AllThingsForGood

Thank you David! And Thanks to Paul too, for walking through that with me.

Thank you so much for helping me, Paul. I need to ask, though, why is the amount taxable on the 1099-R that the receiving-plan issues? And, if there's a Code G, wouldn't that contradict the Box 2a having any amount in it? Thanks!

The AT money is a contribution to my client's plan. (I said "rollover" in my initial posted question - sorry!) The deposit of $30k is the amount being 'converted' to Roth, inside the 401k plan. It's being considered converting on the date of deposit so there are no gains associated with that basis.

The After Tax money came IN to my client's solo-401k plan. The financial advisor wants record of its basis ($30k), so wants a 1099-R prepared showing the AT money being converted, inside my client's solo-401k plan, to Roth. I have never had this circumstance, and even questioned the necessity of a 1099-R at all. Is a 1099-R necessary? (Might should have been my first question) If NOT, is there any reporting necessary from the solo-k plan?

Good morning. I have a client (1 ee plan) who rolled INTO the Plan aftertax money. To establish basis within his Plan, I'm preparing a 1099-R showing the after-tax amount as being 'converted' to Roth inside the Plan. Can you please tell me if I'm thinking right about the 1099-R? Box 1, the amount that came in is shown ($30k). Box 2a, taxable amount $0. Box 7 - H (what else could this code be? is H right?) Thanks !

Could that sentence be interpreted as "marked as terminated"? There's no way, operationally, to 'remove' anyone quickly.

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?