Bird

I think it can be "un"-terminated. Apparently no actions have been taken to consummate the termination, if I can phrase it that way...just adopt a reso saying the prior reso is rescinded. Of course all activity in the interim is subject to review. Of course there are no 1099s if it is moved. Unless the vendor screws up (or the person(s) communicating with the vendor), which seems possible.

I know. I was asap chair for quite a while and always felt that if an asap came out, it was important. And they were mostly written by members, not staff, and were...better. I freely admit to being a stick-in-the-mud and disliking change so pay no attention to me.

Bill where did you find this? I just realized I don't get any communications from ASPPA; maybe going to spam and I can't say I mind b/c they were pretty crapped up with useless info so that important stuff like this gets buried.

Interesting Q; what brings it up? Is it of any significance, dollar-wise? I'd think it should be included - doesn't the value of the bond reflect the accrued interest - in other words, if a buyer were to purchase the bond, I think they would pay a bit less for the bond since they would get the bond itself plus the accrued interest. So the accrued interest is really part of the portfolio.

There's a technical answer to this, and a practical answer - the technical answer is that the plan exists and you have to do everything you would do for an ongoing plan. The practical answer is, if there is never going to be any activity (and you're not going to get paid), then you just ignore it as if it never happened. At least that's how I would approach it. It's a bit different if you have someone that thinks they are going to use the plan but just doesn't fund it in/for the first year. In that case we would (and have) filed a return for the first year with 0s. I think there is an argument that because it had no money a return isn't needed, but then you get into questions about the effective date to use when you start filing returns, and honestly, filing a return is such a small deal that it's easier to just do it than tie yourself in knots trying to figure out how to start reporting in the second year.

Sorry; this is a perfect example of the confusion and flat-out wrong-ness of the term. You are describing a 401(k) plan that happens to only have an owner(s) (and spouse) in it. It may have been sold as a "solo" but it does not preclude participation of others, and the minute you have another participant, reporting requirements change as do other things, such as bankruptcy protection. But it's the same plan. Again, a plan may have been sold as a "solo" but it is a regular plan and if others enter there are regular reporting requirements...and a not minor point, a "one-man" plan (which is a term the IRS has used although it could cover multiple owners and/or spouses) does indeed have reporting requirements, if/when assets are over $250K and in the year of termination, regardless of assets. Why?

Yeah thanks. "I thought I was wrong once but I was mistaken." Actually I think it is ok if the owner is in fact 100% vested under the new schedule - although it definitely looks bad if you follow the sequence. absolutely a problem if you make him 100% vested when he wouldn't otherwise be on the new schedule.

For the record, I want to note this is correct and thereby correct myself. The term "solo 401(k)" made me crazy...

I'm not trying to argue with you but I think he did clarify that, enough to get to the gist of the problem anyway. And of course he's unfamiliar with the terminology; he's a participant, not a pension pro. I don't think we really want to be reading the DRO(s) and divorce decree, do we...? Anyway, I thought your list of demands was kind of off-putting and I would have ignored it myself. Maybe it was the fact that it was bold, which I understand was to differentiate it from the other text. (If I can say all of this without being annoying myself.)

I get it; the statement that the plans had to be merged seemed a little strong.

Well, if you read other threads on this subject, you'll find that many of us object to the term "solo k." It is a marketing term, not a different type of plan. You have a 401(k) plan that just happens to cover only the owner, and if you do nothing, new employees will enter the plan. If it were me, I'd keep the existing plan and maybe amend it as necessary. (Actually, if it were me, the plan wouldn't need any amending.) Why would you want a new plan...oh I see, the vesting issue. Well, yes, vesting is problematic. I don't see any way around 100% vesting. Shrug - it is what it is; that's a flaw in the creation of the original plan. It isn't fixed by adding a new plan.

To be fair, I think the original poster has made things reasonably clear. It seems to boil down to the fact that the pension was not part of the original settlement. What, exactly, that means, is the issue - "not part of" in the sense of "we know about it and he gets to keep it" or "not part of" in the sense that it wasn't mentioned at all?

We don't know the way the investments are set up. If it's on a platform, then the "plan" will definitely show the assets leaving - they are in the general assets of the recordkeeper (and might return to the plan if uncashed for long enough! - but that's not what we're talking about). If it's not on a platform, and the plan has its own checking account (and I assume that is the case here), yes the bank records will show assets as of the last day of the year but the register will show a zero balance. I don't think there is any doubt whatsoever that there are no assets in the plan. As CuseFan notes, the IRS has clearly stated that taxation is based on the year checks are written, and I believe, firmly, that that logic follows through to all reporting. No way would I waste my time and/or my client's money on preparing a return for a year after all assets were distributed by check just because a check wasn't cashed.

I have little experience in that but it sounds like someone's conservative approach, not something you would find in the regs. Certainly the part about having to merge into the buyer's plan - there are transition rules and none of them dictate merging.

How could it be delayed if it is filed?

I am positively in the camp that would not just show the checks as payables but as paid - no assets, no liabilities. That pretty much answers the other Qs but an additional comment - failure to distribute within 12 months is not necessarily problematic. It just means you have to keep filing, which means if you cut the checks after 9/15/19 but before 12/31, you're filing a 2019 return which you would be doing anyway. And you have to maintain the document - which might or might not mean preparing a required amendment; I can't think of anything that would have to be done in October 2019 that wouldn't have to be done in September.

Thanks for clarifying. Was the pension disclosed and described in the divorce settlement, with language to the effect of "we agree that husband gets to keep this?" If so, you seem to be on very solid ground. If not, well, that could be a problem. But I'm not a lawyer so I don't know that end so much. Also I didn't know a DRO could be issued without agreement or at least input from both sides, but again, I'm not a lawyer. I'd be interested to learn that from someone who knows.

I guess you are hung up on the "within" language...it actually doesn't read that way (my bold emphasis below - "within" is for a bene receiving payments; "on or before" is for participants). ...shall furnish a copy of the summary plan description and a statement of ERISA rights as provided in § 2520.102-3(t), to each participant covered under the plan (as defined in § 2510.3-3(d)), and each beneficiary receiving benefits under a pension plan on or before the later of: (1) The date which is 90 days after the employee becomes a participant, or (in the case of a beneficiary receiving benefits under a pension plan) within 90 days after he or she first receives benefits, except as provided in § 2520.104b-4(a), or, A date prior to plan entry is definitely on or before 90 days after entry.

You're not going to find a cite that says "when a plan purchases an insurance contract naming the plan sponsor as beneficiary this is ab initio a prohibited transaction." You have the appropriate cite from above: Verbatim: (D) transfer to, or use by or for the benefit of, a disqualified person of the income or assets of a plan;

This is probably way too complicated for this forum. If your ex in fact already received everything she was entitled to, and there should have been something in the QDRO and maybe plan forms confirming that she was entitled to nothing else - then it seems your union (or whomever was acting for them) made a gross error in asking for your ex to waive anything she wasn't entitled to. I'd start by going back to them and pointing out that they have alienated you from receiving your pension benefits, which is pretty serious stuff, and ask them how they are going to fix it (presumably by simply paying your benefits). In theory, it really isn't that complicated - the plan administrator would review the (new) QDRO, and if they are following a checklist, will check a box that says "no this isn't legit because the benefits were paid already" and move on. But I'm not sure what you mean when you say that's already been accepted by the plan administrators - did they just mess up (the same people again, who asked for your ex's waiver)?! And then you say the pension was not part of the divorce settlement - are we talking about a non-pension annuity and another pension? It's not at all clear what's going on.

Talk to the IRA provider. Ultimately they are the ones who have to fix it and you'll have to follow their procedures. They're not gonna make it easy...

The sponsor certainly has an insurable interest in a key person's life but if it wanted to insure someone's life it should pay the premiums. I don't see any circumstance where it would be permissible for the plan to pay premiums and the sponsor be the beneficiary. I'd want to know what the intent was and then...try to fix it. It's a pretty serious screw-up, whether it was intentional or just accidental (where the plan was intended to be the beneficiary). In either case it is gross incompetence on the part of the agent, and the insurance company as well. In all circumstances, the plan should be the beneficiary, even if it is a "directed" by the participant in a DC environment. I've heard of buying insurance as in investment in the context of a pooled account; the concept being that key person insurance is appropriate to make up for lower contributions, or perhaps even the termination of the company and plan, in the event of a key person's death. That's irrelevant to this situation but I mention it as a possibility of someone's (flawed) thinking in a DB plan. I guess it might be a permitted investment in a DB plan but I've never seen insurance in a DB as anything other than part of a benefit.

You are acting as the broker? I think they are Qs for your broker-dealer.

Halitosis from having worms in your mouth?

Or you could allow the deferrals on 10/1, and just hold them until the recordkeeper is ready, and add lost earnings. Not ideal but nothing in this situation is ideal.