Bird

I agree with ESOP guy. No problem with the rollover. Inaccurate/incomplete reporting (5500) is the primary issue. I might be willing to have the sponsor tell me not to (re) file and file. And in theory the plan document may not have been maintained properly; it should have been/should be updated for any relevant necessary changes while the plan was still operational.

I don't disagree with that. Again... That's not what I was talking about. It's not something that worries me a lot, but I'm pretty sure there is language in a Rev Proc (?) that says an adopter (employer) can't rely on an approval letter if the sponsor no longer sponsors the document (for that client, or otherwise). Or words to that effect; I'm being imprecise. The Rev Proc you cited, as well as the newer ones that supersede it, all talk about "maintaining" a M&P plan, requirements to inform employers of the need to amend the plan when necessary, record keeping requirements so you know who has adopted your plan, etc. There is at least an implication (and I am 99% sure direct language at some point) that says/said that you can't rely on the opinion letter if the M&P sponsor discontinues its sponsorship. The idea being that, let's say an M&P sponsor recognizes it made a mistake and needs to correct it. They go to the IRS and get the correction approved, and the M&P sponsor then notifies all of its active adopters that the change has been made. If you're no longer on their sponsored list, then your plan hasn't been amended, and it is potentially DQ's.

Thanks for the feedback!

Are the IRS and DOL entertaining waivers of late filing fees? I was under the impression that after the advent of the late filer program, they didn't want to be bothered with "my dog ate it" stories. I just heard someone say that they do it regularly. Also do(n't) late filing penalties go back to the original due date if you miss the extension?

Did the money go into the plan? If not, then it's not a plan issue, it's a payroll issue, and yes, presumably you would pay him any incorrectly withheld monies.

That's not what I was talking about. It's not something that worries me a lot, but I'm pretty sure there is language in a Rev Proc (?) that says an adopter (employer) can't rely on an approval letter if the sponsor no longer sponsors the document (for that client, or otherwise). Or words to that effect; I'm being imprecise.

...and it continues to be sponsored by the firm that got the approval, no? I didn't read the rest of your message, sorry.

As you describe it, yes. But I'm still skeptical. Let's back up - are we talking about a corporation or some other entity, presumably a partnership or LLC taxed as a partnership? Are they using the same tax id number?

Was it an asset sale or stock sale? Somehow I doubt that the new owners are operating the old company (that would be a stock sale). In other words, I'd guess that the new business does not have a plan and they were right to not withhold deferrals.

I say yes

I think you have to ask yourself what happens if you don't. As for the SH notice, is he making contributions? The SH notice is part of complying with the SH rules, but if he has no employees, then there's not much lost for noncompliance...unless it could be argued that his own contributions, if any, are invalidated. Having said that, it's not so hard to spit it out. As for the QDIA, that is to protect the trustees in the event of someone suing them. If he's going to sue himself then I can't help him. But again, having said all that, we'd probably go thru the motions of sending the notice just because it is easier to do that than to think about it.

Doing so takes the doc out of pre-approved status - I think. I haven't looked at the latest hardship stuff from the IRS...if they provide a model amendment, it might be possible to tack that on to someone else's pre-approved document without affecting its status. But...I believe that pre-approved docs need a sponsor, and is the prior TPA still sponsoring...? Unlikely. Unless that changed. Our checklist says that if someone leaves, we have to tell them we are no longer sponsoring their pre-approved doc. Some of this is angels dancing on the head of a pin because it's hard to imagine there's actually anything "wrong" with a plan that isn't technically operating as a pre-approved doc. But...if we add your time thinking about this, and my time, and the time of all the others reading this, it's probably more efficient to just restate the damn thing and be done with it. (I'm only half serious. I understand that there's a theoretical cost to restate and you're trying to do the right thing but the reality is that when you take into account all the fussing you waste a lot of time and energy. I'll sometimes cave and do it for little or no fee but then they're the ones that don't appreciate it.)

Good points about laws against disinheriting a spouse...but I think in this case they don't apply; see below...however it's just something I found online and not the final word. New Jersey law provides that surviving spouses have the right to a minimum “elective share” equal to one-third of the “augmented estate.” The augmented estate is essentially the decedent spouse’s probate estate, which includes all assets passing under the decedent’s Will, plus certain assets transferred by the decedent during lifetime in which he or she retained some type of control, or which were made within two years of death. The augmented estate also includes joint accounts with someone other than the surviving spouse, but does not include life insurance, joint annuities or pensions (although there are federal rules which grant a surviving spouse survivor benefits in pensions and certain retirement plans which would override New Jersey law). My emphasis in italics - an IRA passing by beneficiary designation is not described therein, and note the additional commentary about federal law which of course is referring to plans with annuity options and not relevant.

I agree it is clear-cut. I'm not sure about the bank procedures and whether they can or must or...may not freeze an account under these circumstances. They are, basically, not doing their job, but again, I'm not sure about whether their reaction is legal or not. I guess I'd go back to them again and say that the next step is to sue them for withholding your legitimate benefits. (Hey I'm not a lawyer and a lawyer would tell you whether that is the right approach or not but when dealing with aggression and nonsense sometimes firing back with aggression and nonsense works.)

Your hesitation about using them is because you can't find anything in the regs specifically about using them in a target benefit plan? Yes, they can be so used.

That's a good point. Not so much that it would specifically discuss audit fees, but the question is whether it says anything at all about general "administrative" fees, which might indicate (by omission) that this can't be done at all.

Is this a self-directed plan where you have to do a special transaction to pull the fees from the participants' accounts? I guess it doesn't matter but in a pooled environment it would just be a fee that affects the gain/loss and would be effectively paid pro-rata (by account balance). I can't imagine - in any environment - paying that fee equally for each participant (per capita).

As I read it the employee took a previously signed form, signed by someone who is not even with the company, and tried to use that to process a distribution. If that's not fraud I don't know what is. The original poster put kind of an innocent spin on it, but it sounds pretty serious to me. I guess I'd want to know - was this a distribution for the employee personally? Makes it worse, although still not ok if otherwise.

Thanks. Yes, we do get paid in advance 99% of the time but every once in a while I get soft. Of course those are the clients that take the most time.

The ASPPA code of conduct reads in part as below. Let's say someone hasn't paid for the 2018 val, am I obligated to provide it? If not, am I obligated to provide, say, the 2017 val (which was sent to the client already)...the plan document (also sent to the client already)? I asked the question about "work product" once and was told that is notes and calcs and stuff that are just in our files. "B. When a Principal has given consent for a new or additional professional to consult with a Member with respect to a matter for which the Member is providing or has provided Professional Services, the Member shall cooperate in assembling and transmitting pertinent data and documents, subject to receiving reasonable compensation for the work required to do so. In accordance with Circular 230, the Member shall promptly, at the request of the Principal, return any and all records of the Principal that are necessary for the Principal to comply with federal tax Law, even if the Member is not subject to Circular 230. The existence of a fee dispute generally does not relieve the Member of this responsibility except to the extent permitted by applicable state Law. The Member need not provide any items of a proprietary nature or work product for which the Member has not been compensated."

What? Is that what someone requested? As you note, what is the code on the 1099-R going to be? I think the best answer is to stop this transaction if possible, then, as suggested, send just the RMD amount back to the/an IRA (coded as a rollover) and then withdraw it as a taxable distribution. Unlike a retirement plan, IRAs don't have to satisfy RMDs individually, so I think that EJ is correct in not treating the amount rolled over as ineligible and is correct to not get further involved. (Of course this doesn't absolve the broker from giving bad advice but EJ, as custodian, has done nothing wrong - as I see it.)

Classic! But somewhat interesting and it might shed light on something I was wondering about - what database are they pulling the addresses from when they approve (or disapprove)? We had a client who received an extension approval, but it had a prior trustee's name on it. He asked us to fix it...we checked everything and had been using the new trustee's name correctly. So I thought it might be stuck in the TIN database and we prepped a letter changing the "address" (trustee name). A year from now we might - or might not - have some insight. Of course many plans don't have their own TIN so I'm not sure what that means.

Looks like a qualified plan from what I can tell. Participants (and beneficiaries) are entitled to see the full plan document. There's no way they can pay it to you if you weren't named. I do think it is unusual that there wouldn't be a default beneficiary other than the estate but it's not impossible. If your dad is in fact the bene by default that at least gives him some options - he could roll it to his own inherited IRA and then name you as bene; maybe he could take small-ish distributions each year (to minimize the income taxes) and then give them to you. Depends on how much money there is. Good luck.

Agreed. A damned righteous consequence for incompetence.

I'm sorry for your loss. This is probably way too complicated for anyone to give definitive answers, but my comments/questions are: Please confirm that it is just the one plan or account, "wealth builder" that did not have a bene des. You are in fact getting the others per bene des? Is it a qualified retirement plan or something else? There's not much you can do to prove intent. Most plans would have a default beneficiary, and it would probably be spouse, then parents. So your dad would be the default. (Which isn't quite the same as the estate, even if it would pass thru to him from the estate.) If that's the case, your dad could disclaim, but then it would go to the next default bene, which is probably the estate, so it would go to him anyway. If the plan names a third default beneficiary, and it is in fact "siblings", then it might be possible that this could ratchet down directly to you, but that might be subject to someone's interpretation. It's worth looking into - your dad should request a copy of the plan language pertaining to default beneficiaries. Worst case scenario isn't so bad - your dad claims the money and then just gives it to you. Every person is allowed to give $15,000 tax* free per year...but I doubt there are any consequences if the amount is over that, because the unified lifetime estate and gift tax exemption is $11.4 million. If your dad's estate is over that then hire a lawyer... *Estate tax free that is - there are no income taxes on gifting.