Bird

I'm not sure which aspect you are asking for clarification on, but IMO if a check is cut in December, it is a distribution then for any/all purposes, and the day the participant cashes the check has nothing to do with the value for DB lump sum purposes, 1099-R reporting, or the 5500 reporting, all showing it as a 2020 distribution, if it is a Dec 2020 event. As far as the 5500, let's say it was cut from a checking account, and hasn't cleared by Dec 31. I think a case could be made that the check register would have a zero balance, and whether the check is cashed in Jan or March, I don't see why that matters, so the 5500 would show 0 assets at the end of the year. The contrary position is that you should show an asset at the end of the year and a corresponding liability for 0 net assets. I'm not sure if the gov't software will allow that on a final return. I'll be honest and say I'm not sure if that (showing the assset and the liability) is absolutely the "correct" way to do it.

To defer the taxes as long as possible.

I wouldn't

I don't know about that

The trust can indeed be dissolved. This is the only asset left after distributing cash and whatever else it owned. So they would be "distributing" (not in the plan sense of the word) the retirement account and "retitling" (again, not really at the plan level b/c it is still in the name of the original owner) - in the plan, this retitling means simply recognizing the bene of the trust as the direct bene of the plan. Thanks for the feedback, even if I don't agree?. If nothing else, it highlights the hassles and expense of naming a trust as beneficiary. (And said trusts might require review in light of the new 10 year payout rule.)

Hoping to get some feedback on this situation - we had a participant pass away a number of years ago - large balance - who named a trust as beneficiary. It is a "see-through" trust so we have been spreading the payments over the two beneficiaries' (grandchildren) lifetimes. One of the grandkids is now 40, and the trust says they can have whatever is left at age 40 (prior to that it was income only, and I think some percentage of the corpus at age 30 and 35 with the balance at age 40). We have been making payments to the trust which then in turn pays the beneficiaries. Do you think we can just start paying the bene directly? The trust could otherwise effectively be dissolved and I'm pretty sure that would apply to the plan account as well, i.e. the grandchild effectively is the direct beneficiary now, but just checking.

OK, I guess we don't disagree then. I wouldn't change my position if it is outstanding for a while but it can get...not pretty.

FWIW if a check is outstanding in a situation such as this, we will treat it as paid in 2020 for all purposes - i.e. the balance sheet will show $0 net assets and we'll file a final return. I guess I am disagreeing - it's an asset but there is a liability offsetting it.

There are fee-only advisors who charge too much and commission-based advisors who will do a good job and not "charge" (receive) too much. Granted, it is tough for a layperson to know what is "reasonable" and what is "too much" but I don't subscribe to the mantra that fee-only is always better. It's not unfair to ask exactly how much either party is charging and/or receiving.

My advice would be to cooperate, but not to the point that it disadvantages you beyond where you would have been had the mistake never occured. And that's tricky, to say the least. I doubt the bill collector will just say "sure, you work it out" because then they don't get paid. Of course they shouldn't have been involved in the first place. Just be very careful about taking money out of the IRA - if you "just" ask for it to come out, it will be taxed to you, plus subject to the premature distribution penalty if you are under 59 1/2. It might be ok to take it out as an "excess contribution" (which it is) and then return it. But you really need some specific guidance from someone who can see the details of your situation.

no Um...yeah, I'm uncomfortable with the idea of paying a debt collector. Did they ask you for the money back politely before going there? Well, in a short term scenario, I'd say there is no doubt that losses are not the recipient's problem. Obviously not (your) fault. If you were requested to return the money and refused, then I think it could be argued that from that point forward, you have some liabiity. Probably not. Again, I think it depends on when the error was discovered and what happened thereafter. I'm just giving gut reactions - I don't know that there are clear answers.

The plan should tell you whether "post year end compensation" is included.

I agree with previous comments. I'd add that most, just about all, people in this situation would roll the money to an IRA and then take distributions from the IRA; generally much easier. As noted, the 401(k) might have restrictions on payouts and also might charge a fee each time. Honestly, it's a very complicated discussion without simple answers; well beyond the scope of this forum. Investment options and fees, direct and indirect, are all critical (within the plan vs. within the IRA and to get into the IRA).

Thanks to both of you. We probably should have done the full maybe notice (for 2021) but I'm not so worried. I'm guessing FTW will come up with something that effectively replaces "maybe" with "no" and a "yes for this year and we are amending back to no" election.

Most of our SH plans are of the "maybe" variety. Based on the SECURE Act, I took the position that the end of year 2020 notices did not need the maybe language and just said "yes it's a SH for 2020." Then when I was writing a new plan for 2021, I automatically checked that option (maybe), but starting thinking mmmm, maybe I should just be saying "no" and amending retroactively. I asked our doc provider, FTW, and they said (conservatively I think) that if we check the "maybe" box then we need to do the "maybe" notice. But I'm thinking that this is just due to the fact that the docs are not amended yet for SECURE, and when those amendents are done, they will more or less fix everything (by eliminating the maybe option or exactly what, I'm not sure). Notice 2020-86 says in A-10 "Accordingly, the retroactive plan amendment rules of § 1.401(k)-3(f) no longer apply for those plan years." I think that means the maybe notice is defunct, dead, gone no matter what. I hope this makes sense. I'm not too worried about it but should I be (about not doing the maybe notice which the plan, as currently written, calls for)?

The form calls for the employER id number. It is sometimes advisable to get a separate plan id number, e.g. if the plan is not on a platform and you need to report distributions on Form 1099-R. We used to put the plan number on Schedule P but that is long gone/showing my age. I think the only place now the plan id number would appear on a 5500 form is Schedule R.

Also some plans say that a trustee is removed automatically if they terminate employment. In any event, the outgoing trustee should not have to sign anything; it's the plan sponsor's call as to who is trustee. I don't think backdating such an action really means anything, and would make it current, subject to any notice requirements as suggested by Belgarath. Dealing with the investment company can be a different matter; they might have their own hoops to jump through.

This isn't comprehensible. Minor details like what the QDRO called for, who is the participant and who is the alternate payee, would be helpful.

All that; I third FTW.

Shrug. Sounds like a contractual issue to me.

I guess we will leave this thread going for entertainment value? Let's see how many times a bot can egest random words from a blender.

This is an interesting thread. It's not really about how many plans, for the reasons mentioned - size and complexity. A different metric, not necessarily the be-all and end-all, is revenue. I think most owners feel their admins should be billing at least 2 times their salary plus benefits; some maybe 3X. I'm a lousy businessperson/owner and never really got to 2X. 300 plans with one person primarily responsible sounds pretty crazy to me. I imagine they would be totally and completely screwed if you left...

Our provider (FTW) has something similar, although it does not specifically say the "has been made available" part. We say, somewhere in the mountain of papers or emailed docs, that if they want to see the Basic Plan Document, they can download it from our website (which reminds me, I don't think the Cycle 3 doc is there yet...). Included with the BPD is the AA with all answers. I've had clients who were bound and determined to shoot themselves in the foot one way or another, but I don't think I've ever had anyone try to amend a plan on their own (!).

I'm guessing that is irrelevant in the case of a Premium Only Plan?

I have a prospect with the following scenario - Two companies, one a partnership 67/33 owned, and one an S corp, 75/25 owned respectively until May 1, then 100% owned by the majority owner. As of May 1, 2020, the partnership effectively dissolves in an asset sale. The S corp has lots of profits for this year and probably a couple of years going forward. Any thoughts on how to set up a DB for the (one man) S corp? Can we "just" make it effective May 1? I think a primary concern is the "effective" dissolution of the partnership; it's probably in existence thru Dec 31. But no discrimination problems since the only other person potentially in is an owner.