Bird

And FWIW, brokerage firms often (always?) use multiple documents, which I have tried to follow, and sometimes found the cross-referenced document to be unintelligible and/or incomplete. If you even get the right document, of course.

RMDs are a calendar year requirement. You correctly used the last valuation date in 2018, 9/30, for the 2019 calc. The only effect of changing the FY is that for 2020, you will have a 12/31/2019 val date and therefore a 12/31 account balance to use in those calcs.

So someone got a cash distribution, paid tax on it, but didn't cash the check...and now the (net) amount goes to an IRA? If that's the case, I don't see how that is "ok."

Sort of. As I noted above, as of what date? Presumably the last day of the year, or earlier...I don't think it would be possible to "measure" this as of some later date, such as the date the contribution is made after the end of the year. Would have to be spelled out in the document...I wouldn't volunteer to try to write that language.

Wow. I'll try to stick to some basic points here. Understand that most of us on this board are third party administrators (TPAs) or other consultants who help employers run their plans - because the plans are too complicated to run yourself. The fact that the tax return shows 3 participants is interesting; it implies that there is indeed a TPA or similar service provider involved (sometimes plans are "bundled" where someone is holding the money as well as providing basic compliance support), and that person/company knows about you and the other employee. If they are any good, they would have an "account" of some sort for you (it might just be a paper account, where they are keeping track of what is supposed to be your money but there might not be a physical account). OR NOT - if it is set up as a "safe harbor match" plan then he doesn't have to make contributions for anyone else - if they don't make contributions for themselves. Yes of course there are rules about giving participants the opportunity to contribute, which is likely where this situation goes awry. My gut says this is the probable scenario. If he's fired anybody and everybody associated with the plan, he's going to wind up in trouble sooner or later because he won't begin to understand the filing requirements that go with having a plan. (I think) I'd go back to whomever you talked to who was his contact and see if you can get more specific info. At some point you probably have to go to the Dept of Labor. I hope they pay attention - unfortunately it's not simple and might boil down to whether or not he gave you any forms, and it's going to take them some time to really understand it.

Sounds like it's ok. But, as Luke Bailey notes, only if you use proper valuations. If there is a $50K CD and it is paying more than today's current CD rates, then it is worth more than $50K (ignoring accrued interest). Again, I suspect it is more about perception than reality...they might regret it after they face the hassle of transferring an asset from a retirement plan account to a personal account, especially if you charge them fairly for this research and also manually preparing a 1099-R vs. just doing it thru AF platform.

The Plan provides or wants to provide? IRS approved? Or is it something on a form? As for excluding someone from non-electives, the premise is so vindictive and silly, given the easy availability of default investments, that it's hard to take it seriously. I'd say that it's not permitted as a condition for excluding someone from a non-elective contribution but I don't necessarily know why. I know, or think, that in theory you could exclude everyone wearing white shoes on such-and-such a day but that doesn't mean I'd do it. I suppose if everyone is in their own group you could do it in practice but otherwise writing it into the document is fraught with peril (or just "fraught" in 2019 lexicon) - as of the last day of the year, or some other day? - how does it tie in with other allocation conditions, such as 500 hours or last day?

I can pretty much guarantee the participants did not include the defaulted loans on their tax returns! Look, this is messy and issuing prior year 1099s causes a lot of grief for everyone. Let me put it this way - I have allowed sponsors to tell us to issue a 1099-R in such a situation for the current year, with added interest to the year of reporting. It's not right but on audit, the participant would have decent shot at a "no harm/no foul" defense - they wind up paying a little more due to the additional interest, and if you wind it back and forth between the years as to what should have been done and what was done, it's close to a wash.

The first question is - does the plan permit in-kind distributions? If so, in theory, you have to offer such to everyone. The second question is - why? What possible reason could there be to not just sell these and move the cash? I can pretty much guarantee that whatever it is is perception rather than reality.

You're welcome. A couple more things... I wouldn't worry too much about the 60 day election period. As long as they get the notice on time you're ok. (But again, why he wouldn't try to accommodate you is beyond me.) Changing investment providers isn't necessarily easy - if you have an advisor, he's getting commissions, and that might mean surrender charges if you try to move everything. You could start over with another company and leave everything where it is (actually it would be up to each participant). But it might be good to just rip off the band-aid. Good luck.

If the Adoption Agreement says "during any 1 prior year" then you are correct; basically anyone hired in 2016 and earning $5000 is in 1/1/2017. Those agreements should be read very literally, with no interpretation. As far as the meeting date, there's no requirement to have a meeting at all so it doesn't really matter. Changes can be made at any time so...whatever works for everyone is ok. But if you want it in November it's hard to see why the advisor would not accommodate that. SIMPLEs are not actually flexible; the rules are pretty specific. But there is in fact little or no oversight. The fact that there is no reporting (i.e. a "tax return" like we do for qualified plans) means that sponsors are generally unwilling to pay for administrative assistance. It sounds like you have a pretty good handle on how it should be run, but because "we've always done it this way and nobody said anything" you are getting resistance. It doesn't mean you are wrong. The investment advisor should stick to the investments end of things and not try to tell you how to run the plan.

REITs are often held outside of brokerage accounts but made to look like they are part of them. My guess is that it was never properly retitled in the first place, and then something happened - could have been reconfigured, dissolved, or sold, or whatever - and it or proceeds from it wound up reverting into the account that it was "officially" titled for. If that's the case, it won't be easy to fix (as you've learned already). Keep after the broker and brokerage firm and threaten to file a complaint and be prepared to follow through.

Not to drag it out...but ok, we're dragging it out...I did (just) look at Vanguard's - no entry requirements/no exclusions. And I happened to have one from E-Trade - there were fill-in-the-blanks for age and service but no place to exclude anyone if you wanted to. Also interesting that the package I saw didn't even have an Adoption Agreement; it looked like maybe the fill-in-the-blank SPD was supposed to double as an Adoption Agreement but it wasn't clear. I got it second hand so it might have been dropped but it sure looked like it was supposed to be a comprehensive package. I'd actually be surprised if the IRS would approve a plan with built-in exclusions.

See above. I'd argue that the existence of employees did not affect the plan's compliance - the plan is fine - but the operation of the plan, in particular the allocations, did not agree with how the plan was set up. The solution may be to "just" allocate the contribution differently by including the employees. If it can be seen as a pooled account then that's not problematic in the least; just re-do the allocations to include all eligible employees. (Not problematic in a compliance sense; likely problematic in that the owner doesn't want them to get anything. Different issues.) Now, there is likely a problem with not giving the employees a deferral opportunity, but there is a self-correction fix for that.

The ones I've seen - and I can't say it is that many - have said no exclusions. They are designed to be used when there are no other employees, but are still valid plans when there are in fact other employees. (Hence our frustration with the term "Solo" 401(k), as if it is in fact a different type of plan.) The correction will depend on whether employees were excluded in the document or "just" not included in allocations.

But I think you DO need to be careful about how you return it. You don't want the IRA custodian reporting it as a taxable event, and they will almost certainly insist on reporting it somehow. If all parties will agree to call it a rollover, then that will get you where you want to go, although it's not technically correct.

You mean the plan language says that (which would surprise me), or everyone just ignored the other employees?

Huh? What did I learn?

We've done it (extended but not filed) and I don't recall any follow up. I would not - NOT - do anything proactively. Poke yourself in the eye if you want for similar results.

They aren't a word-for-word adopter because they were dropped (!). TLDR (the rest). You could be right, and I definitely was careless in my terminology. I could have restated twelve plans in the time it took to engage in this; which is why it's easier/better to just restate than to think/talk about it.

I agree that going to the DOL is not something to be done casually and should be an absolute last resort. And that the poster should be 100% certain of his position. But ultimately, I don't advocate for just ignoring it "because of a very modest 3% of pay." I'd like to assume that's not what you meant but that's how it came across. It is anathema to everything we do as pension professionals, IMO.

I understand the distinction between dropping a client and abandoning a plan. Let me give you a real example. My document provider, Fort William, had a PPA document approved in 2014. Within a year, they found some errors and fixed them via corrective amendment. We had to notify our clients who had already adopted the plan and provide the amendment. A client who had been "dropped" would not get the corrective amendment and could no longer rely on the opinion letter.

I agree with others about allowing changes each pay period - it generally results in fewer changes (inertia leads to not doing anything, but some might feel the need to do "something" when changes are allowed each quarter or semi-annually or whenever). And I'm quite sure this could be a retroactive amendment, so nothing at all needs to be done except to amend the plan before the end of the year to allow what already happened. And finally, as already noted but worth repeating, make sure you are talking about changes in deferrals and not entry dates. It's a not-so-fine distinction in my mind but a frequent source of confusion for office managers or payroll people.

I believe the point of that is not so much that it completely voids the termination but that if assets aren't distributed timely - and I agree one year has been cited - then certain aspects of the plan must be treated as ongoing, the primary consequence being that the document may need to be kept up to date (amended if necessary). Good point about doing new forms; I agree. But I would not worry about there not being a distributable event.

Thanks for the additional info on reasonable cause. Taking this a bit further, what about the DOL? Do they automatically accept the IRS' decision?