Bird

It all depends on what you really mean. So many words have different meaning depending on who hears them and how they are used. To me, "deconversion" is something a recordkeeper does, not a third party administrator. Of course sometimes that is one and the same. For us as a TPA firm, if someone needs documents or whatever that is already on file and easy to send; no problem and no fee. But if it is a pooled account and they want allocations as of some mid-year date, then that's essentially a valuation requiring a fee.

Interesting; I can't say I'm an expert but will offer some thoughts. I think a living trust is generally set up to hold one's assets during their lifetime, and distribute them according to the trust at death, which sort of replaces a will. The "big deal" is that this avoids probate; personally I think that is overhyped but I guess it depends upon the estate. I'm not so sure a living trust is meant to accept assets after death, in which case the primary bene des would never ever be effective; that would be a curious result and probably depends on the terms of the trust. I think you have to talk to the trustee(s) and or their attorney and ultimately have them fill out option election forms or otherwise determine if the primary is valid or not; probably get a copy of the trust even though you don't want to be interpreting it.

Amen, and thanks for putting things in common sense rather than technical terms. I do think it is possible to merge B into and A and keep the same schedule; you "just" have to amend Plan A to say "except however...blah blah." You're not cutting anyone back by doing so. But is it worth the trouble and ill will? And it may not be possible in a true prototype. Also tends to be a major hassle with recordkeeping; you have to set up a separate source or otherwise carve that out.

Thanks for the feedback.

I think it really depends on your service agreement with the client. The custodian can indeed process distributions under its own EIN, and that is common, probably universal, with recordkeeping platforms. If you've withheld and submitted taxes, then you darn well better do the rest of the reporting under the same EIN.

I'm not sure if I have a question or am just musing; here goes... When converting a self-directed plan we have several options: Cash conversion. Everything in the old platform is liquidated, and participants make new investment elections and their money is invested according to those elections. I think this is best from the participants' standpoint, since they get to pick what they want. Mapping. Everything is liquidated and mapped to "like" funds. This seems to be preferred, and I guess is "ok" from the participants' standpoint, since they are more-or-less getting what they elected, even if it may have been some time ago, and even if "like" may be stretching it. We're working on one now and it's interesting that the receiving platform doesn't want, and is more or less insisting, upon not having an enrollment meeting until after the conversion, basically to streamline everything. Participants will be notified and can change investments in the sending platform, before the conversion, so they'll have that opportunity, but I think it's kind of a crappy way to handle it; I mean, it puts all of the burden on the participants to get things lined up ahead of time when they haven't even had a re-enrollment meeting. Target date conversion. Everything goes into TD funds unless participants choose otherwise. My hangup here is that if you have the enrollment meeting before the conversion, and if someone elects something other than the TD default, then someone is supposed to identify that and change that election manually. Definitely not good for the "someone" who has to manually check all that. It seems like a mistake to have an enrollment meeting first because it creates that burden. OTOH, going back to #2, I think it kind of sucks for the participants because they're not given any choice in the matter, and then have to actively go in and change things if they want to. I guess the Q is, am I off-base, p*ssing into the wind on all of this, or...? I guess the latter have become industry standards and I should just accept it.

He gets $20,000. The loan basically doesn't exist for tax reporting purposes since it was already taxed.

Good point. If someone asks for the "Adoption Agreement" I will generally take that literally and give that to them...quickly, so they don't get suspicious and then start asking for more, although providing a pdf of the BPD is certainly no big deal. If they ask for the "plan document" they'd get both (perhaps with a certain smug "knock yourself out" attitude depending on their own attitude).

Is it April Fool's Day? I would allocate losses, or tell the recordkeeper to wipe out the accounts, or whatever it took to not look at them or think about them for more than a second. It is indeed either a document design flaw as ETC notes, or an operational flaw (as in, someone should not have let this happen in the first place).

I meant as opposed to simply logging in to SS and using their numbers. But if you want to be able to assume increases, etc., ok...

I guess efficiency was not a goal in preparing this, eh Tom?

This is where we usually tell people to ask those sources to come up with a cite for their position. Of course they can't because they are wrong. As Mike notes, it might be confusion about how to provide the notice. But the Adoption Agreement should be a fairly short document and I recommend it be provided without further delay.

Ah, I don't mind correcting myself. RBG is correct, there is indeed a problem with "terminating" the first plan - google "401k terminate successor plan" and you'll see. (My somewhat lame excuse is that I was distracted by the tail-wagging-the-dog issue of investments driving all of these decisions and trying to make this as easy as possible for you. My clients would have had a plan that could accommodate any investments and none of this would be an issue.) So, in a more perfect world, you would have restated the plan on a Fidelity prototype and then transferred the assets because you just wanted a new investment vehicle. But it's too late for that, so I think the only option is to "merge" the plans.

I would normally defer to Mike as he has more experience and frankly is smarter than I am. But his comments are mystifying to me so I'll let him explain better if he feels like it. I'll repeat - you can't just arbitrarily say, as a participant, I'm transferring assets from plan 1 to plan 2. There has to be a "distributable event" - termination of employment, attainment of retirement age, etc., something that permits a distribution. If you, the employer, terminate the plan, then you, the participant, can roll over the proceeds wherever you want, including plan 2. If you, the employer, decide to merge the plans, then you, the employer, can indeed physically transfer assets to the remaining plan. I'm just thinking that for a novice, a merger is trickier, document-wise, than a termination. But...this has really gone beyond what is reasonable for free advice; we would normally be handling this stuff for our clients. Unfortunately Vanguard and Fidelity and their ilk make is super-easy to start up a plan but then give no support whatsoever for such procedures, and you are left holding the bag, either screwing things up or paying someone to walk you through it or muddling through with help from this board but still potentially screwing it up. I feel like I'm subsidizing Vanguard and Fidelity and am not willing to take it beyond a certain point, which we've reached. I'm definitely not reviewing forms, sorry.

Mike, since when does an employer-initiated termination of a plan provide for a transfer of assets to another plan? I agree that a merger would involve an employer action. And please re-read my post; the sequence suggested was 1) transfer assets and 2) terminate the first plan - there is no basis for transferring assets (!) And what exactly is the problem with terminating the plan and then filling out distribution paperwork for a rollover? It's got nothing to do with age 59 /12 or at will distributions...

What I said above: " If you transfer money from Vanguard (001) to Fidelity 002), what is the basis for the transfer? You're ahead of the game if you transfer the assets before you terminate the plan "

I'm no expert on VCP filings but the SIMPLE IRA Fix-It guide says "You may be able to file a VCP submission requesting that contributions made for previous years in which you maintained more than one plan remain in the employees' IRAs." (My emphasis) I guess if you filed in 2018 then 2017 would be a previous year, so maybe that's not particularly relevant, but I have a hard time knowingly busting a SIMPLE. $250 is a small price but how much does it cost to prepare the filing...in which, I imagine, you have to explain what happened - "we knew exactly what we were doing and did it anyway."

If that works, good for you. I'm not sure it will be as easy as that but see what happens. (Technically, you are skipping some bases. If you transfer money from Vanguard (001) to Fidelity 002), what is the basis for the transfer? You're ahead of the game if you transfer the assets before you terminate the plan, but if you terminate the plan, I imagine Vanguard will insist on you filling out their forms for a distribution.)

Yes you need to file returns for both plans. I think most of us here would "merge" the plans but it might be easier for you to "terminate" plan 001 and then roll over the money to plan 002. Form 5500 (either SF or EZ) is the annual reporting form, and you do have to file one for every year there are assets in a plan once you are over the $250K threshold. FWIW Vanguard has brokerage options...

I think you'd have to look at the Schwab document to see if it restricts investments. I'm surprised TDA wouldn't ask for a copy of the document or insist on having it restated, perhaps using the IRS form.

It was either left over from a very, very long time ago when deferrals were included in an overall contribution % limit, or somebody just checked the wrong box. You are probably beginning to see that, while you might assume that everything in this field is done carefully and by experts, that's not the case. Looooong story short on this, you are right and they are wrong. The hard part is getting a company like ADP to concede that because they consider themselves to be the final authority and most people cave in. Probably going through your wife's employer is the best thing, but they are likely to simply rely on ADP for the "final" answer, so spell it all out like you did here with the SPD text etc etc, and I don't think anyone would mind including their responses as backup. Good luck!

Tom, I am not disputing at all the idea that a self employed has until the due date of their tax return to complete their deferral contributions for tax purposes, in fact, I said exactly that: "...there is no doubt a sole prop could deposit 401(k) contributions by the due date of their tax return, with extensions, and deduct the contributions." But the issue that I thought was at hand is how the DOL sees it from the "late deposit" standpoint, and the quote below is somewhat responsive, but it's more about partners than sole proprietors, IMO; if anything it tightens up the argument that they are due sooner than generally thought - "If you defer from draws." What if you don't "defer from draws?" But look, it doesn't appear the DOL is on the warpath against sole proprietors who delay their deposits.* I'm just being obstinate and saying they haven't "blessed" the idea that it's no problem. *They have better things to do, like encourage VFCP applications for lost earnings that are worth a few pennies.

Then it's a 415 excess and you deal with it accordingly.

Sorry Tom but I don't think that is the issue at hand; that was about funding before the last day of the year when income is deemed to be earned. There is some, I think, informal guidance that hints at when income is available (the segregation date for when self employed deferrals become plan assets) but I can't find it, although I'm sure I was a participant in such a thread. And I may have a mental block about this so sorry for dragging it out.

OK, sorry to doubt you about what you meant. And welcome to the board. As far as the 7-day deposit rule, first keep in mind that that is not a tax issue, so there is no doubt a sole prop could deposit 401(k) contributions by the due date of their tax return, with extensions, and deduct the contributions. The question then is whether they are "late" for purposes of prohibited transaction rules, and as Lou S notes, there is a school of thought as well as an IRS (or DOL?) statement of some sort that about the clock starting to run when income is determined. However, I maintain, and maybe I'm on an island, that if you elect "$10,000" or whatever dollar amount, that there is no need to determine income to determine the contribution - you know damn well what the contribution is, it's $10,000, so there is no tie-on with income. I believe the "when income is determined" clause applies, or at least should apply, to percentage elections. But I'm probably crazy or at least weird. Anyway I always recommend getting contributions in by Jan 10 or so to be safe.