Bird

I'm guessing there are other beneficiaries. I'd love to see the wording of the bene des. I wonder if it specifically refers to the policy, and what happens if the ex says "surrender the policy and I'll take the cash." Does that effectively disinherit herself since there is no policy?

If it hasn't been made abundantly clear from prior responses, your mother is just talking to the wrong people. There is some possibility that your mother will get nothing, but practically zero chance she will get "a small portion," which tells me these people know nothing and are trying to make her go away. However - please review and confirm this is a 401(k) and not an IRA. Unfortunately the terms get mixed up sometimes, especially if someone had a 401(k) and rolled it to an IRA. If it is an IRA, then it would be easier for your mom's husband to name someone else as beneficiary, depending on state law.

No

Interesting, I always thought modified accrual, for plan purposes, was simply cash basis for everything except accrual basis for contributions. I guess that's what the more complicated description above boils down to. Anyway, we almost always use that (modified accrual). The benefit is that your plan tax return contribution ties in with your business return deduction, and it provides an aid in reconciling. The downside is that it takes longer to complete since the contribution may not be known for many months. It seems that the large bundled service providers tend to use cash, since in theory you can push a button on Jan 1 and complete the financials and not have the messiness of waiting for contributions to be determined.

Not you, the person who suggested it in the first place, which you are rightly questioning.

Please define plan administrator. Employer? Third party administrator? I take some offense that this moron has wasted so much time.

I haven't handled or even seen a SIMPLE 401(k), ever. Looked at it way back and decided there was no point and never paid much attention. So I may be ignorant, but I think you are talking about restating a plan and changing provisions, in which case, no, deferrals cannot be distributed. (Found an old thread from 2010, similar Q, similar answer...from me. No other comments. FWIW)

We almost always restate to the beginning of the year. I don't think there is anything special about blackout or cash transfer dates. It's really about plan provisions and reliance on the opinion letter. Of course if plan provisions are changing then that needs to be documented, maybe with different effective dates.

ESOP guy (and mctoe), It is fairly common to restrict loans to certain sources and perhaps even allow the participant to select which source...for loan recordkeeping purposes. Nevertheless, I think that if the loan were to default, it would be proper to treat it as a pro-rata taxable event from all sources, therefore, very little, presumably, would be from basis. At least that's how I see it, and how I would prepare the 1099. And there would be a 1099, as others have noted. I suspect the driver of this idea is trying to get away with something without committing tax fraud, or otherwise gaming someone's system, with the incorrect thought that somehow these circumstances don't require a 1099-R.

Important point here, make sure the SEP doc says "3" and not "2" - or "1" - or "0"

OK, then no, I don't believe any notice requirements apply to those transactions.

Because I hadn't thought of it? Thanks for both replies!

I agree, no specific disclosure needed for changes inside a brokerage window. But I am curious about these transactions - are we talking about fund mergers, terminations, etc. that are initiated by the investment company? Your reference to "mapping" makes me wonder if there is some kind of oversight over the brokerage window including a list of approved funds...which seems to defeat the purpose and actually/potentially increase liability.

New client adopted MP and PS plans in 1999, moved the money a couple of times, and never restated them. Surprisingly, everything else looks pretty much ok - he's actually been entering 5500 info online and filing directly. Two participants in each plan - father and his daughter, who is term'd. Any thoughts/experience with maybe merging the plans now and submitting a VCP filing as one plan? Over $500K in each plan; $3000 fee per plan...

It is a failure to follow the plan document, no "technically" about it.

We work on pay dates, period. Agree with your thinking. As always, the plan document should control and it is unlikely that it has (convoluted) language carving out when wages are earned vs. paid.

I would think the plan should have language either permitting or not permitting a distribution of a rollover at any time - it can. If not, I think you'd have to assume it is not permitted. I see no advantage. I suspect it is just the way someone always did it, and suggested* that participants do so. *Actual practice might range from an open discussion of all options, to only giving that option, to just doing it and calling it a "rollover" when it really was more of an impermissible merger or something similar.

I'm with you, and/but all of those 3(21) and 3(38) services that I hear about are paid for by participants, one way or another, even though they are all about protecting the brokers, IMO. Do(n't) people realize that it takes decades to weed out randomness and evaluate a manager? Eyeballing more than once a year is wasteful, but I don't expect to change anything, except in my little corner of the world.

Agreed

Unless he can get it paid directly to the company, he will be taxed on it due to receiving the 1099-MISC. But he can/should in turn issue a 1099-MISC to the company so it just washes through his own return (he should also file a Schedule C showing "X" income and "X" expenses for a net of $0. But the best answer is to get it truly assigned and paid to the company, if possible. Depends on the nature of the commissions and also interpretations by the payee...I have a corp for admin work but I'm also a broker. My old broker-dealer used to let me assign commissions to the corp., then they changed their mind and said they had to pay directly to me, period. Also my new B-D. So I pay everything to the corp. and file a Schedule C with $0 net.

We're going in circles Larry. Lack of further discussion doesn't mean I agree. Ed

It sounds like good news/bad news. Good that they deposited your money. Bad that your loan payments got deposited as after-tax contributions. Good that you will get them out at some point, without paying tax (assuming all got recorded properly, which is a stretch, and assuming the loan default doesn't get un-done, which it should). Very, very bad that the loan was reported as defaulted at all, since you made the payments, and they became "plan assets" when they were withheld from your pay and held in the employer's bank account. It's a giant mess and can't be fixed by me/us trying to give you pointers; someone who truly understands all of the implications of these matters has to get involved and work very diligently to fix them. My guess is that the plan had a third party administrator who resigned when things got ugly. I'm not sure what to tell you at this point but you might ask your employer who helped them complete the Form 5500 (plan tax return). That person/company is probably in the best position to get things straightened out.

Was it filed by the Plan Administrator? No.

I doubt a group annuity can truly be involved in an "in-kind" distribution. They might have a "deal" for existing participants to roll out to an individual annuity without a sales charge, with the same funds, but it's not truly in-kind. (Even with direct-held mutual funds, moving the "same" funds from a retirement plan to an IRA is likely not in-kind since it is likely changing share classes from R to A, or whatever.)

I think there is a difference. I don't see how the client can sue you if you do it the (approved) DOL way (of course they can sue you but I don't see how they can win...what would you/we have done wrong?). If you do it your way, in some theoretical and hypertechnical drama, it would be shown that you pushed the buttons to file for your client in an unapproved manner and therefore share some responsibility for the filing. Having said that, I freely admit that there are times when I say "screw it, we have to get this over with" and do stuff that isn't 100% proper. I'm just not willing to make a policy out of it.