Bird

If they are in they stay in. Electing to defer is not relevant. No you can't apply it to the person who got in August 1; yes you can to the one hired August 2 who is not in the plan yet.

...and you apparently have your own business? I'd say it is ok, but the question comes up: why? What's wrong with leaving it in the 401(k)? Do you not want that plan?

It's definitely ok. At least the IRS said it was; the case is North Shore Auto but I can't find it for all the ads...don't recall if it was a PLR or what. They changed the eligibility at least twice.

Minus the cumulative PS-58 costs too. I think you are overthinking the rest. If the participant buys the policy for $100K, he owns it and that's that - the death benefit is all tax free to the beneficiary. As far as the plan is concerned, it now has cash from the policy that is just part of the total account balance. Nothing special there, all taxable...except for the cumulative PS-58s...unless I am mis-remembering something but I think the IRS came out with something way back that said you get to recover them even if the policy is surrendered or sold.

Amen. I'd at least make it effective 1/1/19. But I agree it can be done.

The first answer is to simply make smaller payments more frequently - divide the quarterly payment by however many pay periods there are in a quarter. I wouldn't bother trying to reamortize to try to "properly" credit the timing of the payments, and I wouldn't change the interest rate. All of this assumes the loan policy permits such a change. The second Q would involve a reamortization, and...I think it can be done, but would have to research that. I think you have to make sure none of the reamortized payments stretch beyond 5 years from the original loan date.

The money is protected but you still have leverage. She can "voluntarily" choose to use plan assets to repay some of the embezzled money, and in return get a lighter sentence. We had a situation like this not long ago - as I recall the prosecutor had control of the embezzler's checking account; we processed a regular distribution (20% withholding can't be avoided) with a direct deposit to that account, then the prosecutor was able to write a check to the sponsor as partial restitution.

Well, I think I would net it all and get a negative number. If there were companies not adopting the plan, then I think it would be appropriate to ignore any income from them. Unless there is positive income from some other company to give a net positive for self-employment income, he would have a problem taking the deduction, which is taken on the 1040 (at least I think he needs to show positive SEI in order to take the deduction).

Assuming the issues with the loans are ok (i.e. there is no reason to think they have defaulted), and you seem to indicate they are indeed ok, then it boils down to how to get the loans and the money "transferred" into a new plan. In my opinion, that would require a plan merger (I don't know what "transfer" would mean otherwise). So that would mean establishing a new plan and then merging the old into the new. That is safest, in my opinion, as far as continuing the loans. But here's a not-so-stray thought: why not just have the new company become the adopting employer for the existing plan? I don't see any reason not to do it and it saves a lot of trouble. The old company may not exist (or it may) but I don't think anyone will question the owner signing a consent to let the new company become the adopting employer.

An S-corp shareholder would have to have the deferrals withheld from his wages by 12/31. If that wasn't done, then there are no options for even talking about deferrals. If it was done but not deposited, then the deferral contributions are fine as far as deductions but now they are (very) late deposits.

That's interesting; maybe a bit unusual in my experience for a small business but it really simplifies this situation. The new owner has absolute control to do whatever s/he wants with the plan; you probably already have legit paperwork but as I said earlier, ask them to tell you exactly what they want. They can't just keep making you dance around and say no to whatever sacrificial offerings you bring them. As Larry "suggests" (ha) turn this around so they understand they have liability and they will come around.

Well for this guy there is certainly no problem since he has no employees and likely never will, so we just set some low eligibility and be done with it. But I am reluctant to use "everybody employed" on a date with an immediate change to 1 year. I know there are boxes to check in a prototype to make that work without taking it out of prototype status, but I try not to do that due to the risk of a "pattern" of amendments being discriminatory. And nobody can tell me it is not discriminatory to let the owner in with no service and make everyone else wait a year...

I doubt it exists; the fact pattern immediately prior says or at least implies that all of this happened after the original trustee died. If the new company adopted and maintained the plan as its own, then I agree with Bill Presson. The new owner should be able to name himself as trustee and it sounds like he did. I understand that it's a little fugazy with a new entity maintaining what was another entity's plan but they'll have to get over it. I'd ask the bank "exactly what 'proper' paperwork do you want and we'll get it" (short of having the dead guy sign something...).

The Q was more about eligibility and what kind of service requirement you might impose for participation. If someone started doing business "stuff" on Jan 1 2017 then I'd use that as his/her start date and could use a 1 year elig requirement for a plan effective Jan 1 2018, and he/she would be in. I know we both agree the date an EIN is obtained is irrelevant. But I don't think you'd use date of birth as date of hire...?

Maybe for some esoteric purposes but I assume you would only credit service for plan purposes from the day s/he starts actually operating as a business (?).

Really? I see this as a 1099 issued in error that simply needs to be fixed. I thought the EPCRS cite was for other employer errors, such as not withholding at all. I don't deal with that much so I'm just askin' - doesn't really seem right.

Presumably there were taxes already withheld and processed. I think that cat left the barn already. He could not cash the check but he'll still get a 1099.

No. I'm not sure where it got started but it is urban legend. Ask the actuary to provide a cite.

Kevin C, as usual, is 100% accurate (and jpod too!). To emphasize/rephrase - once amounts are withheld from your paycheck, they are considered "plan assets." Therefore, as you have indicated, you have done nothing wrong and in fact the loan payments were made - they just weren't deposited properly to the plan investment accounts. The problem is that the recordkeeper has an automated system that spits out 1099s if deposits aren't made in what they consider to be a timely manner. Fixing it won't be easy, but that's the proper way to approach it IMO - someone has to firmly and persistently nag the recordkeeper into amending the 1099-R. Also then there is the related but different issue of late deposits, which need to be corrected (made up, with interest). Good luck and keep us posted.

Shrug. An unnecessary complication, IMO. Then you'll have people with $251K griping and asking for it to be raised to $300K or whatever.

My 2 cents... I don't see the MEP thing truly increasing retirement plan creation. If somebody wants a plan now, I can find or create something pretty good. If they don't want a plan, I doubt whatever savings are available through a MEP are going to change their mind. The RMD thing drives me up a wall! First, changing the table now and then is not going to make a significant difference, and is just one more thing to maintain and update for us. Second, if you don't want the money then, by definition, you don't need it for your retirement security. Third, if you don't buy the first two arguments, this overrides everything - YOU DON'T HAVE TO SPEND IT! You just have to be taxed on it. What is the big friggin' deal here?! You got a benefit from deferred taxation, and the RULES OF THE GAME have always been that you have to be taxed on it, later. This is just more conservative nonsense to minimize/avoid taxes (while we are looking at a trillion dollar deficit) couched in the image of helping poor Grandma, who is being "forced" to take money out of her retirement plan. It disgusts me, and I'm not exaggerating.

I disagree that it's not a deemed loan, at least not necessarily so, and the fact that website says it is deemed is certainly positive (it may or may not be correct but that doesn't matter). Others seem to be assuming that you had a distributable event and therefore the loan was treated as a distribution, but that's not necessarily so...you don't say whether you took your other money or not, at least I didn't see that. Most systems would probably deem the loan either on 3/31 or 6/30 (i.e. create a taxable event), and then, when you actually take your other money, would offset the already deemed loan (i.e. treat it as a distribution for recordkeeping purposes). I think Lou S provided the relevant cite. Good luck.

Without doing any research or reading this carefully (i.e. covering myself if anyone jumps on me for being wrong...) I think the idea is that if a beneficiary does not take an RMD by the time it would have been required under the annual distribution method, then they would be "stuck" with the 5 year rule in the plan, and that would carry over even if rolled out. But if they take the money out of the plan before the first RMD under the annual method would have been required, they are free to do what they want in the IRA.

You're overthinking it. The auditor is wrong (it's not that uncommon). Just gently ask her to review that with her manager and it should go away. If not, then drag out all the document crap but don't complicate it now.

As noted previously, it is important that the participant request the withdrawal as a refund of an overcontribution. None of this is mysterious or subject to the whims of institutions if done properly.