Bird

Wow, that's never been on my radar in the circumstances described. Example 1 is where there was an ongoing plan, and then is amended after everyone else is gone. I don't know how you can discriminate against someone who is not an employee (and was never covered by the plan). I get that the example has some similarities but in my mind it is loosely akin to the question of vesting for employees term'd prior to plan termination, where you have to look at whether their terms were part of that event or not. Kind of looking at the overall history of the plan.

See response in other thread.

Not sure if you are asking as the reporting entity (plan) or receiver (participant) claiming exemption. As far as reporting goes, I believe we have to play it straight - that is, if someone is under 59 1/2 then it gets code 1, unless one of the other (non-Covid) exemptions is met. As far as claiming relief on the 1040, that is in fact done on the 1040 or one of the schedules/forms...8915-E maybe. I'm not sure if that ties in with Form 5329 or you don't file 5329 at all.

Exactly. It is permissable to use the employer ID but then you do get mixed up with payroll WH and it is not a good idea (and the worst-case scenario of the IRS seizing plan assets although I have to believe they were returned...but who wants to be involved in trying to fix that?!).

I agree. Although I suspect they didn't consider a layoff a termination of employment. And someone should have said. when you went to repay it: "hey do you realize the loan defaulted and this does not fix that?" (!)

Did you repay the loan to the plan or had you rolled money to an IRA and repaid it there?

That's probably correct; thanks. I stand corrected.

No practical ramifications. If 1099-DIVs are suppressed on the accounts, as they should be, then the IRS isn't getting anything to find anything wrong with in a cross-checking process (and I believe if it is a corporation they're not cross-checking anyway). Having said that, we do exactly what you do. (I guess) the former TPA was waiting until there was a distribution to get an id number? Or in fact using the 'er id for distributions...that opens a different can of worms. I see not getting a trust id number right away as just delaying the inevitable deactivation, but it's not really a crazy approach.

It's ok to amend now in my book. Whoever "owns" the plan would sign; sounds like the old employer to me if it was an asset sale. Someone - an IRS agent I think - once told me that rolling tradable securities was equivalent to a "cash" distribution; "in-kind" referred to company stock or other illiquid assets. I don't think that was right but I do think that no one would care.

I would look at what the money earned in the DC plan and return the principal and those earnings. (Ignoring questions about what the appropriate DB values were and when payouts should have occured.)

If you are talking about a loan offset where the participant (you?) rolled an equivalent amount of money to an IRA, it is just that - a rollover. It is pre-tax money once it is in the IRA.

Thanks again to both of you. This is not insignificant.

All good info, thanks. What is your take on the apparent change to attribute ownership, so an owner's children in a plan would not prevent it from being a "one-man" plan?

Wrong, and that wasn't the point of the apparent change in 2020.

Does it matter at this point (Jan 13) or are you just trying to figure out the penalties? And someone took $2M in cash?! Not having looked at it in a while, I'm leaning towards next day filer, but am not sure. Totally unhelpful, sorry!

I hadn't even thought of changing the interest rate. I suppose you could, if there is something in the loan policy saying you do that for reamortizations (but reamortizations aren't generally contemplated). Did you add one year to the loan payment schedule? Generally I'd expect payments to be lower.

Correct. There is a new table but it is effective in 2022.

I probably know the answer to this but will ask anyway...employer has a SIMPLE IRA and only owners are contributing in 2020. If we start a 401(k) in 2021, and we cover NHCEs, do we get the credit? (NHCEs were eligible in 2020 but none were contributing.)

Reading between the lines ("and penalty") this participant is less than 59 1/2 years old. Your plan has language saying that 401(k) deferrals can't be withdrawn prior to age 59 1/2 as an in-service distribution. Therefore it is not a distributable event. (The ERD is effectively not applicable to 401(k) money.)

What I'm saying is - you jaywalked, in the middle of the night, on a country road when nobody was around. Now you want to report yourself to the police and pay a fine. I will spell it out for you. You enter the person on a 2020 8955-SSA. Nothing bad happens. It's not like anyone knows that the person should have been reported in 2014, 15, or whenever.

You have 60 days to do a rollover. It gets a little bit ugly if taxes were withheld...using your round number of $400 net received, the gross would be $500 with $100 of taxes withheld. You can roll over the full $500 - the other $100 comes out of your pocket. If you roll over $400, you will be taxed on the $100 that was effectively not rolled over because it went to the IRS.

Thanks, that's how I was seeing it and not sure I described it properly.

I could be wrong but I never saw the 5500 and the 8955-SSA as linked (you are describing "a return that requires an 8955-SSA"). I would put the participants who weren't reported on a current 8955 and move on. Just think about it a little bit, and if you don't get it, keep thinking.

We've done an occasional spin-off, say where two docs split up. I'm quite sure we have created a new plan and then spun-off the assets in a separate transaction. Yeah it is considered a continuation of/from the original plan in a way but I don't think, e.g., that you would use the original effective date of the old plan when setting up the new plan, nor do I think you would call it a restatement. I'm not sure if I am disagreeing...

We ask in various ways until we are satisfied that we have the right answer, or at least have a paper trail that we can blame someone else for not providing accurate info (only half-joking). Often it goes to your last item - ask the accountant. Experience and getting a feel for things goes a long way. As far as the original question, I believe it is highly unlikely that the partner is not included; as noted by C. B. Zeller, "employee" probably includes "partner." On a somewhat related note, I've had accountants state that sole props or partners can't get contributions because the plan definition of comp is "W-2." Sigh. W-2 comp does include self-employment income; you don't literally (only) read numbers off of a W-2.