Bird

I'm a little confused and unsure about what you are asking. Not to be insulting, but since an awful lot of people throw out the term "top heavy" when they mean something else, are you sure you mean "top heavy" and not "401(k) non-discrimination testing?" Top heaviness is not something you test "to be sure it is not top heavy," it's something you test... and then if it is (top heavy - more than 60% of assets belong to the owner) you have to be sure to provide a minimum 3% employer contribution. If the owner does not want to make that contribution then it would certainly be a good idea to run a preliminary test to see if it would be (!) For the basic ADP non-discrimination test, you can do a projected test and try not to fail, but it's not that big of a deal to fail because you just do refunds the next year. Hope that helps, maybe if you clarify we can zero in on a better answer.

I agree, and don't think it is overly technical since that's the key to not having a plan termination. It might help to think of the A/B/C definitions this way: Plan C is spinning off from Plan A, and Plan A will change its name to Plan B.

Why would anyone want to bother? Unless I'm missing something, it just makes no sense to do this, let alone want to this. What is gained for a small non-profit to go to a 401(k) at this point? Somebody needs to nip this in the bud and say "No you can't do it, period, start the 401(k) on 1/1/18."

I don't think so.

Well I learned something today (I guess I can go home now). Like ETA, I thought a SIMPLE IRA was really just an IRA and it was implicit that you could roll into one, but because of the two year holding period and higher penalty for taking money out, they are indeed different and rollovers in were not permitted. The PATH* Act of 2015 does permit such rollovers, but only after the two year period has passed. Can't say I'd heard of it, or maybe just forgot. *Protecting Americans from Tax Hikes (eyes rolling)

IMO, if the receiving plan does not allow new loans but does allow loans to be rolled over, it still needs a loan policy and all of these details should be covered under that policy. I'd suggest that it be reamortized on the new payroll schedule and would not be overly concerned about a few days difference in the final payoff date.

Aye, and there's the rub. Asap 06-07 had this to say (my emphasis): "Practitioners should remember that there are other considerations relating to the timing of amendments, such as IRC §411(d)(6) cutbacks. For instance, amending to use the top-paid group election during the plan year might result in different allocations ("converting" an HCE to an NHCE might reduce or eliminate the need for a QNEC, or could change NHCE allocations in a tiered plan). Depending on plan requirements for receiving an allocation, an employee might be deemed to have "earned" the right to a given allocation; a change in the HCE definition that results in a reduction of that allocation could be an impermissible cutback." Rev Proc 2005-66 stated that discretionary amendments had to be executed before the end of the plan year, and per the asap, IRS speakers confirmed that a change of testing method (e.g. prior vs. current year) was indeed a discretionary amendment. The above quote was added as a caution. I don't know if there's been any clarification since but this is what I "remember" (at least remembered enough to look up/find).

I say they can be done as received.* If it is on a platform, the recordkeeper might set up an account for each bene, which makes it sound complicated but actually simplifies things for processing. *But if you can reasonably expect them to come in at roughly the same time, and it makes it easier, hold them and do them all at once. I rarely invoke common sense in plan admin, but here I think you can. It certainly does not make sense, common or otherwise, to hold up 3 distributions forever because someone else didn't respond.

I seriously doubt you are looking to do that. The sane approach is to bring over accumulated data (years of service etc) with the census and account data and move forward. You might want to re-create the last year from your old system on the new but you can just start with the next year.

We've seen it/handled it and I agree there is no time limit. I don't think you need to set up an after-tax "account" - you just need to keep track of basis.

We regularly accrue these type of expenses and don't worry too much when they are physically removed from the account, although we try to do it in a timely manner. Accruing them effectively expenses them in the correct year, at least in theory. Never been called on it.

I'm in the camp that says term'd/no balance at EOY means no SAR. Of course we take the 5 seconds to generate one and keep it on file in case IRS wants a copy. Have never had them ask for proof of delivery.

I agree with your thinking.

I generally use 12/31.

What does "bundled" mean in this scenario?

I understand where you are coming from and am not being critical. The bad news about AXA and bigger companies like that is that everything, and I mean everything, is system-driven and there is sub-par customer service. The good news is that everything is system-driven and if a distribution was made, it was undoubtedly reported to the IRS (you indicated above you received 2 W-9s [sic] - they are 1099-Rs) so you would have paid taxes for that year and don't have to worry about it coming back. You got screwed by the fact that someone set up the loan amortization on the wrong schedule, and that there was no warning about the default. Unfortunately, I don't see any recourse at this point; it's way way too late to unwind it in any practical way, and even at that, it's too late to correct it under correction procedures in place. The good news is that the remaining money in the plan is in fact yours. Your associate may or may not be a jerk but I am confident that she was not going to try to put it somewhere else; again, with the system-driven approach, it would probably be impossible.

Not sure if you are questioning the existence of the in-service provision (if so ignore the rest) or the ability to roll 100%, but there is no doubt that she can roll 100%. She's not term'd at the time of distribution and it would be improper to assume a future term date, IMO. If the termination occurs and it is determined that an RMD was needed, the RMD would be satisfied already (money left the plan) and the only problem is that it was an ineligible rollover. That is satisfied by proper reporting and taking the money out.

I remember seeing this in the prior thread and not quite following. I don't believe you can have "permissive" cash-outs. That's why we generally prefer not to have them in our docs; I see it as something else to screw up (i.e. not doing a cash-out would be an operational failure). I vaguely remember this changing in some LRMs for a required restatement, but could be wrong...

Is there some reason not to allocate the forfeitures? I feel like I'm missing something. I understand not wanting to create small balances, but it appears that's not a problem. Getting back to your original post, no, allocating forfeitures has no impact on the business accounting. I don't see that amending the plan will accomplish anything; your choices will still be to pay expenses or allocate.

I would take it out.

You might save some time by just poking yourself in the eye with a sharp stick. If your employer used AXA, and then Paychex, then they had little or no "hands on" interaction with plan activities and will have little or no clue about what happened. I can only chuckle at the thought of getting useful info from Paychex. Kevin is right about the funds remaining; little doubt that it represents earnings that couldn't come out when you took the "hardship" (somehow I doubt that was legit). I don't blame you for being frustrated with the way things were handled but by choosing to pull your money out and then not attending the meeting or filling out forms; they had no choice but to put you in a default fund.

It solves the problem in that the moment it was made there was no RMD. When she retires on 11/30, that means that there was an RMD, retroactive if you will, and so you issue two 1099-Rs, one showing a taxable distribution for the RMD, not eligible for rollover, and one for the balance being rolled over properly. She does have, I believe, until 4/1 (or 4/15) to take that out as an overcontribution for 2017. If she and her broker think that there is no RMD for 2017 if she retires in 2017, then I take a bit of sick pleasure in this...

If it happened that long ago, and reporting was done properly on the distribution as it happened, despite the fact that it was incorrectly distributed, then the WH has already been applied to 2016 taxes for the participant and applying to the IRS for a refund is not going to work. The participant would have to repay both the cash received and the WH. Of course you're talking about an amended 1099-R now, and ultimately the participant should be getting a refund of taxes and penalties paid on the distribution (not necessarily 20%).

Jumping in late here, but I'll ditto that. I don't buy into the "debt" to the participant/estate theory; it's just a mistake and any money in the plan at this point is payable to the benefiary.

Forget for a moment that these are life insurance policies and think of them as self-directed investments. Participants (in theory) elected to purchase these investments with some of their other account money. They can choose to move the current value back to the other investments, or they can leave it where it is. Assuming the policies were set up properly in the first place (a fairly big assumption, given what all of us have seen screwed up by life insurance agents), then they are owned by the plan, and surrendering the policy(ies) just means moving money from one part of the plan to another. You're not moving funds "to" the plan, you are moving funds "within" the plan. Hence no taxable event. In a perfect world, or just a reasonable one, the insurance policies would be tracked as "PS" or whatever kind of money they were originally bought with. Unfortunately, some administrators choose to show premiums as "expenses" of the plan, which then leads them to ignore the values of the policies for asset reporting purposes. Possibly the reason for some of the confusion about moving "to" or "within" the plan.