Bird

We've written a handful of these over the years and as far as I know, there were no required amendments...until a few weeks ago, I was talking to someone at Fort William and they said, well, something different was required and would be sending some info. Glad this came up b/c I forgot about it. I will share if I learn anything.

I'm with Belgarath.* That old bene des covered him as a participant. I don't think the fact that his account was closed even matters; if he were still an active participant I would not be looking at his participant bene des for guidance. *And Bill Presson; I'm piling on but I had started writing this as they were responding and didn't want to waste the finger effort.

Not what I meant. I don't see anything unclear about what I wrote. You said the client has a SHNE - Safe Harbor NonElective. In my world, that means everyone gets 3%. (Subject to some potential exclusions, such as HCEs, and whether it is set up as a maybe as I described.)

It's not a question of who received what in the past. It's a question of whether the SHNE is hard-coded for 2020 or set up as a "maybe" type where it could be amended and notice given by...yesterday, or is it today...to adopt the SHNE provision.

We have a fair number of these plans - mostly small enough that we don't worry too much about the risk of a lawsuit. Generally I agree with C. B. Zeller. Not too terribly worried about trying to manage by average age or other actual age weighting. We do try to stay ahead of things and suggest raising cash if it is apparent that a large distribution is going to be in the works. We're (TPA) not typically directly involved in the asset allocation strategy, but we (I) have been doing this long enough to know red flags when we see them, and to say "hey, what are you doing here?"

My notes say the 8822-B is optional as of 12/2019 and that we need to review going forward. I'm not sure how accurate that (optional) part is because I don't see anything indicating that on the form or instructions and the latest version is in fact 12/2019. But...the 5500 series is not going to use a plan TIN anywhere, is it? (I think) a plan (trust) TIN change of address should be reported as per the instructions on Form SS-4.

We would restate and use the new EIN; probably include the sole prop as an adopting employer or at least credit prior service.

I think you have to know how they are allocating the contribution expenses for employees amongst themselves. Might have to do some manual calcs or trick the system by dummying in some numbers. Don't know Datair to opine on how that would be done.

My first reaction is that this isn't a great example of "good faith" investing; too conservative. My second reaction, after reading some details, is that the investment policy appears to have been reasonably carefully thought out and they were deliberately doing what they thought best. Kinda sucks and if it were my company I'd say "fine, let's terminate the plan and make no more contributions." Still doesn't concern me and my $500K, $1M, even $10M clients. Thanks for posting; good info just in case we would need to point to something to shake somebody up. I'm sure some advisors will use it as proof that self-direction is required but it really is proof that you need to be reasonable, and the bumpers on reasonable are narrower than some might think.

Agree with JM. It is unfortunate but you'll have to get an attorney involved. It seems highly unlikely that there would be no gains or losses credited for that long a period of time - "date of valuation" doesn't necessarily mean date of initial valuation and in any event it would seem that you went through a process that was approved all along the way, and the ability to come back 6 months later and try to recapture something is shaky at best. We're only hearing your side of course but from what you're saying, this sucks. Good luck and let us know how you make out. One question - is this a big company or small company your ex worked for? That might give a hint as to who is making decisions for the plan and how serious this is. It could be that your ex just rattled somebody's cage and out of fear or whatever, they are going after you, but maybe just to see what happens. I can't really advise you to ignore it, but it could be just an attempt to see if you will cough something up without a fight.

Thanks for taking the time to read it carefully. I see what you are saying...

"Settlor functions" such as starting and terminating a plan should be paid by the employer. I can find a lot of latitude in my billing for "adoption" vs. "administration" if needed; will try to carve out some small amount for adoption (or termination). Not that anyone is checking.

I phrased the question awkwardly - I know they can be excluded and not get a contribution, but can they be excluded from testing (i.e. ignored/treated as if they don't exist)? Say we have an owner and 1 NHCE; the NHCE leaves. No 401(k), no SH, just PS. In a standardized plan, the plan language would exclude the NHCE. In a non-standardized plan with groups, and no allocation conditions, I don't think they can be - CuseFan said it pretty efficiently.

Ferenczy Benefits Law Center has an article with a chart and nowhere does it talk about previously having a vested benefit, at least that I can see. The language cited in the original post, and our docs, is present tense and I'm not sure why it should be interpreted as past tense.

If we have everyone in their own group, and no allocation conditions, for testing purposes, can we exclude those with less than 501 hours and term'd? I don't think so/just checking.

Is this definitely the case? It's a stock sale. Being honest, I don't know for sure but the company still exists and I'm not quite sure that the underlying ownership matters...or maybe it does? Is the upshot that the company itself, while changing hands, is not part of a controlled group (with itself) due to the change in ownership?

What you described is correct. A SIMPLE IRA is effectively a regular IRA after the 2 year period.

Under certain circumstances, none - that's the point. If you want a qualified plan (one where you get deductions to reduce income) and you have eligible employees, you can't arbitrarily exclude them (I'm being very general here). The question is too open-ended to answer well. As Bill Presson notes, you need to talk to someone who is knowledgable about plans - likely not a CPA - who can look at your existing plan and evaluate it for booby traps, before you buy or start another business.

I don't see it specifically as a cutback issue. A safe harbor issue though, in a stock sale.

Non sequitor. If they are paid on a 1099 they are not employees (unless they are misclassified). If you are talking about real estate brokers, I think it is pretty well established that they are 1099 independent contractors. Not advisable to let the tail wag the dog and try to change that classification to employees just for the sake of setting up a 401(k). They can all establish SEPs or...whatever.

The next time anyone sees or hears of a problem related to a default that happened because a participant told the employer to stop WH, please let us all know, and I can add it to my worry list. Having said that, I could see a situation where there is a pattern of loans being taken out and not repaid that would rightly be seen as non-compliant. But the occasional stoppage of WH...no.

It's sure been debated here, ad nauseum. IMO if a participant says to an employer "stop withholding my loan payments" then the employer does it, and the loan eventually defaults. QDROphile alludes to the counter argument that the election to have payments withheld is irrevocable, and depending on state law, cannot be changed. I've never learned which states would effectively force a participant to continue withholding on something they no longer wanted.

I've always felt that any/all money paid after death should be the designated bene's. The fact that it is being required under minimum distribution rules doesn't change that, IMO.

And be aware that - if you decide to buy a laundromat (or whatever business venture) because you think it is a good investment, and it has employees and you decide not to install a plan there because they would have to be covered and it would be too expensive - nondiscrimination testing will apply across all (both) of the businesses. It doesn't matter if you own one and your wife the other or jointly, they all get treated as one business because of attribution of ownership between spouses. Effectively, it means you would have to cover the employees, probably at the same 25% employer contribution rate in your own "solo" k.

From a retirement plan standpoint, it doesn't matter. Max contributions devolve to pretty much the same number. I doubt a C Corp is advisable (you have to carefully zero out corporate income otherwise there is corporate tax) and I doubt an S corp is worth the trouble of setting up that separate entity and then having to take payroll to make retirement plan contributions. Most, or at least many, people who are setting up a partnership or sole proprietorship these days do so an LLC and then elect to have the LLC taxed as a partnership, or a sole proprietorship as applicable or desired. If you are not worried about liability (and I think that risk is somewhat overblown but that is a different discussion) then you can skip the shell Limited Liability Company and just set up a partnership or sole proprietorship. I don't know the answer about HSA and HRA combo. My business (C corp) has both and when I researched it a few years ago I determined it was ok, but not crystal clear. I don't remember the details on the reasoning. It might be a little agressive - someone might come along and say that it's not ok. (I have no problem telling someone they need to hire a retirement plan professional for that stuff while not doing the same myself for other stuff. ?)