Bird

Not if the plan is terminated. The plan could instead be merged into one of the other plans.

Yes on all counts, including the termination timing. A plan could be terminated at any time...I guess technically if the corporation ceases to exist and the plan is still alive, it is fair to ask who is doing the terminating and sponsoring while the plan exists, but practically speaking, no one is going to fuss about it as long as there are no liability issues.

Once it's in it doesn't matter, so I've always seen the money commingled. But it's important to know how much of each kind was deposited, so (I think) most vendors will note the source as it is deposited and (maybe) subtotal it on a report at the end of the year. Whether it was coded correctly by the person making the deposits is another matter!

Catch-ups are determined when a limit is exceeded or a test is failed. In this case, in theory, the $5,500 is not known to be a catch-up when it goes in, but it will become one when the other contributions hit $49,000, causing him to exceed the 415 limit, so any deferrals over that become catch-up contributions. So...what they're doing works for me.

They want to get things done, and I don't blame them. The PA should be giving the participants a form that says "what do you want to do about WH? If you don't reply we will do X." Personally, I'm happy to keep some distance between large investment companies and participants; they're often making them sign off on spousal consent and all sorts of stuff that isn't right but they think gives them extra protection.

When you say Z "maintains" a plan, do you mean it started a new one after the company split? Maybe it doesn't matter. We would typically have XY adopt the old XYZ plan as the new plan sponsor. You might want to have XYZ be an adopting employer for a while if there might be additional contributions coming from that company. We would typically have some kind of resolution from XYZ permitting the change in sponsorship. If XY has reason to be concerned about the existing plan, then you might want to terminate it and have XY start a new plan. Otherwise as described above. You might also consider doing a spin-off of assets for the Z employees to that plan.

We do it with a resolution/amendment (not a whole new document). We also have the old sponsor sign a resolution indicating that sponsorship by the new entity is ok.

Yes, we are doing it; PPA requires it. I doubt you are alone in not doing it. PPA also said the DOL was to issue regs on this within, I think, 6 months, and we're still waiting, so I don't know if they can enforce it with a straight face. We are (I am) old school and we reconcile every transaction in our pooled accounts. So we have the data readily available to tweak into a list of assets; it's not that big of a deal for us.

I don't think anyone without intimate knowledge of your plan's "qdro website" could really answer the question. I mean, the text is perfectly clear, but we just don't know how "the form" gets processed. My guess would be that if you specify an amount, and interest is to be added to it, then future contributions will in fact be excluded.

I agree. I think it's fair to say that the conservative position is not to try to count unpaid hours, and the IRS is unlikely to ever say "no, no, no, Mrs. Owner should have come in in year X-1." But that doesn't mean it is right.

If you have an existing plan, the real question is, "what does the plan say?" If each participant is in their own group, then sure, you can pick and choose. If not, then you have to work within the terms of the document. Not quite true; you can always increase the NHCE's contribution.

I think that's correct.

Yes, and just put it in the file. (I enrolled the first one without having the form in my hands - gasp.) Yup. We did this rather reluctantly but having this end of it under our control has its advantages.

I'm usually over on the retirement plans side of this board but I have a little knowledge about POPs; we have written a few now and again. I think the broker is correct; enrollment is automatic unless an employee signs a form to waive out, which would be unusual. That's at least how ours are written. And I wouldn't be too worried about exposure. I think there are many arrangement that are being treated as POP plans but without documentation, and from what I can tell, there is little or no enforcement. That doesn't make it ok, but your efforts to become compliant are probably good enough.

We have to be careful discussing fees here...but that's probably not unreasonable.

Just for the record, mandatory withholding was instituted to offset some other, unrelated budget expense or revenue decrease - by instituting WH in the year of payment, the government was able to recognize additional projected revenue for that year (instead of the following year when it would have otherwise been paid when participants filed their 1040s - so it was really just shifting money forward one year). Kind of, ah, quaint, I guess, considering that it was probably on the magnitude of a few billion and we are now running a deficit of 1.4 trillion and it's not getting a whole lot of attention. I don't think there was a problem of participants not voluntarily reporting distributions because 1099s were being issued, even in those dark ages.

I read it...once, and left it open to read again some other time. With any luck, my browser will crash and I'll lose it, and never think about it again, because I'm pretty sure that paragraph that seems to say "ignore it" is the important piece of information.

No, just report what actually happened with $0 withholding. There is a requirement to withhold, but the consequences aren't that dire - the participant would have to initiate some action to ask the trustee to submit the required withholding, and the trustee would say "sure, just as soon as you return the overpayment." I don't believe the 1099/945 side of the IRS does any enforcement of the mandatory WH rules - they couldn't, really, not enough info.

Before any participants have earned the right to an allocation under the existing formula and/or definitions. That could be as late as the last day of the year if the plan requires employment on the last day, or it could be before anyone has earned 1000 hours, or 501 hours, depending on the requirements for allocations.

This is one of those all-too-frequent things where I had the answer and don't quite remember and can't find the notes on it. I know I've posted before, with some certainty, whether that was an "often wrong but never in doubt" moment I'm not sure. I'm going to go out on a limb and say you do not count it; I think it's added back to the W-2 as a reporting convenience more than anything else. Using "W-2 compensation" as the definition of compensation doesn't necessarily mean you're going to find the right number on the W-2.

You're probably not going to find any plain English descriptions from the IRS or DOL about what investments are permitted. If this is a participant-directed plan, as one would infer from your statement about "...participants being able to invest in everything from gold to buying a farm inside a 401K plan", then it is almost certain that the plan should have parameters on those investments, or the SPD or other employee communications. Real estate and other non-publicly traded assets are bad enough in a trustee-directed plan; I don't even want to think about it in a participant=directed plan.

Jenny, when you say "trust account" are you talking about a bank checking account or a brokerage account?

We're doing it - just processed the first one successfully yesterday. I don't know anything about an SEC audit but we're not an RIA. As an aside, I can't say the process was as easy as I had hoped. The instructions are not quite updated for the latest version of the software, and I just have the general impression that software developers are required to take an illogic course somewhere in their training.

There was a thread on this - I saved the printout - and the answer is that you don't report it, confirmed by the IRS over the phone, for what that's worth. I'll try to come back and link to that thread. ... Here it is: thread from Jan 2010 (edited to add link)

The successor trustee. If you don't have one, then a new trustee should be named, perhaps the executor of the estate would have that authority as the effective plan sponsor if the business and plan are being wound down, or if the business is being continued as a new entity and the new entity is taking over the plan sponsorship, then the owner(s) of the new business would have that authority.