Bird

All good and accurate information. Now you can decide whether you want to have an open-ended argument with the box-checkers at large financial institution, or you can provide them with your advisory letter, which as noted is public information, so they can check their box and move on.

That's what I suggested way back at the beginning.

I don't have the time or inclination to debate this but these perceived problems are manageable.

But they can and will deactivate it. Calling that number is not as hopeless as you might think. If it has been deactivate, there is a procedure (basically faxing over a request to re-activate); see sample letter below. As a side note, if you are using EFAST, that system can and will essentially disable a TIN for its own purposes, and you might have to reinstall the software and start over and "add" it as if it were a new plan. No fun. EP Entity Control Unit Internal Revenue Service Via Fax: 801 620-6900 Re: xxx Inc. Profit Sharing Plan EIN: xx-xxxxxxx To whom it may concern: Our EIN for the above named retirement plan has been inactivated. Please re activate the EIN for our plan. The details are as follows: Name of Plan: xxx Inc. Profit Sharing Plan EIN: xx-xxxxxxx Address: xxxxx, Inc. xxxxx xxxxxxx Responsible person: (Trustee) Telephone number: xxx xxx-xxxx If anything further is needed please contact me, or our third party administrator: xxxxxxxxxxxxx Sincerely, (Trustee)

Agreed. A plan default bene des is every bit as legit as a written bene des.

I don't think so. Offset, by definition, means the loan has been extinguished by reducing the account to pay it off. "Q&A-9 defines a plan loan offset amount, in general, as a distribution that occurs when, under the terms governing a plan loan, the participant's accrued benefit is reduced (offset) in order to repay the loan." While a participant may rollover cash in the amount of the loan offset, I don't see how a loan itself may be rolled over once it is offset - it no longer exists. Having said that, if the paperwork/key entries have not actually been made to literally process the offset, I could possibly see tweaking the loan policy to make the actual offset date June 30 (if that is within the outer bounds of what is allowed) and do a direct rollover of the loan.

shERPA's analysis is spot-on. Definitely some issues that should have been communicated and cleared up ahead of time. I guess that means I am changing my answer.

I vote no.

I don't have much to offer except to say I agree with you. I guess that's why I'm instintively reluctant to use a paying agent. Does their attitude invalidate the distribution entirely - was there a distributable event other than a CRD?

Not filing will eventually cause more work/headaches than filing with zeros for the financial info. Assuming there are contributions in 2021, are you/they going to use an effective date of 2020 (will make the DOL/IRS think, correctly, that a 2020 return was not filed) or 2021 (wrong)? If they are ever audited and use "2021" as the effective date on the 5500, it will be compared to the date in the doc and cause a problem then too. Just do it.

Meh. You can do it if you like but it will only provide clarity to those who choose to read it carefully, i.e. no one.

Good Q/clarification; for the record I was assuming "pooled assets" but now that I think about how the question was posed it is likely it was about a pooled employer plan. As far as that latter arrangement goes, IMO most of the cost savings to be realized are in the "large" plan market (> 100 lives) where an (expensive) audit is required, and you are basically combining plans and getting one audit instead of many.

It's sort of old-fashioned but nothing wrong with it, especially for smaller companies. It's a good way to start up a small plan inexpensively; you can convert to self-directed later.

We've seen it; I believe it is a "warning" and not an "error." I love FTW but some of this stuff is annoying (e.g. in compliance, if the plan is top heavy, it is shown as a "failure" - it's not a failure, it just "is.")

I don't think I would call it an offset - I'd call it a distribution of the loan balance, and yes, I think it can be done. If the plan administrator and/or recordkeeper balk, then he could take a distribution of cash equal to the loan balance and then pay off the loan and get to the same place.

I think this would be similar to changing a plan year, and my somewhat vague recollection is that you would look at the two 12 month periods - the one ending within the plan year on the old method, and the one ending on the last day of the year on the new method, and credit accordingly - which I think is exactly what you are suggesting.

Does the plan allow participants to change their election with each payroll? If so, you might not have a problem at all.

Not "technically" - in fact it would be a controlled group. Let's be clear - you can't have an LLC that elects to file taxes as a corporation, and a Schedule C as the same business. There's either something funky going on, or it's not being explained to you very well, or you are not relaying it very well. In any event, commissions paid on a Schedule C can definitely be included in plan compensation. Of course it is the bottom line (net profits) on the Schedule C that you use, so if she is receiving commissions but paying money out to the LLC and netting the Schedule C to zero, then there is no income. I have no idea what is going on here.

😲

Somehow I doubt it is being taxed as a corporation, or else there are two businesses.

Maybe the plan wasn't really terminated since it took so long...terminate it again?

Technically true, but it would still have to be amended for interim law and why wouldn't you just restate it?

Is this one business or two? If it's one, she's not treating it as one. If it is one, then why does she have an LLC taxed as a corporation but reports on a Schedule C? If it is two businesses, then the Schedule C could be an adopting employer and they could be eligible earnings.

You have to send it somewhere

That's idiotic, but thanks for posting.