AllThingsForGood

Excellent points, again. Thank you!

Peter, this is great information - thank you! I have reported the assets as required each year, so all are aware of the investments & their ratios. BUT, I know that's not enough to save my behind, necessarily. Regarding the Code Section 404 -- this plan is not intended to be a 404c plan. Does that declare moot the reference you gave? I am going to highly encourage the client speaking with an ERISA attorney, and I'm making note of the 2 statutes you mention. I'll research those (and other items you mentioned) myself. THANK YOU.

Artie M, thank you. "Clogged stethoscope".... love it! The $2/share was the purchase price. I do NOT think that is a fair value, because the issuing-company (board, I guess) was raising money in 2022 and I'm almost certain the valuation was an independent one (I'll have to double check on that). IF the $17.57/sh was indeed produced independently, that is the best value to use at this time. Fortunately, there is no related party/PII issue. No relationship at all. The shares of this private stock makes up 42% of the total plan value. The other 58% is in a regular investment account (Schwab, with an outside manager). THANK YOU!

I want to add this comment -- the Dr could take 100% of the private stock as his own segregated investment, however, if it does sell at a huge gain, he wants all the participants to share in that! It's a double-edged sword, I guess. If the stock does go to $0 value, they'll all share in that massive loss. At least the Dr's intentions are good!

Thank you both, ESOP guy and Paul I. I will be following both of your advice - GET IT IN WRITING from the Trustee/Plan Sponsor. Thank you so much.

I know that the #1 best answer to my question will be "hire an ERISA attorney". But I'm hoping someone here has experience, and can relay their thoughts on my PITA situation. And please don't fuss at me too much; only looking for real life experience, not scolding. I hate non-qualified assets in a Plan, but this wasn't my idea. Background info: -- Medical practice with 401k, Trustee is the doctor. 73% of the Plan assets belong to the owner (Dr), his wife, and his daughter, and the other 27% belongs to 9 NHCE participants. -- 56% of assets are in a pooled account (Schwab) + 44% is in private stock (this valuation is part of my question though, so the 44% may not be accurate). All requirements are being met concerning the 5500/Sch I/audit reqm't. -- This 401k Plan purchased the private stock for $2/share in 2019. The company prepared IRS Forms 5498(?) in 2022 stating its value as $17.57/share. There is going to be a valuation done this fall (b/c of a capital-raise) and most likely a sale of the company next year. (Thank goodness) So in this plan, the stock asset showed a large gain in 2022, to reflect the value of $17.57/share. -- The doctor is now very worried the value will drop to $0, and wants to report its value on 12/31/25 as being back at the purchase price of $2/sh. -- One of the 9 NHCE participants was paid out during 2024, and her vested balance was determined using the Schwab account + private stock at $17.57/share. She was paid out of the Schwab acct to avoid having to transfer shares of the private stock in-kind (would be very impractical). Question -- (1) Can we make future plan distributions by paying out their share of the Schwab account, but hold back their portion of the private stock to be paid once it liquidates? They'd get the 2nd payout as soon as that occurs. (2) Should we reflect the asset's value back down at the $2/share? Or is the more accurate value the $17.57/share as reported by the company to its other share-holders? There is no way to really know how much it's worth until it does actually sell. I personally believe the $17.57/sh valuation is the more accurate of the two since that is what has been used consistently in this plan since 2022, and in other reportings outside of just this plan since then as well. My main objective, of course, is to be as fair as possible to the NHCE participants in the plan. THANK YOU.

I'm going to PM you, since I'm late to this conversation.

Thank you for your input.

Because of the operations I mentioned? Are you offering the In Plan Roth Rollover as an alternative solution?

I am creating a form to send to clients to give to all their 100%-vested participants, to elect their 2024 ER contributions be made as Roth. I understand that a 2025 1099-R will be produced for each participant who wishes to have their 2024 ER contributions go in as Roth money type, since the "allocation" and/or "deposit" is being made in 2025 for 2024's ER contributions. Here's my operations question: Am I right to say that the 2024 ER contributions that are elected to be Roth (per person) will be shown that way on the 2024 reports? I know that seems like a dumb question, and maybe the better question is: How long does each participant have to complete their Form saying they want their 2024 ER contributions as Roth?? When should we be sending these Forms to our clients for the year we're closing out? As we all know, there can be a lot of back and forth before an employer makes a final decision on their ER contributions. Handing a participant a form today might send the signal that they 'will definitely' be receiving a Discretionary Match and/or Profit Sharing etc., when the decision isn't made until March 14th or even Sept 14! Thoughts? I'd love to hear how others are operating.

I'm replying in hopes that there might be an update for this. I, too, would like a Form template to give to clients who elect this option. Thanks!

Thank you! Yes, ok, the "you" is the sponsor/employer (in my case). And thank you for pointing out that it's NOT just talking about 1 type of form, but ALL information returns. W-2s etc! Yeah, better use IRIS 😄 I appreciate your dumbing it down for me.

Thank you CB and Paul. CB - you hit on my question exactly - it's the sponsor who has more than 10 1099-Rs to file that has to use IRIS. If I'm filing <10 1099-Rs per client, I as a TPA don't have to. Is that right?? My assumption makes sense, but I don't want to screw up. And by the way, my clients are very small employers, so there are rarely 10 distributions from a single sponsor's plan in a given year. 😁 Some don't even have 10 employees.

I am SO confused by this, and cannot find answers. I am a TPA, and I have about 15 clients that had participant distributions from their plans during 2024. That's 15 separate plan-sponsors. I use Datair - I input each individual's 1099-R data, and print the 1099-R for the participant and the plan's copies. Then I move on to the next sponsor. I do this on paper forms that I order, and feed into my printer as I print each 1099-R. Am I now required to use the IRIS system?? Or can I keep on doing it the way I've done it -- print XYZ's 401(k) Plan's 1099-Rs, then print ABC's 401(k) Plan's 1099-Rs, and so on? Thanks! Trying to be as clear wtih my question as possible. I appreciate any answer, even if it's fussing at me for being so dense 🫣

Paul, I totally agree with you and have stated my concerns several times. Thank you for the reply.