austin3515

When the person is no longer engaged in a trade or business? And why would you file a Scheudle C with no income/expense? I'm not sure the plan necessarily needs to be terminated if there is no business anymore. That I think is an interesting question. I'd be curious to see what everyone else says... I have never heard of a "mandatory termination."

Just file the 5330, that's my advice... I've done them and it seems to me everyone would be happy. I can't imagine any DOL or IRS auditor would ever argue the point, and if you don't file it, you'll have a heck of a time teaching them!

You could also set up your own SIMPLE IRA and make up the difference to $18,000 in that plan. If you're 50, you ought to be able to get to a total of $24,000 between the two SIMPLEs (plus the SIMPLE IRA employer contribution of up to 3%).

Plan Trustee (and owner of a financial advisory firm) wants to give his employees investment advice. He wants to have one of his employees (a series 7 advisor) serve as the registered advisor. Is this possible? The payments would flow through the advisory firm itself but the employer would not take a cut, it would just be a pass through (because it has to go through the broker/dealer, etc). It seems to me that the Schedule C instructions refer to employees who receive wages for their services to the Plan. That is what we are going for here. Is this possible?

That's a brilliant idea!

I think an amendment is necessary to your position, which is that any changes to information that BENEFITS participants should be allowed. By your rationale an amendment changing vesting to immediate from 2/20 should be disallowed. To disallow such an amendment would be so far beyond the ridiculous it makes me lose my balance to think of it.

Hilarious!!

I dont think it matters, there can only be one annual calculation for the earned income individuals. Annual match, period. I do not see how this could be discriminatory either given the circumstances. They essentially have one pay-period.

Our prototype is clear, no Roth rollovers if Roth contributions are not allowed

OK, but if you're doing a 3% SHNEC in the ESOP, you cannot do a 6% PS for the HCE's in the 401(k) plan and claim that you pass 401a4. Agreed? I think that is what we all wanted to know.

The answer was no - an ESOP may NOT be permissively aggregated with any other plan. https://www.law.cornell.edu/cfr/text/26/1.410(b)-7 ©(2) (2) ESOPs and non-ESOPs. The portion of a plan that is an ESOP and the portion of the plan that is not an ESOP are treated as separate plans for purposes of section 410(b), except as otherwise permitted under § 54.4975-11(e) of this Chapter.

Small non-profit has all its money at Vanguard. Previously took the position that it was non-ERISA b/c deferral only. But because the additional cost is minimal and because there are limited investment options, we are suggesting just to do the 5500's and treat as an ERISA plan. I think this is consistent with the DOL's analysis which takes into account the participants ability to choose from multiple vendors. So let's say we decide to change the status. Effective date of plan is 1/1/2000, and 2015 is the first year we will file (forget about 2014 and the extension, it would just be a distraction). We check the first report box. Then what happens? Anyone done this? It seems like the DOL should be sympathetic here...

And so they are! Thanks!

Anyone have any cites for how to determine if two mutual insurance companies would be part of the same controlled group? Do the non-profit controlled group rules come into play (same board, etc)?

I would not bat an eyelash. I say amend!

What amendment? No amendment is required as Company B just hired some new employees. Now if you want to recognize service, that is a different story. The amendment would just say "Company B Plan recognizes service with Company A".

This is total nonsense and should not be relied upon, but I'd clean it up and move forward. Nothing wrong with Prime+1%. I personally would have changed the loan policy (I think it would have been a better story), but either way I would not go crazy. Now if this is a very large plan with an audit, etc. perhaps my answer changes. But if we're talking about a 50 participant plan with a dozen loans, there are only so many hours in the day! Perfection is a very tough standard to meet.

I totally agree!

This is great, thank you! Q-7: Will the plan administrator be subject to liability for tax, interest, or penalties for failure to withhold 20 percent from an eligible rollover distribution that, because of erroneous information provided by a distributee, is not paid to an eligible retirement plan even though the distributee elected a direct rollover? A-7: (a) General rule. If the plan administrator reasonably relied on adequate information provided by the distributee (as described in paragraph (b) of this Q&A), the plan administrator will not be subject to liability for taxes, interest, or penalties for failure to withhold income tax from an eligible rollover distribution solely because the distribution is paid to an account or plan that is not an eligible retirement plan (as defined, with respect to distributions from qualified plans, in section 402©(8)(B) and § 1.402©-2, Q&A-2 of this chapter and, with respect to a distributions from section 403(b) annuities, in § 1.403(b)-7(b) of this chapter.) Although the plan administrator is not required to verify independently the accuracy of information provided by the distributee, the plan administrator's reliance on the information furnished must be reasonable. For example, it is not reasonable for the plan administrator to rely on information that is clearly erroneous on its face. (b) Adequate information. The plan administrator has obtained from the distributee adequate information on which to rely in making a direct rollover if the distributee furnishes to the plan administrator: the name of the eligible retirement plan; a representation that the recipient plan is an individual retirement plan, a qualified plan, or a section 403(b) annuity, as appropriate; and any other information that is necessary in order to permit the plan administrator to accomplish the direct rollover by the means it has selected. This information must include any information needed to comply with the specific requirements of § 1.401(a)(31)-1, Q&A-3 and Q&A-4 of this chapter. For example, if the direct rollover is to be made by mailing a check to the trustee of an individual retirement account, the plan administrator must obtain, in addition to the name of the individual retirement account and the representation described above, the name and address of the trustee of the individual retirement account.

This is the my question, thanks. I am not involved in the Former Participant 401k Plan. Others agree?

Former owner of my client terminated with said client and took another job at an unrelated company. He had some nontraditional assets in his account and I believe instead of rolling to an IRA he decided to set up a 401k plan for the sole purpose of accepting rollovers. I am suspicious that there is no business tied to this 401k plan, he just preferred this to the IRA platform because he would have more flexibility. So I am concerned that the plan is not qualified. Now I could be ALL wrong about this. Remember, these are only suspicions. The amount involved happens to be quite substantial. What obligation does the plan sponsor have to vet this out? The sponsor "should know" enough to be suspicious because based on the Plan name on the rollover request it is clear that it is being sponsored by this individual and they do know he has not gone into business for himself. And he has been employed by them for "several years" so the existence of an old plan seems remote.

I would think these guys can handle a spin-off. Standard operating procedure for these guys. In light of KEvin C's interpretation (which I agree with) they have no choice but to facilitate a spin-off.

Well when you put it like that I almost feel guilty for asking I have a feeling she's not going to tell me his name. And yes I realize that giving a link to the article would have been the same thing (hence the guilt)... I actually tried googling it but found nothing. I actually think this would be a good article from one of those law-firms. The expression "oh, let's put your spouse on the payroll" is something that I have heard many times before. I always clarify when I hear it by saying, "No, let's find a job for Spouse to do for which we can compensate them." I think if I could say "here's an example of a guy who was convicted in court for doing this" my warnings would have more bite!

April, is there any press on this case? I would love to circulate this around to people. If it was public information in the press I don't see how it would be a breach of confidence, but hey, I would understand...

Owners work their you-know-what's off but had no income to show for their hard work. What do people think? In the testing as a zero, or not? I know it is a gray area.