Bird

Can you give an example?

C'mon people, I said "generally." I won't waste everyone's time responding. Let's see what the original poster has to say.

A. What is your role in this (more bluntly, how do you not know)? B. If it is profit sharing then I don't see how it is excess. Profit sharing would be an optional contribution and once made, generally not recoverable. Who said it was "excess" and what did they mean?

why is the parenthetical "profit sharing" there?

Yes. The IRS would say the plan wasn't really terminated and at least needs to maintain the document.

Maybe I'm missing something - what is the significance of paying them before the termination as opposed to upon termination? What is the distributable event that allows them to be paid prior to plan termination?

Yes, I think that was my point...which perhaps was not well stated. Again, I didn't read every post but if there was someone there who argued that "minimum just means minimum and you can do more without regard to what the doc says" I missed it. I know there was something from an IRS Q&A where they appeared to say that, but my take is that they make mistakes in those all of the time, because of the way the questions are worded or just because they aren't thinking it through very carefully. edit: "IRS" for "IRA"

Meh. Skimmed them quickly and thought I saw the same discussion - ok if the doc allows it for one reason or another.

I thought it was settlor expenses that could not be paid by the trust. Settlor expenses being starting and terminating the plan, in my perhaps too-short hand. I don't think anyone would seriously question this as a plan expense.

I don't think I've ever heard that.

They can actually do a QP; it is the SIMPLE that is invalidated. I've heard people here opine that it is NBD; the SIMPLE IRA contributions are treated as regular IRA contributions for limitation purposes and if it's too much then the participant has to deal with it as an overcontribution. (I think) the idea would be that they would recharacterize all of the SIMPLE contributions as regular pay in the payroll system. Too many moving parts IMO and I have always just said to look ahead and drop the STUPID, er, SIMPLE as of the beginning of the year.

Beating this to death... Adjust your thinking as follows: I have a participant with an RMD, say $10,000 He wants to take more than that, say a total of $15,000 The extra $5,000 is not an RMD (Required Minimum Distribution). It is just a regular distribution, and as others have noted, it may or may not be permitted. It is eligible for rollover and thus subject to 20% WH.

Agree with Belgarath. I try no to invoke "common sense" in pension discussions but just 'cuz the doc says 100% doesn't mean you really can; it's just not enforceable. Taxes take priority.

Well, she can't contribute more than her comp but the catchup is excluded in the overall max contribution calc so she could get 30,500 as PS. I'm assuming this is a corp otherwise the husband's comp is reduced by contributions and everything changes.

When did he take the loan? How much?

So your argument is based on the premise that something is in the regs but not in the code, and therefore it doesn't apply. Just want that to be clear for everyone.

I'm guessing they are contemplating some lower deferral max, say 5%. So that someone making $1M would in fact be limited to $14,500. Possibly a holdover from the old (old!) days when PS was limited to 15% and deferrals counted as PS.

I think the vast majority of the time you can find a way to get the owner in without immediate eligibility, which is effectively what "everyone employed on the effective date" becomes. It's obviously more of a potential problem when the owner actually has employees, and the hire dates dovetail...at the extreme, you could have an owner "hired" on Jan 1 and employees hired on Jan 15 or whatever; yes I think it is problematic to include everyone employed on the effective date of Jan 1 and make everyone else wait. I've seen on this board that people think that just because the plan allows for everyone employed on the effective date to be in, and everyone else has to satisfy a waiting period, that it's ok because it is a pre-approved document. Maybe overly conservative; I don't think I've heard of any cases where it was raised. But I think I heard it discussed as a possible problem and for whatever reason that is stuck in my head.

There's not really a question of it being a plan asset; it's about how it is treated. Peter gave you the answer in the first part of his response, specifically "The remaining portion, if any, of the proceeds paid to the beneficiary by reason of the death of the insured employee—that is, the amount in excess of the cash value—constitutes current insurance protection and is excludable under section 101(a).” That means it is ineligible for rollover and that's the key. I give you a little credit for stubborness but you are flat-out wrong.

The problem with those elections is that they were supposed to specify how the money was to be taken out, and few of them do. You're probably ok to just start with regular RMDs as if he were a non-owner (assuming he is an owner otherwise current law would allow him to do exactly that anyway). For the record those elections were at least a little before my time...but I've had a bit of experience with them. None are perfect to say the least.

My emphasis. That means it is in fact paid for from the participant's money.

I would use an eligibility requirement that brings in the owner and use it going forward. It doesn't have to be immediate, it could be 3 months or whatever. I am very uncomfortable using "everyone employed on plan inception" when the only person(s) employed is (are) owners. If that's not discriminatory on practice I don't know what is.

"only"? I don't disagree but isn't that going to be the common, in fact contemplated, scenario?

Presumably this was something elected by the participant, and paid for from the participant's money, so...no.

No