Bird

I say yes.

I disagree that it's just a salary deferral change practice. You could get the same result with a once/year salary deferral change but that's apparently not how the plan reads. I guess it can't create a discrimination problem if no HCEs are getting contributions, but at best it's a pretty arbitrary rule, and it pretty much stinks if you ask me. I also wonder how this is written into the document and whether they have applied for a FDL for the plan - I don't believe you'll find this provision in a prototype or VS plan.

I think you are correct; the disclaiming person has to in effect say "no thanks" and let it go wherever it would have gone had that person not been entitled to it. Then, that person is ignored completely for all purposes.

We've seen some for late filings, but I suspect the late filing triggers an earlier letter than a no filing. The IRS has said they're working on an EZ late filing program; no details. It might be best to get everything in and beg for a total abatement of penalties...or not.

Perhaps I'm the only one, but I'm not seeing the need to issue a 1099. If there just happened to be a couple of payments that spilled over, that doesn't constitute default, unless your documents are that strict. (And I don't believe that a provision that says "notwithstanding...it's all due on the five year anniversary" is enough to declare a default.) I understand that a loan by its terms must call for repayment within 5 years, but I'm of the opinion that whatever is due at the end of the five year period is subject to the same grace period as any other payment.

I don't think it's too late to un-do the termination if money has not yet left the plan, but other than that, you have outlined the (one) possibility for making employee contributions - a SIMPLE IRA.

Exactly. The time spent trying to figure it out is more than the time to just name a new trustee. The fact that the assets are held elsewhere implies that something is messed up anyway.

I'm not sure what you're asking, but if it is about the costs of an additional page on an existing website that direct cost s/b zero. I think it's just a matter of who is maintaining the site and how much they charge to put up the info. I don't believe it's a very challenging task.

I'm not sure what alternative you might be considering, so I'll say "yes."

I agree. Right; that's just stupid, bordering on moronic.

If you follow the instructions, the answer is no (true, it's voluntary, but it's not "...in the same year as the separation occurred." If you're mailing in a paper copy I think it is fine to have a 0 on that line (and line 6a). If you're filing through FIRE you'll probably get an error; pick a line (6a/b) and put it in there just to get it through.

...Doesn't matter as long as there is one in the file if the plan is audited

Austin, I'm not sure. My notes from when they changed the 1065 due date indicate that all contributions are now due 9/15. But really, if the contribution is deducted on the 1040, and the 1040 is due 10/15, I'm not sure why there should be an earlier due date. i think there's no question that employer contributions for the employees (e.g. PS) are due 9/15, as they are shown and deducted on the 1065. I think it's one of those things where I'd say up front "contributions are due 9/15" but when push comes to shove as it does in this case, I might say "go for it."

IMO it is a plan "and trust" so a trust account is ok. The 1099 reporting won't hurt anything (be sure to have a separate ID # for the plan/trust; don't use the employer ID, although my understanding is the IRS doesn't do any reconciling of investment 1099s to employers anyway). You might be able to ask them to suppress 1099 reporting anyway. But as noted, you might want to just go elsewhere.

I agree with the above, but would say that you don't want to be overcautious. I think if someone keys in a wrong number it is, or should be, a mistake of fact, and I would rather be prepared to argue that point than mistakenly move it into a "forfeiture" account and erroneously allocate it or use it for fees or whatever when it's not a forfeiture at all. (FWIW, it would seem that in this day and age, there's a "system" issue if contributions and wires aren't in sync.)

I could argue that if his deferral election is "$16,500", then that amount is known as soon as it is written on paper or wherever and determination of income is irrelevant to determining the amount, so it is due asap after the end of the year. I'm not so sure that electing a percent, and not knowing the amount to be deposited until much later, is a valid "excuse" for putting it off until Oct 15. In any event the election must be in place before the end of the year. But...from a tax standpoint, I believe it is definitely ok to put it in this late; it's just late for the prohibited transaction rules. And I don't think the government cares that much about sole proprietors getting their own money in on time.

In my world, the new TPA takes the lead on this process.

Jim, I understand the kind of plans you're talking about and think it will be prohibitively expensive to comply. Even plans that are with only one fund family and daily valued but not on a platform (i.e. each participant has a true retail account) are problematic at best.

I don't have any regular 5500s with insurance but no, I don't treat it as an expense in general. As Bill puts it, it's really just a transfer from one investment to another. (With the exception being term insurance; that's a pure expense.)

Agree with the first statement. Curious about what you mean by the last sentence. On a full 5500 it would be listed separately but on an SF it's just part of the total. We do not treat a premium payment as an expense.

Hadn't thought of that but I guess so; thanks for the reminder. Yes. I think so. But frankly, there's not going to be much in the way of consequences for failure to do so. First, the participant would have to complain, and in that case, you just give them a statement and it goes away. I mean, I don't think the DOL is going to be coming around saying "show us a copy of the final statement for so-and-so. I'm not saying we shouldn't try to comply but...

It's a "distribution" in which you elect to "roll over" your account by a "transfer." (It's a rollover for tax/reporting purposes.) It is, truly, a distribution from Plan A that happens to be a rollover. Any payout from a plan to or for the benefit of a participant is a "distribution" from that plan, for purposes of the plan's income statement. A trustee-to-trustee transfer is generally a transfer from IRA A to IRA B (typically initiated through the back door by IRA B's custodian). You can't do that in a qualified plan because the distributing plan must generally provide certain notices and get the participant's (and maybe spouse's) approval for the transfer. But don't feel bad because financial institutions don't understand and try this (initiating a "transfer") all the time.

Actually it's more the opposite; leaving the policy in the plan converts otherwise tax-free death benefits to ordinary income. When you die with a policy in a plan, the tax-free part is the "at-risk" portion (face amount minus the "cash value" (FMV)) (plus PS-58 costs already taxed) - i.e. the cash value is taxable. So if the policy increases by 14,000 each year, the tax-free benefit decreases by that much and the taxable portion increases by that much.

That's a good question. I think the technical answer is that, unless the partners each adopt the partnership's plan as adopting employers (i.e. the way this is being treated, each partner has his own commission-based business in addition to his share of the partnership), you ignore the commissions. But then the question arises, is this pay arrangement legitimate, and can/should the individual businesses adopt the plan? It sounds like if all of the partners who get commissions own 100% of the partnership, then you have a controlled group and it might be easiest and best to just have all of the individual businesses adopt the partnership plan, and count the 1099 income. Whether the pay arrangement is legit or not is another matter. But if there is no tax avoidance behind it, and I don't think there is, I'm not sure it's a big deal.

I just said there is no such thing as a Solo/Individual 401k...but to answer the question you meant: If you have a 401(k) plan that only covers owners (not quite that simple), then you have a qualified plan. The plan itself is a "regular" QP - you still have limits, document requirements, etc. But, most of the testing compliance stuff goes away because there is no one to discriminate against. And, for 5500 filing, you don't have to do it all, if assets are under $250K (except in the final year of the plan) and you can file an EZ if assets are over $250K.