Bird

Maybe it's not that significant compared to all of the other minutiae we handle, but I'm grateful that we TPAs don't have to deal with it.

What is the significance of this question in this context? 49.99% is 49.99%.

What is an installment payment if it is not irrevocable? Isn't it just a payment? Maybe I'm being dense but I don't understand this at all.

Maybe its me, but if the installment payments were not irrevocable then they're not really installment payments. What is the duration of the installment payments that is problematic? Or are we talking about someone who started taking distributions before age 59 1/2 and did installments to avoid the premature distribution penalty?

Were the (so-called) installment payments elected irrevocably? I'm not really sure what to make of this; if we have RMDs we pay them one at a time and don't call them installment payments. Also not sure how a MP plan would not be subject to QJSA rules.

You're missing some words there. Yes (or roll it to an IRA). The loan is indeed an eligible rollover, but if it's not rolled over, it is effectively distributed and therefore taxable. Under no circumstance does it simply go away.

That's a great question. My initial reaction was "it's ok" because you're just clarifying what it means to be employed (or not) on the last day. But the regs refer to "...employment on the last day of the plan year..." which says to me that you can't very well say someone employed and terminated on the last day is, well, NOT employed on the last day, for this purpose. Unfortunately the examples refer to "...employees who have not separated from service as of the last day of the plan year..." which muddles things, at least for me. In any event, no way would I use a term date of 12/31 and say that person is not employed on the last day of a calendar year.

This is confusing. If you say that those who terminate employment on 12/31 are eligible, who/what is saying they aren't?

The plan termination date is one thing, the final distribution date is another. Your statement about making contributions after the short year doesn't make sense - let's assume a calendar year plan, term'd on 3/31. Terminated just means no new contributions are accepted (accrued contributions, such as the SH for the prior year, are fine. That plan can stay open for "a while" (generally not longer than 12 months, although going beyond simply means you have to keep the document updated). Let's say you leave it open until Aug 31 in order to complete the contribution, and wait out the 60 day requirement for the other plan (as noted there are workarounds for that but I digress). The deposit is made Aug 15, everyone rolls out on Aug 31. Your short year is 1/1-8/31. No need for any special justification; things just take time.

I for one thought there were a lot of important points brought out. You started out by saying "If it's related then a whole host of restrictions can still apply regarding in-service distributions, hardship availability, and joint & survivor protections." But if it was in fact a rollover, then none of those things apply, even if it is a related rollover. So the naming discussion was the key to the whole thread. Now you're saying "...across multiple TPA's, and just about every unbundled recordkeeper out there; after a provider change, or just a few years that knowledge is lost" (effectively saying, I think, that it doesn't matter, or at least can't be tracked).

But the gist of this thread is that if participants actually rolled the money over, having been offered all options and waiving the annuity benefit, then it lost the MP flavor and is not subject to J&S. If the money was transferred and they didn't have to waive the annuity benefits (and get spousal waiver if applicable), then it was something other than a rollover. We generally did these as mergers.

Exactly. All Qs raised should be addressed in the QDRO procedure, which I believe is a requirement (to have a QDRO procedure).

I agree with Lou S. If it says "rollover" of either type, then you should be able to take that at face value and not worry about the sources. If it was MP money voluntarily rolled over, I'd like to think we would ID it as such and not call it rollover. Having said that, I believe we have a situation or two where we do call transferred money "rollover" because it is easier - but only if it doesn't really matter based on money type.

What C. B. Zeller said is key here. Whatever you do, it seems possible if not likely that all those terms should be 100% vested. Having said that, I believe the specific concerns about vesting and contributions relate to amendments, specifically -11g amendments that add contributions that are not part of a formula, which must have "substance." If your allocations are part of a plan formula, then, in theory, you are ok (ignoring the elephant in the room of partial termination).

No. Start by asking what they are trying to accomplish.

We're in a similar situation. Personally I don't think there are great net advantages to MEPs and PEPs in the smaller market; of course there are multiple factors and it's important to drill into the total costs, but it's easy to gloss over that stuff and sell it as the hottest newest thing. However, there is always the issue of perception, and sales people pushing things that might or might not be improvements - and that's the problem. I believe there will be consolidation. Plus it seems the trend is towards the "no service" service model (e.g. ADP and Paychex), and there seems to be consolidation in the small professional fields, especially medicine, and the bigger companies that are gobbling up the smaller companies just offer 401k with some kind of match. Anybody can do that. I'm in the fortunate position of not having to worry about it myself and haven't paid that much attention so I might be missing something.

I believe this is correct - i.e. my previous answer was wrong; it must be paid out over 5 years, not 10. From the IRS (my emphasis): The 5-year rule generally applies to all beneficiaries if the owner died before 2020. It also applies to beneficiaries who are not individuals (such as a trust) if the owner died after 2019. If the owner died after 2019 and the beneficiary is an individual, see 10-year rule next.

Yeah but under new rules I don't think it matters.

Good luck with that

Under old rules, I think the idea would be that you would have to determine designated benes by Oct 31 of the year following death and start payouts by Dec 31 of that year if the bene(s) wanted a lifetime payment option. I guess the consequence is that would have been under the 5 year rule. After SECURE, non-spouse benes have to take everything within 10 years (with some exceptions) so I don't think it matters too much. (All this from memory without checking on new rules so others can chime in and correct me if I'm wrong or missing something.)

You mean the SF? I think 8f.

You're going to fund the IRA and pay the taxes? That's a windfall; I wish someone would screw up my finances that way.

I've seen that and even checked the current FTW trust agreement but it's not there. Honestly I'm leery of having automatic things like that as the results may not be desired. Bottom line is this is no big deal and the plan should be amend-able to remove the one trustee.

It sounds like $8000 was withheld and submitted for taxes, and $32,000 rolled over? So the $8000 is taxable. As JOH suggests, it is worth trying to roll over the $8000 and ask for a waiver on the 60 day limit. Not everyone has $8000 sitting around though and I doubt the other parties want to be involved in lending $8000 to get off the hook. Failing that, then someone is definitely liable for the 10% ($800) penalty. Some taxes would be due at some point so also paying all of the taxes at the marginal rate would be overcompensating, IMO.

Good grief indeed. If they used the company name and the company tax id, then it's not exactly a stretch for someone (IRS) to say that they just shifted money from one business account to another and did not fund the plan. It's a bigger stretch to say they opened a plan account.