Bird

Good point on the first comment; although we don't know what actual eligibility is and he might be (have been) eligible if we assume he was in fact hired. I guess I would hope this one account would not tip the scales. And the second point might work, with the "if" you note.

Unless you really want to make a big deal out if it, I think I would consider it a rollover while the guy was employed, and then he terminated. It doesn't impact testing and it does count as an account.

Generally speaking, you would want to give more to the younger NHCEs as you get more bang for your buck that way. New comp testing projects contributions today to benefits tomorrow (at retirement) so the time value of money gives higher benefits to a younger person, all things being equal. Specifics depend on demographics.

That's a good point, and I almost said something to that effect. From the facts presented however, I don't think that's the case here.

Agreed. The fact that they said it IS a rollover and therefore no 1099 is required is pretty scary.

A. Logic has no place in retirement plan discussions B. Your logic is flawed anyway as noted by CuseFan

Perfectly stated. I would add that this means that a 12/31/22 merger date means a final return for 2022 (regardless or where the assets physically resided). A 1/1/23 merger date means a final return for 2023. (We would generally use 12/31 to avoid an additional return.)

Why is that, and is(n't) it a cutback anyway? How is an in-service distribution different from a termination distribution, in terms of the valuation issue?

*I think* (or am just guessing/assuming) ftam is saying the plan was set up in a timely manner (by Oct 1) but that no one actually deferred until Dec. It's likely, or at least possible, that the reason is that enrollment materials weren't available so in fact then there were not deferral opportunities for 3 months which is problematic. I agree that if the plan says the match is based on the full year then it is, and I don't know if that can be "corrected."

If it is allowed by the plan, then it is allowed. If asset values have decreased since the latest val (generally end of prior year) then you can do a special val (or if assets have increased and the trustees find it prudent for the participant to share in the gains). Otherwise you just pay the person out and they get no gains or losses for the year. If you haven't done the 12/31 val yet then I would wait until that is done. People need to understand that it's not a bank where you walk in and get your money right away (or not, as in the case of SVB, but I digress).

One of several possible problems, none of which are surprising. Yes, the policy should have been owned by the plan and proceeds payable to the plan. Agree with comments above that it was in fact a distribution from the plan, subject to normal distribution processes, taxes (and 20% withholding for most of it), except that cumulative PS-58 costs are recoverable as basis.

As Effen says, you need to work through your attorney on this. If the QDRO refers to a plan, and the money is in an IRA, then that needs to be changed at the very least. But there is an implication that the QDRO terms were agreed upon by both parties so this has to go back to your attorney.

It's not really a big deal and I think most new small corps would be set up as S rather than C. C corps take some careful planning to zero out profits (to avoid double taxation) and most folks can't or won't do it right. There used to be an advantage for C corps in health insurance deductions but that is not relevant now.

1. I don't see the relevance of 60 days here. It is a payment from a plan account to another plan account. 2. It would take a very friendly bank to deposit a check of that size into an account that is not titled as the check is written. 3. I think someone needs to go into the bank (or other financial institution) and see what they are willing to do. Most likely they will say they have to open an account in the name of the plan, deposit the check, write a check back out and close the account. So be it. Then you have questions about both 1099-R reporting and 5500 reporting, as well as plan document issues...obviously a document was not maintained all these years so you don't have a qualified plan. (C'mon, aren't you going to tell us how this happened?)

Yeah and it's not really a forfeiture is it, more or of an "oops" contribution. That's a mess.

I think you need to push back and clarify what they mean by "late." If you are on extension to Oct 15, then completing the contribution by that date is not "late" for...anything. I'm guessing they didn't realize you were going on extension or else just didn't spend any time thinking about the answer.

It's really a matter of whether you want to beat your head against the wall that is the big 401k vendor. Obviously you can do what you suggest, but you have to find someone there who understands, which is the challenge. It might be as simple as checking a box saying the RMD was taken from other assets, or saying you'll do your own calcs but...it might not be that easy. It boils down to figuring out which is the least painful route.

Thanks all. I have no experience at all with ESOPs and appreciate the feedback. It makes more sense now.

Perhaps this needs clarification. We have a company with a 401(k) plan, and they started an ESOP. We are trying to determine ownership for HCE/key determination. I believe we attribute the ESOP ownership (and think I found the appropriate reference in Who's The Employer) but an ERISA attorney says no. (I did not present this to him and it is possible the question was garbled.)

For purposes of determining ownership, are ESOP shares counted? We have a disagreement here...

...in the same plan, ah, yes, most likely. Nicole, it sounds like the plan administrator has been somewhat unhelpful and probably doesn't really understand the process, but maybe not liable for anything.

Is there a paper trail - forms? It's hard to imagine setting up an account in another 401(k) plan without having you sign something (equally hard to imagine getting money out without your signature).

I would just let it go and file the EZ going forward. We have changed from SFs to EZs and surprisingly, the govt seems to be able to recognize it. If not, it is an easy explanation; easier I think than asking for headaches by filing an amended return.

The FTW document says such an employee ceases to be participant...for purposes of Article 4 (contributions), the implication being they are still participants for other purposes. If your document isn't so specific I think that is a (the only) reasonable interpretation. I would count them as participants but they just don't get any accruals.

I don't have a dog in the fight here, but not getting an "additional" allocation because you hit a limit doesn't necessarily equate to being eligible with $0 comp. I get that one reason they can't contribute is that 100% of $0 is $0, but they are also ineligible to defer because they have $0 comp. And then you go back to the 0/0 problem.