Bird

I think it was implied that it would go through his personal checking account; I don't think it could be done otherwise, at least not without jumping through hoops.

No problem. A self-employed person is indistinguishable from his or her business so it doesn't matter where the money comes from.

You have to set up an auto rollover option; no balance is too big for that for a terminating plan. Or at least threaten to; sometimes that gets them moving. And explain that plan expenses will now be shared by participants, and that person being the only one, will have to pay for administrative costs associated with doing all of this due to his/her recalcitrance.

I'm not an actuary but I actually believe it is legit in the sense of reducing the FMV of the asset. Annuities are legitimately worth less than their purchase price immediately after the purchase due to the surrender charge, and FMV is equal to or pretty close to surrender value. The fact that the surrender charge eventually disappears isn't particularly relevant b/c the contract basically sucks; recovery of the surrender charge takes place over a period of years and it's not like the gains are unusually large b/c of the disappearing surrender charge. (In large part because the expenses are higher in order to recover the upfront commissions paid.) All of this assumes it is not some variant of a springing value contract. Not to say this is a good idea - what I usually say when presented with some variation of this is: instead of doing that, how 'bout if I just charge you $10,000 (or whatever) in fees? (Unfortunately that sometimes need more explanation but they eventually get the point.)

Client got a CP 220 notice stating the IRS made changes to their return and owes $2200+. Of course no changes are specified or the reason for the penalty. (It reads like a scam.) I saw an earlier thread on this and realize it's probably for a "late" filing...but this was a 2011 return, filed Oct 15, 2012. We didn't handle the plan at the time, so don't have proof of filing the extension and doubt we can get it, but I think we can beat the rap; just looking for the fastest way to do so - does(n't) the statute of limitations cover this? (It's very hard not to begin any correspondence with "Are you f-ing kidding me?")

Or if they set it up and fund it for one year. "Substantial and recurring" could be used to establish permanence (or lack thereof, in which case they could indeed argue the plan was never qualified), or to establish an effective termination or partial termination, in which case the consequence is "only" full vesting.

Yes, I think in general a sole proprietor doesn't necessarily have to document actions in writing. The same would apply to an estate...at least to the extent I'm making all of this up. In any event...nothing to worry about, IMO.

If you want to be hypertechnical the plan should be officially terminated but I doubt there would be consequences to not doing so.

This is the second post in a couple of days in which someone "went online" or "to the investment company" and changed deferrals. The first thing I would do is make sure this is a valid way to make a change.

Amen. Not sure why this is generating so much blah blah blah.

If she has a distributable event (e.g. attainment of age 59 1/2, if the plan allows), then she can do whatever she wants, including a rollover to the MP plan, assuming the MP plan allows rollovers. Otherwise, no.

It's 8 am and I already learned something today, oh boy! I can go home. Oh wait, I am home (snow day). But I must say, what a bizarre piece of information it is! Imagine being the bureaucrat who makes such important decisions...

And operationally, this is the only thing that makes sense, because if you have a payment due in the last quarter and wait until the end of the first Q to determine if it is deemed, and in fact it is...your 1099-R is late if you want to do it retroactively.

Definitely need more details. Were some employees eligible and the only reason they are not getting the SH is that they didn't get the notice? (!) "...they are going to add..." Very confusing.

I don't know that I'd call it an exception to the rule. They're term'd in 2017 and not active at any point in 2018. For personal taxes they're not treated as "worked" in 2018, they're treated as "paid" in 2018. I'm still not clear if you are saying you add back that 2018 comp to 2017 as the cited language says you should.

I'm not advocating for removing money in the situation described, but "deposited" is not necessarily "allocated." If an employer was shooting for a 50% match and it turns out someone got 52% while someone else got 48%, I could see moving money from one participant to another (understanding the dollars may not match up perfectly). If the employer has been depositing 50% as a discretionary match throughout the year, I don't think it has been allocated until they make some year-end declaration (or don't...they should have a resolution but often I think the action implies the declaration). So in some theoretical sense, they could remove the money from the participant accounts but leave it in the plan. I think it would have to be allocated as some sort of an employer contribution and not just shoved over to a forfeiture account and used, say, to pay fees. But it's really ugly and I think I'd say "no you can't do it."

That's a great cite and I see no reason it is not applicable now.

OK thanks/sorry, my attention span is limited.

Well, first of all, if you are checking the box to include post year-end comp, are you doing it for all employees, term'd or not? That's how I read it and how FTW explained it to me, and why we do NOT check the box. As far as counting comp for a contribution or not, we don't. They term'd in 2017, had no hours in 2018, and thus aren't entitled. Most of our plans say you don't get paid (a distribution) until after the end of the year in which you terminate, and if we had to finagle it so they supposedly term'd in 2018, then they wouldn't get a distribution until 2019, and I can't deal with the wailing and gnashing of teeth that would entail. I like to think I'm not a prick (others may disagree) but I'm just not worked up about someone not getting a contribution of a few bucks. It does create some discrepancies - if that person deferred out of their last paycheck, in some theoretical sense they shouldn't have, I guess. We just ignore the comp and the deferral and move on.

Tom, we're among the "few" that don't check the box. Note that for this case it says you have to add back the 2018 comp and include it in 2017. No way are we going "there." And note that it is not specific to terminees, at least how I read it. Thank you but NO.

Retaining records "necessary to verify, explain, clarify or back-up the entries on the Form 5500" is not the same "being able to prove someone got a (or the correct) benefit." That's a red herring as far as I'm concerned, and a dangerous one if it leads you to believe that purging (all) records is ever a safe approach.

Might depend on what they want to do with it but if it is coming out of the plan and going back to the employer I'd say absolutely not. Saying "oops we changed our mind" is not a mistake in fact.

I'm not sure you can force an in-kind distribution on a participant. I sure as heck don't want anyone foisting a fractional share of real estate on me in lieu of cash.

I think you just have to take a practical approach to this. The check is no good so Empower effectively has the money. Get them to reissue a check, probably to your new bank (with some difficulty). Start all over. It's up to you and your system whether you can amend the 1099 as if it never happened (technically correct and probably not all that difficult) or leave that be and treat it as if it's "just" a correction and not issue a new 1099 for 2018. Make sure whatever moron dropped the ball doesn't screw this up again.

I guess what 401king is positing is that one payment was missed and they defaulted the loan because that particular payment was never made up. But as Lou S. notes, the participant could/would/should just be one payment behind all the time and it's no big deal - happens all the time. This doesn't exactly make sense although I guess they are describing the loan rather than an action. The whole thing is so lame that it makes you wonder if Wells Fargo has figured out a way to make money on loan defaults.