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I think your first statement was the answer to your question, LOL, as these situations often get treated like they are personal bank accounts rather than QPs, IMHO.

The scheme is intended to allow the individual to maintain the 401(k) plan and take advantage of the higher levels of contributions. The simplest approach is to make the IRA rollovers out of the existing plan. Next, adopt a prototype plan owner-only plan and set up a bank account in the name of the trustee of the plan. She can deposit her contributions into the account and then make the rollovers into the respective IRAs. She can keep a very small amount in the bank account and will not have to file a Form 5500-EZ. Further, with the bank account there likely will be no income to have to worry about any separate accounting between the deferrals and the NEC. She will need to prepare two 1099Rs each year for the rollovers to the IRAs. As rollovers, there will be no tax withholding to deal with. None of this is technically challenging. If she feels it is still a hassle, there are local TPAs or CPAs that can do this for a small fee.

Supports everything Peter was saying.

To avoid a command to provide a qualified joint and survivor annuity, it can be enough (if all other conditions are met) that the participant does not elect an annuity. ERISA § 205(b)(1)(C)(ii) https://uscode.house.gov/view.xhtml?req=(title:29%20section:1055%20edition:prelim)%20OR%20(granuleid:USC-prelim-title29-section1055)&f=treesort&edition=prelim&num=0&jumpTo=true; Accord 26 C.F.R. § 1.401(a)-20 https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFR6f8c3724b50e44d/section-1.401(a)-20. As austin3515 notes, many individual-account profit-sharing plans preclude a choice of an annuity. Further, many plans have no form of distribution beyond a single sum.

I thought it was the opposite - you don't have to offer annuities but if you do then the spouse has to agree to any annuity version that's not the QJSA. Yeah, been a while....

I thought there was something that said if the plan offeres annuities, but that an annuity was not the "normal form of benefit" or something like that, then the QJSA rules did not apply. Me personally I eliminate annuities all the time because they are just awful (Except of course when required by law), but I did think there was an easier method of allowing for annuities.

David Rigby, Albert F, and CuseFan, thank you for helping me think this through. According to both Vanguard and Ascensus, the new fees are, for Ascensus’s directed trusteeship, $20 a year for each participant, and for “Ascensus’s annual account service fee”, $20 a year for each fund. (None of Ascensus’s fees relates to assets under recordkeeping, and the fees are not subsidized by indirect compensation other than float income.) My friend invests in only one target-year fund for each of her two subaccounts. So, she counts her Ascensus yearly fees as $20 + $20 + $20 = $60. She qualifies for no account fee on Vanguard IRAs. While $60 is a higher proportion (300 basis points) of $2,000 than it is of $1 or $2 million, I’m not seeing a less expensive path to getting recordkeeping for her § 401(a)-(k) plan. I fear Ascensus after 2024 might add a distribution-processing fee, even on rollovers. (That’s among the reasons my friend wants to do rollovers now before the transition to Ascensus.) If a processing fee comes, it might influence how often she moves amounts from her Ascensus-recordkept § 401(a)-(k) plan into her IRAs. Ascensus provides the plan-document service. I’ll edit the adoption-agreement choices. And I’ll edit even base provisions as much as can be without defeating the IRS preapproval or causing Ascensus to resign. About creditor protection: A reason for keeping each IRA clean with no contribution beyond the rollovers from the § 401(a)-(k) plan is to get the 11 U.S.C. § 522(b) exemption from the bankruptcy estate without limit. I have not researched other bankruptcy law, nor a creditor’s rights outside bankruptcy. But lacking an ERISA protection or preemption on even the employment-based plan, I’m hoping she doesn’t lose a useful protection by moving to the IRAs. We can check with a debtor’s-rights lawyer. Other points I should think about?

On September 6, 2000, the Treasury department published a final rule to amend the 1988 rule. Under that amendment, a plan sponsor may amend its plan to remove an optional form of benefit (including an optional annuity) if the plan provides a single-sum distribution form otherwise identical to the optional form of benefit eliminated. Such an amendment must not apply to a participant with an “annuity starting date” earlier than the 90th day after “the participant has been furnished a summary that reflects the amendment and that satisfies the requirements of 29 CFR [§] 2520.104b–3[.]” (I’ve simplified those explanations, and omitted some conditions.) For the details: Special Rules Regarding Optional Forms of Benefit Under Qualified Retirement Plans [final rule], 65 Federal Register 53901-53909 (Sept. 6, 2000), https://www.govinfo.gov/content/pkg/FR-2000-09-06/pdf/00-22668.pdf. Also, the Treasury department published further amendments in 2004, 2005, and 2006. https://www.govinfo.gov/content/pkg/FR-2004-03-24/pdf/04-6220.pdf https://www.govinfo.gov/content/pkg/FR-2005-08-12/pdf/05-15960.pdf https://www.govinfo.gov/content/pkg/FR-2005-09-13/pdf/05-17959.pdf https://www.govinfo.gov/content/pkg/FR-2005-09-27/pdf/05-19222.pdf https://www.govinfo.gov/content/pkg/FR-2006-08-09/pdf/E6-12885.pdf

In theory, yes, this should work. All maintenance, expenses, taxes, etc. would have to be paid from the plan, meaning there needs to be cash in the plan as well. The odds of all that happening - actually happening - in my experience are very low. Plus appraisals. Also, when the real estate is distributed in-kind, it's subject to withholding, which is another interesting conversation. If the participant reaches RMD age before the property is distributed, that becomes a challenge too.

You are not starting a new Plan, you are simply restating the existing Plan to a new Document provider (E-Trade). Please make sure you implement this properly, the penalties for messing this up are very severe.

I think you should hire a TPA that knows what they're doing so you don't get bad advice and get in big trouble down the road.

I would use the word blatant, but yeah, if that is not the perfect example of a PT, I don't know what is. I remember seeing this sort of stuff a lot back in the 80's when I first started and most/all PSPs were pooled balance forward trustee directed. Vacation homes/condos, timeshares, antique/collectible cars, etc.

It’s a classic PT.