust Company (RTC) that will cut the checks/ACHs/Wires, issue 1099-R, forward federal/state withholding. There is a firm called Penchecks that also does this service. Since the checks are written on their accounts it is their problem when a check gets lost. With RTC they are happy if the participant signs a Lost Check Affidavit where they agree to not cash the lost check if found and will reimburse the bank if it does get cashed. I have a few clients that work with Penchecks but haven't gone through their lost check process but they have to have one. In their case I know they don't just work with ESOPs but there are a good number of the 401(k) TPAs around here who point their clients toward that firm. So Penchecks issues a lot of checks every year (so does RTC). You aren't going to find a fact pattern they haven't seen by now. In short I would stop writing the checks and outsource it. The only thing that might stop you is if you are a small ESOP. I have some small ESOPs who write <10 checks/year they find these services a little pricey. But maybe peace of mind of taking these hassles off your plate will be worth it. The vast majority of our ESOP clients outsource this process to a paying agent.

I assume you are in NewYork. This was covered in other posts, but was regarding DOL emails to clients, claiming they can not find Form 5500 for 2020 Basically use the same procedure, copy Form 5500 for them, note the "special " extension wording, mail your reply certified, return receipt and keep your fingers crossed. Good luck.

The 50% of the balance amount for a loan is only relevant when the loan is issued. After that, the participant still has access to all the rights in the plan.

I just took a peek at the instructions, no help there - that almost insinuates the sponsor must have an identically short tax year. And I've only "relied" on the automatic extension as an "oh bleep" fallback after realizing a 5558 was skipped - typically we'd just do 5558s en masse to try to avoid the issue.

That might take a careful reading of the document to see how it addresses (if at all) any automatic rescinding of the spouse as beneficiary. I'm skimming a BPD and the one I'm looking at says the designation of the spouse as beneficiary is rescinded upon divorce. Is the spouse's status as primary beneficiary that which is rescinded, or is the FORM with that designation (and making the nephew contingent) rescinded? It wasn't immediately clear in the text I was peeking at.

9/30/ 2022 is too late to convert to a SH Match, that would have had to have been done prior to the start of the Plan year. They could have added a 3% safe harbor non elective by August 31 (yesterday) or can add a 4% non-elective prior to 9/30/22. They can go to a safe harbor match for PYB 10/1/2022 but you are outside the safe harbor 30 days before the plan year for distributing the notice. You can probably argue on fact and circumstance that the notice was delivered in a reasonable time before the start of the plan year. The sooner that is done, the more likley it will be deemed reasonable. OPPs just realized PYE in 9/30 and not 12/31 so editing response.

State law, corporate articles and bylaws, the nature, form, text, and context of the resolution, and what you mean by “signed” and by whom. For example, from your post, I cannot tell if this was (1) a resolution adopted at a meeting on August 25 and memorialized in minutes signed by the Secretary on August 31, (2) a unanimous written consent that specified an August 25 effective date, executed by all directors with dated signatures of August 31, or (3) something else that is valid and effective, as stated, under applicable state law.

This is good foundational guidance: E:\PUBLAW\PUBL229.106 (govinfo.gov)

Logic? Nope. But it is literally written into the law. (1) Members of family (A) In general An individual shall be considered as owning the stock owned, directly or indirectly, by or for— (i) his spouse (other than a spouse who is legally separated from the individual under a decree of divorce or separate maintenance), and (ii) his children, grandchildren, and parents. https://www.law.cornell.edu/uscode/text/26/318 So you own your grandchildren's stock but going up the family tree it is only the parent's not the grandparent's stock. In fact back when I trained more people I told people to try and remember this by remember this saying: For attribution it is down 2 an up 1 on the family tree. Just a guess a lot of estate planning has old adults moving stock and other assets to their grandchildren if the generation being skipped can afford not to inherit the assets. So they decided to make it so you can't estate plan and make the current oldest living generation suddenly not HCEs. But that is a guess. Congress doesn't really need logic.

Best source I am aware of is the EFAST2 FAQ 33a: (https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/efast2-form-5500-processing.pdf) I don't know if you are focusing solely on signatures required of the plan administrator but, the enrolled actuary's signature on the Schedule MB/SB must be manual, from the Form 5500 instructions: Now I have a question for you - let's say I load a PDF of a document onto my tablet, which has support for a digital pen, and I sign that document using the digital pen on the tablet. If the document requires a "manual" or "handwritten" signature, but states no requirement for ink-on-paper, does my pen-on-tablet signature satisfy that requirement?

IRS Form 4506. Expect to wait several months.

Interesting, I will admit I have not scrutinized that section. Still, I wouldn't expect the DOL to have copies of returns that were filed solely with the IRS, for example a paper 5500-EZ that was mailed to Ogden. Is anyone familiar with the process to request a copy of a 5500-EZ from the IRS?

I'm not sure about this (note under "year" in right corner)... Also from the instructions... Note (2). If a filer is not subject to the IRS mandatory electronic filing requirement under Treasury Regulations section 301.6058- 2, a filer may elect to file Form 5500-EZ electronically using the EFAST2 filing system. Information filed on Form 5500-EZ is required to be made available to the public. However, the information for a one-participant plan or a foreign plan, whether filed electronically with EFAST2 or filed on paper, will not be published on the internet. Only says that 5500-EZ information will not be published "on the internet".

5500-EZ filers are exempt from the requirements of Title I, including the SAR and the public disclosure.

I agree that an individual does not have to be an employee in order to have ownership attributed to them or to have their ownership attributed to another person.

I think we've been able to get those from the DOL Public Disclosure Room. The following from the SAR (see last sentence): *************************** You also have the legally protected right to examine the annual report at the main office of the plan,___________________________ and at the U.S. Department of Labor in Washington, D.C., or to obtain a copy from the U.S. Department of Labor upon payment of copying costs. Requests to the Department should be addressed to: Public Disclosure Room, N1513, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, DC 20210. ***************************

Bri is correct - there are two pieces in play here: (1) does the plan provide for mandatory cash-outs (a) under $5,000, (b) under $1,000, or (c) not at all; and (2) if (1)(a) then the document must have the default IRA rollover provision for distributions between $1,000 and $5,000, and could allow for distributions less than $1,000.

There should not be withholding, and any withholding would have to be accomplished via a distribution, right? And based on the person's age that would be an impermissible in-service distribution.

A plan sponsor properly advised and serious/responsible about compliance would have kept signed and dated copies and/or certified mail return receipts (IMHO).

What was involved in checking? If you mean you looked them up on the DOL's website, you won't find them there, because it does not show 5500-EZs. If you believe that the Form 5500-EZ was not filed for one or more years for which it was required, then file the missing forms as soon as possible under the IRS relief program. https://www.irs.gov/retirement-plans/penalty-relief-program-for-form-5500-ez-late-filers

Your numbers appear to be off - 47% + 47% + 16% = 110%. Attribution under sec. 318, used for determining who is a 5% owner for HCE, Key employee, and RMD purposes, among other things, goes from grandchild to grandparent but not from grandparent to grandchild. In your example (notwithstanding the inconsistent total), both Grandma and Mom would be deemed 94% owners (since they are each attributed the other's ownership) and grandkid would be deemed 47% owner (attributed Mom's ownership only).

EBECatty, thank you for your smart catch. It didn’t occur to me that a § 457(b) plan’s sponsor might have stated a plan’s required beginning date, required distribution period, or other minimum-distribution provision other than by reference to the Internal Revenue Code sections. Unless my client intends a provision more restrictive than what’s needed to get (or that allows less than what’s permitted within) eligible-plan tax treatment, I write some provisions of a § 457(b) plan using Code-sprinkling. For example, a document’s definition for “Required Beginning Date” might state it “Has the meaning given by IRC § 401(a)(9), including any special rules under those provisions.” Likewise, a provision about how much must be distributed to a participant or beneficiary might refer to § 401(a)(9) and § 457(d)(2).

I believe the timing is correct. Notice 2022-33 did not extend the deadline for a non-governmental 457(b) plan, so it should still be governed by the SECURE Act's statutory deadline. I think there is a (perceived) lack of clarity on whether the SECURE Act's 10-year RMD rule applies to non-governmental 457(b) plans, but I am fairly certain the age 72 RMD rules apply. If the non-governmental 457(b) plan document includes those rules in the plan document, I would think it would need to be amended for SECURE. The remaining SECURE provisions, and all of the CARES Act provisions, do not apply to non-governmental 457(b) plans.

Is this an internal plan conversion? How/why would there be withholding? I think I'm missing something (even if it is a plan to Roth IRA or IRA to Roth IRA, how is there any WH?).

Pretty sure the OP is referring to distribution paperwork in this case and that's our experience with Nationwide. They require wet signatures and won't do any distribution steps online.

A Revenue Procedure states: “The signature requirement [to adopt an IRS-preapproved document] may be satisfied by an electronic signature that reliably authenticates and verifies the adoption of the adoption agreement, or restatement, amendment, or modification thereof, by the employer.” Rev. Proc. 2017–41 § 5.10, 2017-29 Internal Revenue Bulletin 92, 99 (July 17, 2017) https://www.irs.gov/pub/irs-irbs/irb17-29.pdf. In recent years, I have not encountered a service provider that, if it asks for a plan sponsor’s signature, refused an electronic signature. I have encountered service providers that refuse ink-on-paper, insisting that the only signature the service provider recognizes for its business purposes is an electronic signature, and one made using the service provider’s chosen software and method.

I think your plan document still has to have forceout provisions in it to start. (Is that the question? Whether or not you can use the auto-IRA rules if they're not in the document?) I think 401a31B is saying you have to auto-IRA balances only if you're mandating the distribution and it exceeds 1,000. But the plan would have to provide for the mandatory distribution in the first place.

Actually, the safe harbor TH exemption isn't lost even if non-Key HCEs miss out on a THM. (Thought so, but just double-checked the EOB to confirm.)