Bird

I wouldn't let the automatic payroll deduction requirement get in the way of making the loan, especially since the problem, if I understand correctly, is strictly a payroll issue. I'd probably ask if he could make the transfer to keep it simple, but if not, you set up the loan with the intent of having it paid by p/r deduction, and then when they can't do it (oh gee) you make other arrangements to get it paid.

They are deducted on your 1040, line 28.

The accountant might be trying to apply corporate accrual accounting rules to the plan, incorrectly. I'm guessing that there is some sort of rule that says you should prorate the compensation across two corporate fiscal years. That doesn't apply for plan tax return accounting. I'd stick to my guns and keep showing the definition of comp in the plan that says compensation paid during the plan year. Ask her to ask for some help as no one else in the plan universe has this interpretation.

Well, if it is an employer profit sharing contribution, that is a direct transaction from the employer to the plan and doesn't have to go through payroll. If it is an employee (401(k)) contribution, it does have to go through payroll.

It may be "essentially" self-directed but it is still trustee-directed. Not a problem.

I say it is the check date. That's when they would have received the cash referenced in the reg.

Not extended for 2014. I saw something that said a house panel had approved a proposal to make it a permanent thing. Not sure how likely that is.

First you need to determine the beneficiary for RMD purposes, by 9/30 of the year following death. That will resolve the question about using the shortest bene life expectancy or doing separate calcs. I believe you could and probably should set up separate accounts within the plan. Some of the answers might depend on the terms of the trust. I don't claim expertise, but...I think if the trust allows for a full distribution, then the bene(s) could set up beneficiary rollover IRAs and start and/or continue the RMDs from there (or whatever they want to do). If the trust bleeds out he money over a period of time, then everyone is stuck with the plan making payments to the trust, and the trust funneling the payments to the benes. Not always well thought out, e.g. if the plan wants to terminate and the trust says it stays in existence for the lifetime of the beneficiary, I'm not sure how that is resolved.

I don't think there's any such thing as a short year for a SEP. You either have one or you don't. Could possibly be coordinated with a 401(k) if some contributions have been made.

I agree with you. The question I put to the an accountant where I can't quite figure out what to use is "what are you paying self-employment taxes on?" That's my starting point for plan contributions (and would be reduced by half of SE tax and the contributions to ultimately determine "compensation").

There isn't any requirement to do it. We normally prepare the forms when someone is eligible and follow up periodically.

In your situation, it would be ok for the Owner to witness SpouseA's consent, as plan representative, if they were doing something similar. I don't think Owner can witness his/her own signature, so...no.

Note that the dates are "2003" and "2004." That was the point...

I think it has nothing to do with the type of contribution. The question is, is the plan self-directed or isn't it, and if so, then I think the answer as to "when" is "as soon as possible."

And FWIW, they do it that way for 1099 purposes; the 1099 SS # feeds off of the database. It's still an account for the deceased participant.

You're welcome and good luck. I don't blame the new TPA for being cautious, what with no info whatsoever until the money appears. But...they're involved and will have to make a decision. Maybe waivers from the various parties and potential parties in interest would make their decision easier. Keep us posted.

I think you'd have to try to figure out the earnings based on the actual returns for the highest-performing fund for the period in question. That's easier for the DOL to say than it is to do, so...well-meaning as it is, I doubt it is done very often. You could probably use any reasonable method to approximate the returns, but the decision-making and calcs involved in approximating can be just as tedious as doing the actual calcs. My guess is most folks use the DOL calculator and move on.

I doubt the participant got an economic benefit in lieu of the policy; it's possible the participant got (or was supposed to get) the policy itself as part of his distribution, in which case, the proceeds would go to his (policy) beneficiary, not the beneficiary under the plan. But there was no change to the policy beneficiary, so it is in fact the plan. I suspect at the end of the day, running it through the plan will get the money to the intended beneficiary; there might be some differences in taxation (good luck figuring out how much is taxable). If other money was rolled over and the insurance policy was taken as a taxable distribution, that would show on the 1099-R(s). Odds are that didn't happen b/c it would likely have been a large amount. The participant might have bought the policy and rolled over the purchase price along with other plan assets but again, that's unlikely b/c it would be a large amount. (Interesting that "...Plan has received a check..." - seems like someone must have filed a claim, no?) Another reason not to have life insurance in plans! Just curious, chris, what is your role?

I agree. The issue is discrimination, not lost earnings. (And the custodian should stay out of it unless there is some specific authority for being involved.) I'd probably scold and warn them and move on.

When immediate distributions are allowed (always in a takeover plan; my new plans say "after the end of the year and after all contributions have been deposited"), we'll pay what they have in there now and pay the rest (add'l contributions) when deposited.

Yes...well, it's not exactly a full-blown hold-harmless agreement but I have them make the decision, in writing, with an explanation of the pros and cons.

I can't say I read the RRs carefully but I think that once the sharing arrangement stops, that she has in fact terminated employment with 'er #1, and therefore would be entitled to a distribution but not continued vesting service. 1 hour of shared service would change that for me, but 0 hours sure sounds like a termination of employment.

Yes, you are correct. (What a mess!)

I think that is what Flyboyjohn was saying...but I don't think that you can just leave it alone, either. Obviously the intent was that these were 401(k) contributions and assets. I'd think about having each participant roll over their SIMPLE account into the 401(k) - obviously plenty of time has elapsed so the 2 year period is not an issue and they would be regular rollovers, and reported so on a 1099-R. Just ignore the rollovers in your own system (I'm assuming that you are keeping track of things in your own system, and not wholly relying on the investment company to do everything, including tax returns?) The only problem is that the IRS will almost certainly follow up, probably 2 or 3 years later, asking the participants to prove the money was rolled over, because they won't get a 5498 as they would for a rollover to another IRA, confirming receipt. Be sure to save transaction records showing the rollovers and you should be ok. I know it's not "right" but it's ultimately what would happen, I think, if you fixed it through a correction program.

To be qualified, a Roth distribution must be in the account for at least 5 years, and must occur after one of several events, one of which is death. So if the money was there for 5 years, no.