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The limit is the lessor of 2 numbers which are "1/2 vested account balance" or "$50,000 reduced by highest balance in the last 12 months". So if his vested balance is over $100,000 the $50,000 reduced by the highest outstanding balance in the last 12 months should always be the smaller number.

Next Plan Year.

Okay. Then I’m confident there is no deadline spelled out. But, using a deadline of 12 months after the end of the year as the latest “deadline” is probably a good practice, or using a deadline that is no later than 30 days after the tax return deadline (to count 415 limit purposes) is perhaps a better practice? And allocating after 12 months maybe should include missed earnings.

Well, they have to be a "distributee" and sounds like they aren't. So they don't even get to enter this section because they aren't tall enough yet to reach the line on the sign.

Failure to distribute the related match ends up as a 401a4 issue, though, right? It's not really a corrective distribution occurring when it's simply the match being forfeited. Not sure if that buys you any extra time beyond 3/15 though.

Don't make his problem your problem. He has a 401(k) plan that seems to have been validly executed, a trust established, and deposits have even been made. It sounds like he has a 401(k) Plan. If he wants to terminate it sure, you can help him with that along with the distribution, 1099-R and final Form 5500-EZ filing.

Yes, Peter, if the person was entitled to the TH allocation but took a distribution before such was deposited, that contribution must still be deposited and, to the extent vested, distributed. Same as any ordinary profit sharing - employer declares PS of X% of pay for all eligible participants employed at year-end, but doesn't deposit until 9/15 extended tax return due date. I terminate that March and take my vested balance (cash basis). Come 9/15 deposit, I need to get my X%. Can the employer make earlier deposits for participants getting distributions? Maybe, and doing so could alleviate tracking and paying these people two distributions, but then that must be tracked. Also, earlier access to that contribution may be a BRF subject to nondiscrimination.

Only the 50,000 statutory maximum gets reduced by the highest balance in the previous 12 months. You don't do that same lookback with smaller loan amounts. Those just have the usual 50% limitation.

In 1985, few employment-based retirement plans provided the convenience of paying a distribution as a rollover contribution directly to another retirement plan or an Individual Retirement Account. About what happened or what was reported, the individual might request from the IRS a copy of her 1985 tax return (and of later years’ returns). Form 4506 https://www.irs.gov/pub/irs-pdf/f4506.pdf. Consider whether the individual’s tax returns over many years might have been filed under an assumption that the account was an IRA. If so, consistency might require a taxpayer not to assert a different treatment now. See, for example, Estate of Hilda Ashman v. Commissioner, Tax Court Docket No. 15578-96, T.C. Memo. 1998-14575 T.C.M. (CCH) 2160, T.C.M. (RIA) 98,145, 22 Empl. Benefits Cas. (BL) 1283, Pension Plan Guide (CCH) ¶ 23943M, 1998 Tax Ct. Memo LEXIS 146, 1998 WL 188936 (U.S. Tax Court Apr. 22, 1998) (In 1990, a distributee received a distribution from a qualified pension plan, and her tax return treated it as rolled over to another plan. For 1993, the taxpayer was estopped from asserting that the 1990 distribution was taxable in 1990.). See generally R. H. Stearns Co. v. United States, 291 U.S. 54 (1934) (by Cardozo, J.).

If an employer waits a few months to pay the contribution needed to meet the top-heavy minimum allocations, what is due to a participant who was a non-key employee at the relevant time who before the plan-wide top-heavy contribution has been paid severs from employment, is entitled to take a single-sum distribution of her whole account, and claims it? Must or should the employer “top up” such a participant’s account so it will have had its top-heavy minimum allocation before the participant exits the plan? If an employer does not do that, must or should the employer and administrator later credit the individual’s account with a “trailing” top-heavy minimum allocation?

Excellent question. It's one of those things I've heard "within 12 months of the end of the Plan Year" but I'm not sure where that authority comes from as I don't see it spelled out in the Code or Regs but maybe I'm missing it. Possibly some other IRS guidance? It's one of those things I'm confident in but can't seem to point to the correct citation.

I agree with 12/31/2024, but where is that deadline in the regs?

Something sounds off. But assuming (and possible a faulty assumption on my part) that this is a calendar year plan, that the plan was not TH in the past and that 12/31/2022 determination date is the first time they are TH then yes the 2023 TH minimum will be due in 2024 based on 2023 data. If they want to deduct it for 2023 it would be the due date of the 2023 tax return, with extensions. If they wanted to push it out to the latest date allowed in the regs then that would be 12/31/2024 and you can have deduction and 415 fun with the timing.

Does the plan have a determination letter? If so then there's your written evidence that the IRS finds the plan is compliant (in form, at least) with the qualification requirements, including sec. 401(a)(31). You could also point them to code sec. 401(a)(14) which says that a plan does not have to begin distributions before the latest of the year of termination, age 65, or 10 years of participation. But for real, the participant clearly doesn't really understand what they are reading in the regs, or they are just seeing what they want to see. You can explain to them that the reg doesn't say what they think it says, and if they really feel they are being denied a benefit that is due them under the plan, then you can always point them to the plan's claims procedure.

Precisely, just went through all this with a colleague yesterday. Solo or HCE-only plans - no reason not to allow this. But any NHCEs - fugediboutit!

What if you contacted Penchecks (or another trust paying agent) to see if the trustee could endorse the check to them and they pay it out to the IRA? They may not be able to take the check, but if they can, it keeps it out of the corporate account.

Does the document spell out what to use? If the document gives you the leeway to use any 414s compensation, then sure, you MAY limit 414s to only periods of participation. (You don't have to, but you have to be uniform for all employees.) If you have separate participation comps (and a hearty "Blam!" to anyone who's forced that upon you) then I suppose you'd use the participation comp relevant to exactly what you're testing for. If you're testing the gateway then you're measuring nonelective contributions by the employer, so use the participation date applicable to getting nonelective contributions under the plan.

That seems crazy, like you're just giving the guy an extra $1,000 because of the data entry error.