401k Conundrums

Thank you all for your responses, you are beyond helpful. I see there was a Life Insurance answer book for qualified plans printed several years ago, but it looks to be out of publication now. The EOB has some info, but beyond those are there any other resources to learn about life insurance in plans?

Have you tried using PenChecks uncashed checks program?

A plan has life insurance contracts, mostly whole life, with very sizeable cash values. A participant that is well beyond RMD age is planning to retire this year. To date, no portion of the Life insurance has been swapped out. Participant will continue to do some consulting and have continuing 1099 income. Financial advisor wants to pitch the idea of rolling over the life insurance policy in-kind into a solo-K for the participant (along with the other plan assets), so that life insurance policy can continue. It is my understanding that life insurance can be rolled over in-kind as long as the distributing plan allows (which is does) and the new plan allows for life insurance (it will be drafted as such). It is also my understanding that rollovers do not count toward the incidental benefits test, so the plan would not violate this if the premiums are being paid from rollover funds. Is this correct? Forgive my ignorance, I have very little experience with life insurance. What happens with the 40 years of PS 58 costs that have accumulated to date under the original plan? Going forward the premiums will be paid by employee (pre-tax rollover) contributions, would these be includable in income (would he still need a 1099 for PS 58 costs each year?) H He has sufficient assets (if he rolls over his other funds) to take his annual RMDs from those assets. What pitfalls do you see with this plan? How does he get ultimately get these policies out of the plan into his personal ownership? Can partial swap outs be made? Thank you for any input.

Thank you all, for your comments and suggestions. I've completed solo-k cleanups in the past but none that crossed over to Title I plan status. I do wish marketing teams who are out there selling these would be more transparent and inform business owners about the potential pitfalls and the benefits of involving a TPA.

There are significant assets in the plan, doesn't want a plan disqualification if at all possible. We are discussing with an ERISA attorney...but they too have not ran into this exact issue so just reaching out to see if anyone else may have been in this predicament and how they handled the late filings.

New client has solo-k for 15 years, didn't realize he needed to be filing returns once his assets exceeded $250K. He thought all was well, until he tried to transfer his plan to a new custodian. He has hired employees and wanted to allow the employees to participate in the plan and thought the new bundled provider would be a better fit for that. Provider says whoa.. wait a minute...we cant take your plan (at least not like this). You need a TPA. So here we are...another solo-k gone wild. Unbeknownst to the client, his employees current and past are already eligible for the plan because the solo-k has immediate eligibility (and immediate vesting). So he's looking at some missed deferral opportunities, some top heavy failures, some failed ADP issues. Not to mention his plan document has not been amended or restated since it was initially adopted with that cute little account application/adoption agreement...and he needs 15 years of 5500 filings to be completed. So my question for today is: part of his filings should have been EZ filings and part of his filings (after adding employees) should have been SF filings. Would you file all the late filings as SF filings under the DFVCP because he now meets title I of ERISA. Or, should the years where he was truly a solo-k be filed on an EZ through the IRS's penalty relief program?

Recently took over administration on a plan and discovered there is a participant that passed away in 2020 with an outstanding loan balance that was never offset. Would you offset the loan current date and issue a 2025 Form 1099-R f to the participant's estate?

Thank you!

I'm sure this has been asked already and I have probably missed it. Does the "small" plan status also extend to deposit timing rules with the new 2023 DOL change to the participant counting methodology? I have a client with 1,000 plus eligible plan participants but less than one hundred participants with account balances, so are they a small plan with regard to the deposit timing rules?

Non profit sponsoring a 401(k) plan had a status change and is now a church organization. Does this make the existing 401(k) plan a "church plan" effective with that status change? Should their 5500 filings cease unless they make an election? Is there a time frame by when the election must be made after the status change? Any advantages to becoming an electing church plan?