Bird

Agree. Sometimes things get downright weird here... Well, that's what I said but who's keeping track?

I second Larry's confusion, and the part above is screaming at me. Being beneficiary of the policy is not the same as being entitled to the policy itself as plan beneficiary, and in any event she can't be the beneficiary of the policy on her own life as noted above.

Circling back on a couple of issues... If she has the money to buy the policy, then just do it. I certainly understand and have used Larry's approach of borrowing the money out to reduce the cash value and then distributing or buying it, but in that scenario the buyer is left with a somewhat crippled policy that needs an infusion of cash to keep it going, maybe not right away but over time. Just buy it and be done with it. The new owner could always take a loan or do whatever she wants to free up cash if needed. Heck, simply distributing the policy as a taxable distribution is not the end of the world if she has enough cash to buy it - so she pays tax on it. I think someone noted above that we are talking about deferring taxes, not avoiding them. And I am really curious to know exactly how that bene des reads. If it specifically references a/the policy, I still maintain that screwing around too much by buying it and/or borrowing against it might unwittingly change the value of the beneficiary's interest.

Just to sum up, in case the practical answers got lost for the original poster... Yes. My addition in italics/brackets. And that is done by requesting a return of an "excess contribution." That way it is reported properly, i.e. not as a taxable distribution, since it will have been reported as taxable on the 1099-R issued by the plan. There's just no way to get an IRA custodian to refund or otherwise disgorge money without reporting it, so it is critically important that the participant not just "take it out" in which case it would be taxable (a second time).

Interesting. I'll start the discussion. (Oops, a minute or two late for that...) In theory, and maybe in reality, as a customer, I shouldn't care or need to know who is making what on something I buy. If I want to buy a gallon of milk as cheaply as possible, I shouldn't care how much different stores are paying their suppliers for the milk, or their overhead, or whatever. I should just look at the price and buy the least expensive one. Ignoring service differences, which of course is a big thing to ignore but just focusing on costs, I think you should have enough info to make a decision based on the participant fee disclosure and the quote for direct service fees. Look at the share classes offered and expenses, and try to find identical funds so you can compare apples to apples. Some platforms have asset charges added on , and some capture revenue from fees built into fund expenses. One platform might use R-6 shares with 0 comp built in for the broker and recordkeeper, and charge 75 bps as a wrap fee, and another might use R-2 shares which have 75 bps built in for broker comp plus 15 for sub-TA fees. That gives you a pretty good idea of who is getting what, but again, does it matter? If the first scenario has fund fees of 50 bps and a wrap fee of 75, that's 125 bps total. If the second one has fund fees of 145 bps, well...that's more. Do you really need to know who is getting what?

Yes

Yes, it is required - if applicable. So we do it quarterly for plans with brokerage accounts or where otherwise the statements are inadequate. DOL FAB 2006-03. Also discussed in ASPPA asap 07-08 (brilliantly written ). Of course we are still waiting for the sample language from the DOL that was required to be provided within one year of PPA ('06).

I think if someone had earned income and was still a partner at the end of the year I would consider them as employed.

I think this nails it. I believe it is implicit that "all" of the services for the pay period must have been performed. Why they chose to use the "performance of services" phrase without that clarification is unknown to me but seriously, it makes no sense to have deferrals deposited well before a paycheck is cut - in a normal situation, someone could elect to stop their deferrals or otherwise change them right up until the pay date, or at least a few days before. I guess you could argue that it was deliberate but it's just weird. I think we all agree that the idea is stupid.

It's not going to be covered in the SPD. "I'm sorry that this didn't happen as quickly as you would have liked but many companies have a policy that they will only send checks to the employer, probably so they don't have to deal with returned checks, etc. It's not a bank account and there are many rules and administrative procedures associated with retirement plans that often cause delays, but it is all perfectly legit. If you don't like that answer, well, you can hire a lawyer but you will only waste your money."

FWIW, and I don't claim expertise on this, but I think it is worth noting that Revenue Ruling 86-142 was for a DB plan. I think the scenario is different for a DC plan. I think the RR is saying that the payments for expenses are indeed deductible, but they are contributions. In a DB situation, that's sort of a "who cares" as long as you're not bumping against limits. In a DC scenario, if they are contributions, then they have to be allocated. Can't say I read every word so I might be off base but that's how I see it. Prior threads indicate they are contributions, but there are no cites that I know of.

Does your plan still have active employees? It's not really clear what is going on; you say there is no transaction between employers but yet one seems to have terminated some or all of its employees and the other has hired them. You could do a spinoff of some assets and merge into another plan. I'm not sure if that is better or worse than just treating the employees as terminated and letting them roll their accounts into the other plan as they desire. A merger means the participants have no choice.

You might want to consider using forfeitures to pay expenses instead of allocating them. Saves some trouble and if they are small, prevents opening up $2.00 accounts for participants who otherwise wouldn't have an account at all. Unless you are a large payroll provider and offer fries, er, plan services, with that.

That's just wrong. Sounds like they have figured out a workaround to fix whatever the real problem is. I can't swear to it but I think we have changed EINs without incident, or maybe just responded and it went away, but have definitely never been told to file a final 5500. I don't think I would even bother to call since I wouldn't trust an answer from the people answering the phones.

At the risks of assuming facts not in evidence... You mean, he signed an irrevocable waiver before entering? Then he is not a participant and not counted at all.

Thanks! I already learned something today so maybe I'll go home...

At what point is it discretionary - do they need the follow up notice by Dec 1?

B. There are contributions other than SH so TH applies. I'm not sure what "discretionary SH to HCEs" is, perhaps the "maybe" SH with follow-up notice, but in any event that is not the case here. Very clearly, HCEs are getting PS, not SH.

How else would it be written? I'm not so sure. You don't have a spidey sense that this is totally screwed up?

Mike is correct (of course). There is no second taxation on the loan, but they do need to keep track of it because it is a "deemed" distribution (for tax purposes) but not an actual distribution at the time of default. It just kind of disappears when you get your actual distribution.

My take on this is a bit different. I think you have to "provide" the SAR and then, upon request, provide the full report. Posting the full report on the sponsor's intranet site is considered to be providing it. In other words, I think you have to make some kind of active effort to push out the SAR, but then it is ok to say "oh and if you want to see the full report it is on our intranet" (in the Your Rights to Additional Information section). I do not think it is enough to passively post either without pushing the SAR out, electronically or otherwise.

My concern was this: the bene des may say "Mary gets the life insurance policy on her own life." If that is literally what it says, and the policy CSV is worth, say $100K, and the plan follows Mary's instructions to borrow $90K out of it, then the policy is only worth $10K. I don't think Mary is entitled to the money that was borrowed out.

I'll repeat my concerns stated earlier about the language in the bene des. If it refers to the policy directly, she could be ceding money by having the plan take some out via loan. The whole scenario is obviously ill-conceived and needs way more care than can be provided by us throwing ideas around. Not that any of the ideas are bad but I sense some other crap bombs here.

I'm going to the bank this afternoon and will let you know what I get for them.

"Excludable" implies some discretion which may be leading to confusion. If the sister is not a participant because she is excluded under the terms of the plan, then you have a one-participant plan covering only the owner and indeed do not have to file a 5500 until assets exceed $250K.