Bird

!!! And this makes sense, since simply taking a distribution based on a table could be stopped at any time.

I think we can assume that RP has a 401(k) plan. RP, are you the owner, and do you make 401(k) contributions for yourself? How many employees do you have? Do you know if it is a safe harbor plan? It sounds like you don't have a third party administrator helping to run this plan, correct? How did you set it up? (Broker, direct with financial institution...?)

I think you provided your answer. Neither 1 nor 2 says anything about not being sure about the name. I think I looked at the instructions the first time I ever completed one of these and decided that would never apply...and I sure as heck don't pay any attention to it now.

But I think the point was they didn't want hardships for everybody, just terminees. And there could be source restrictions.

That's an interesting question...I don't see why not.

He can use whatever he wants to determine his distributions before his RBD - any table, any age on any table, a random number generator, whatever.

I assume it is a volume submitter document? You are really "just" making a change to a VS document and should specify all of the conditions that you are changing. You could reference "the safe harbor rules for hardships found in ..." and it might be ok. But I don't think it's a good idea...in fact I think it is a bad idea. In an effort to be nice, you're hanging your butt out there hoping the IRS would say it's ok. In fact I don't think it is ok to have contingencies like that, but I'm not sure. In any event, as a practical matter, everyone is going to try to claim a hardship and you're just going to deal with saying "no" to that instead of saying "no - and here it is in the plan, sorry but that's the way it is."

I didn't do any research when I opined above that the elig periods were based on years ending, and I'll assume the EOB is correct. Still, I don't think it matters that there used to be an entry date on July 1. It's a two part determination - satisfied eligibility on 6/30/20? Yes. Next entry date? 10/1/2020.

The short year is 7/1/19 - 9/30/19? I think you're ok. (Actually I think your eligibility computation periods are the 12 month years ending 6/30/19, 9/30/19, and then each 9/30 thereafter.) Yes his entry is delayed a bit versus the scenario without the change, but so be it; he never actually had any rights as a plan participant so you haven't taken anything away from him. For some reason a case with the name "North Shore Auto" has stuck in my mind - the sponsor kept changing the goalposts for eligibility with several amendments, but it was ok because the participant had never actually entered the plan (even though he had satisfied eligibility - I think). McGath v North Shore Auto, fwiw (added by edit)

Most of the folks on this board are TPAs and would be providing the documents and advice requested for their client. Does the plan have a TPA? Yes such a plan can be terminated, but there are some follow up questions and nitty-gritty stuff that can only be answered by someone familiar with the plan.

So he's probably going to show some phantom transfers from the S corp to the individual as a sole prop. I don't know...I mean obviously it's not right. I like jpod's idea of coming up with W-2 income better, even if means penalties, if that can be done. I don't have an answer.

Mmm, ok, I'll give you that one as an advantage. This conversation is largely angels dancing on the head of a pin for me - I think I'd allow someone to pre-pay as discussed through the end of the current quarter and maybe year but would definitely...maybe/probably (?) not allow it beyond that. Will let you know the next time it happens...

I agree with you; surrender charges are just an investment expense (probably indicating a "bad" decision at the time of purchase but I doubt a fiduciary breach). Half right - they are in fact contributions. A nice gesture and they might look and feel like "make-ups" for losses but not to be confused with the restorative payments described in the Rev Rul, the whole point of which was to confirm that they were not contributions. (In other words, maybe I'm being picky but I'm quibbling with the phrase "these payments" - restorative payments are one thing and contributions designed to make up for losses that the sponsor might feel bad about but aren't fiduciary breaches are another.)

i guess if you want to call them something I'd call them "extra" contributions... But you just put after-tax money into a plan and turned it into taxable money when it comes out. I don't see how there is an advantage to that. Just to clarify, I was being very specific that pre-paying, say, 15 payments at once and/but treating them as 15 separate payments on the amortization schedule would be ok, and (to the original point), no payments would be due until the date the last of the prepayments was originally due had passed.

I'm having a hard time following you. But it seems there is not a sole proprietorship to potentially save the bacon. It's just that the accountant wants to use S dividends as earned income - no dice.

I believe this boils down to a technicality - if the participant wants to pay all of her remaining 2019 payments at once, and NOT get interest credit for the early deposit, then it is equivalent to a series of payments that just happen to be made at one time, and no problem at all. If the participant wants to ultimately reduce interest for making a prepayment, then it should be treated as a principal payment, and it does not eliminate the need for the regularly scheduled payments. Of course the custodian might have its own (made up) rules and whether you want to fight them or not becomes part of the equation. I'm almost certain that American Funds Recordkeeper direct will treat a lump sum as a series of individual schedules payments, so if you went to the amort. schedule you'd see a Dec scheduled payment being made in July with no adjustment to interest.

True, which makes is somewhat theoretical. Well, that's what we are debating... :) My emphasis on "should" above - I believe the correct word is "may" - RMD language generally supersedes anything else as far as "must." I can be pretty cavalier about stuff like this, and I think the worst-case scenario for taking someone off too soon is $1/participant fine, but I don't see any need to rush to remove them.

You need to get all of the facts. Is there another business? If not, then how is there Schedule C income?

I don't think so. I believe they mean some sort of irrevocable benefit payment, such as an annuity.

Sure, why not? (sarcasm) Setting aside the absurdity of the whole scenario, I guess you could have the participant write checks to the employer (assuming it is a platform system where ACHs have to come from the sponsor) or write checks to the plan. How big (or small?) can this employer be that it can't handle loans in payroll? If they decide they can't handle it, the loan program can be terminated, although I don't see how you could cancel an existing loan.

You're talking about the SF, right? Yes, "Other income (loss)" is exactly what the name implies - net gains and losses of all kinds. But note that expenses are carved out separately. Not really unique though...

We talk directly to participants - a lot. Maybe it's not prudent but it saves a lot of time and it's what sponsors pay us to do. We try to qualify that we're not the Plan Administrator but probably aren't careful enough. If someone is an a-hole then we tell them they have to talk to the PA.

I'm a big fan of distinguishing between perception and reality. But I think you're mis-using the term here - it was not filed, period. I haven't tried using a reasonable cause since they extended penalty relief to EZs but I don't think this is a reasonable cause.

I was trying to find a way to politely say "I don't want to ignore you but don't care enough to think about it" but then I realized what you were saying...we just report the bond that was in place at any time during the year, presumably the highest (or only amount if it is a new bond).

The regs say the beginning of the year: §2580.412-11 Statutory provision. Section 13 requires that the amount of the bond be fixed at the beginning of each calendar, policy or other fiscal year, as the case may be, which constitutes the reporting year of the plan for purposes of the reporting provisions of the Act. ____________________________________ Who is the reader of your memo?