Bird

I think yes, for purposes of the "late deposit" rules which are focused on employers not holding onto the money for too long. You might have other issues about complying with self-direction, or maybe not.

The bigger problem is usually getting the receiving plan to accept; first the plan has to allow loans and second it has to accept rolled-over loans (or at least not specifically disallow rolled-over loans). I have an ongoing argument with Fidelity about rolling loans out of one of their plans; they're saying that if one participant terminates employment and wants to roll a loan out to another plan, they can't, but if the whole plan terminates, then they can. Doesn't make much sense to me.

I think the regs under 1.417(a)(3)-1 give the details (but they generally don't have to be "details" as in actual dollars of the payment stream). I agree with you; it's hard to understand how you couldn't show the normal form of benefit in dollars.

I agree, definitely ok to change as long as participant hasn't reached the entry date and entered the plan. There was a court case...was ready to make a crack about my fading memory...but it came to me (I think) - North Shore Auto Body.

As noted, you could have a pooled trust and buy no-load funds. If they want self-direction, they could contact T. Rowe Price or American Century; I think they will work directly with plan sponsors and have some kind of platforms... ...but I wouldn't want to have anything to do with it, as a TPA or as a "consultant". I've seen enough of them to know that they're not designed to work efficiently with a third party. They just want the money and couldn't care less about coordination with anyone else. And as also noted, you have to be careful about being sucked into an advisor role. More ideas, again not recommended but FWIW - ExpertPlan will work directly with sponsors on a turnkey basis, and Fidelity...if you don't think a $5,000/year minimum is too much (!).

I guess it depends on where you are sitting. If you are the participant, and want to get away with what you can, you ask for the rollover and cross your fingers. But if you're representing the plan in any way, I think you just make sure the default is processed (tax forms wouldn't be due until Jan 2013 anyway for a 2012 default, which seems the most likely scenario) and that's the end of the discussion. (I don't remember for sure but I don't think JH would unilaterally default a loan; the TPA or plan sponsor would tell them to do it.)

I'm with you. It should probably be part of the Annual Notice thereafter (or some document that coordinates with the Annual Notice).

A participant who is a More than 5% Owner at any time during the plan year ending with or within the calendar year in which such participant attains age 70 1/2 must get an RMD, even if employed, and must continue to receive RMDs even if they cease to be a 5% owner. I just want to make sure I didn't miss something else - if a partner sells out at age 65, but continues to work as an employee, then they don't have to take an RMD as long as they are working, right?

For the most part, we attempt to ID pending large distributions and raise cash near the end of the year so that those accounts are effectively segregated. Of course, that's not always possible, and we do declare special val dates on occasion. For the most part, I think you can rely on plan language allowing you to do it, such as ours (Ft. William): "Valuation Date" has the meaning specified in the Adoption Agreement. Notwithstanding anything in the Adoption Agreement to the contrary and in the event that a Participant is to receive a distribution from the Plan, the Plan Administrator may in its sole discretion declare a special Valuation Date for that portion of the Plan that is not daily-valued in extraordinary situations to protect the interests of Participants in the Plan or the Participant receiving the distribution. Such extraordinary circumstances include a significant change in economic conditions or market value of the Trust Fund. As far as an official policy...well, I don't know that you need one and don't know that you want one, forcing you to act when you might have good reason not to. But...I did have a plan that wanted to commit such a policy to writing, and did so, in 2002, but the file is corrupt and I can't open the document; sorry, but I really did try! I think it was something along the lines of "If asset values change by more than x% (10?) and that causes a participant's account to change by more than $x, then we'll declare a special val." But that almost forces you to do a special val just to determine if one is needed! Long story short, informal is best, IMO. fyi ASPPA asap 8-37, reprinted as asap 11-27, touches on this. Send me a PM if you're not an ASPPA member. BTW, I don't think it is discriminatory; more likely to be discriminatory if you didn't do one, in certain circumstances.

I saw one of my platforms say that the next one was due within 2 months of Jan 1, 2013...but I don't think that's right. Was hoping/planning to revisit it annually in the summer.

When you say "pooled assets with 6 investment options" that appears contradictory. You mean that the broker creates 6 pools of money and invests them 6 different ways, and participants direct their investments into those pools? If so, it doesn't sound like a brokerage window. If the broker is setting up separate accounts for each participant and then investing according to the 6 different goals, then that might be a brokerage window. I think we need to know more about how the accounts are run.

Yeah, I think for practical purposes you are stuck with either "free" providers who offer Roth or going with a more customized approach where you pay someone for a document. I honestly don't know if those simple prototypes that they use require theirs to be the only plan; I don't really think so - just that all of the assets of the plan be housed with the custodian sponsoring the prototype. So I think it is possible to have two plans and split the money as you suggest. But (for me) the effort of poring over the document(s) (and the effort of just getting the whole document(s) in the first place!) to make sure that everything would be ok in this scenario isn't worth the time/trouble/expense of just writing a "custom" document.

We're doing it. Still waiting for that required guidance from the DOL...

Thanks Kevin! I hate to think how much time (and clients' and participants' money) is utterly wasted on this issue.

It's not deemed anything. The cure period can extend beyond the original 5 year period, IMO.

I don't have any, other than experience and knowledge; and as Austin notes, there isn't any real dispute about it. The time I want to spend on this was used up a while ago; readers will have to make their own decisions. But just looking at the text posted from the Pub, I can see that they are short-cutting the calcs and telling a self-employed that they are assuming equal (and maximum) contributions and basing the calcs on net earnings from self-employment before the self-employed's contributions, and the applicable percentage indeed is 20%.

For the uninformed and/or newbies, if self-employment income before contributions is $650K, and employee and partner contributions bring earned income after contributions to $600K or so, then plan compensation for the partner is $245K, and the contribution rate is 32.5/245 = 13.26...%. Absolutely no doubt about it. I didn't look (again) at the IRS Pub cited, but it is either wrong or makes simplifying assumptions that are mis-applied if used in situations such as this one.

They are required but what are the consequences of non-compliance? Exposing the trustees to a complaint/lawsuit by the participants that they didn't have enough info to effectively manage their accounts? I'd weigh the costs and risks on this.

I agree with you too. There is a fix - start a new plan with the design you want and contribute to it, then merge the plans after this year.

My understanding is the same as yours - they want to visit the employer's office to make sure it exists and is what it says it is, but the audit can typically be done elsewhere. I think you should push back and ask if this is a change in policy or what, and do they have new guidance? I suspect it is just a rookie agent who doesn't know how things work in the real world.

It is proper for the plan to be the beneficiary of the policy. The participant's plan beneficiary designation will then funnel the proceeds to the beneficiary. The at-risk portion is tax-free and that flows through to the bene so there's no loss of that benefit.

I don't yield. The line 9 instructions say Do not include salaries and wages reported elsewhere on the return, such as amounts included in cost of goods sold, elective contributions to a 401(k) cash or deferred arrangement, or amounts contributed under a salary reduction SEP agreement or a SIMPLE IRA plan. and the line 18 instructions say Enter the deductible contributions not claimed elsewhere on the return made by the partnership for its common-law employees under a qualified pension, profit-sharing, annuity, or SEP or SIMPLE... I think you have to read it very literally - they are not telling you to deduct them on line 18, they are telling you not to deduct them on line 9 if they are included somewhere else (presumably line 18). I'd cautiously conclude that maybe you could in fact split them out and deduct the net wages on line 9, and the 401(k) deferrals on line 18, but you also have to nod to reality - most or all accountants are just including 401(k) elective deferrals in wages on line 9; I just talked to one and he couldn't begin to understand why they weren't part of wages. I have a sense of deja vu on this one. I hope I am arguing the same way I have in the past.

OK... That's really what I was saying too. (My emphasis on "employer contributions.") But Nate asked about "401(k) contributions" which I took to mean "elective deferrals" which should be included in wages.

Line 18 is for employer contributions for employees. That may have been what was meant ("profit sharing") but that's not what was asked ("401(k)"). FWIW. If we are talking about employer contributions, then yes, they are an expense that must be subtracted in order to determine earned income.

If you mean 401(k) contributions made by employees, then they would be part of their wages and salaries.