stainedglass80

Question re: self-correction of an employer eligibility failure (governmental entity adopting 401(k) plan). If the employer will cease contributions to the 401(k) plan (either through a freeze or a termination) within the self-correction deadline and subsequently adopt 457(b) and 401(a) plans, is the appropriate action merging the 401(k) plan into the 401(a) plan?

I read Rev. Rul. 2004-37 to suggest that the forgiveness should be included in income, with the employer required to deduct and withhold, at the time forgiven (assuming it was not compensation when first paid) but it is not clear whether that is just because of the interaction with 83 or whether it is more generally because (as described in 2004-37) "the reduction of the stated principal amount is a medium for payment of compensation by Employer to Employee" not subject to 108.

If an employer issued a forgivable loan to an employee (say, forgiven in three years if the employee continues working and if not, must be repaid), I had understood that the forgiveness would be included on a Form W-2 at the time of forgiveness and subject to withholding, FICA, etc. at that time. I also understood that the alternative, if it was not considered a bona fide loan, is that the amount of the loan should have instead been included on a Form W-2 at the time of funding. Reading through some of the case law on this it seems like some employers are actually reporting the forgiveness on a Form 1099-C and not a W-2. Any thoughts or guidance on this front? I am concerned with the idea of an employer reporting through a 1099-C rather than a Form W-2 but haven't yet found the authorities on this. Reporting at the time of forgiveness on a W-2 seems a safer approach.

Thanks @david rigby - I searched but only found two posts with no answers. I did not find anything in the ERISA Outline book or on EBIA, or in the IRS guidance on these topics.

Does anyone have information on whether a foreign government entity can sponsor a retirement plan (e.g., SEP-IRA or 401(k)) in the U.S.? I have not found any direct information on this point.