Bird

That's a different issue, but yes, I think so. With a caveat that if the firm itself has some kind of restriction, usually minimum asset-based, then it might be ok. IOW the plan is not imposing the restriction.

I have an older version of the regs in one of my files (1993) for this very reason. It doesn't say exactly what this says (actually refers to "former employees" and "former HCEs") but I think they kept the intent; that you can look at current and former (or frozen) groups separately. As long as you are not favoring former HCEs in the former/frozen group. I might have to concentrate harder than is possible for me at this very minute, but I think they more or less expanded the definition by changing "former" to "frozen" - that is, as I see it, "frozen" could mean current employees or former employees.

I think what you propose is do-able. I just looked it up and a few things to keep in mind are- you must close all Roth IRAs in order to claim a loss it's a miscellaneous deduction so you have to subtract 2% of your AGI to determine the deduction value (for all misc. deductions) I like to keep things simple so it sounds like kind of a hassle to me. Depending on your tax bracket, it might be worth the trouble.

Understood, but as long as C doesn't exceed a deduction limit, I don't see a problem (because no one cares...).

Isn't that the kind of policy where the participant can buy the policy from the plan by paying the plan the policy's cash value? This is not normal insurance - if the participant dies, the money does not go to the participant's beneficiary but to the plan (think "key man insurance", if that term is still being used; probably should have been changed to "key employee insurance" by now). The plan, by setting the policy up so the plan itself receives any proceeds, owns the policy lock, stock and barrel. It does not appear that the policy exists for the benefit of the employee. I agree that there is an additional option to what I cited - buying the policy. I almost went into a discussion about the possibility of it being key man life insurance, because of the way the question was posed, but since that would be rare, thought I wouldn't go there. It is a (remote) possibility. But if a participant has a policy in a plan, it is properly set up with the plan as owner as beneficiary, even if it is strictly for that participant (or beneficiaries of the participant).

The plan doesn't care, right, as long as it gets the required contribution? And if Companies B and C are both happy to have it as laid out, then they don't care. The IRS doesn't care either; they would just look at compensation and contributions received. Some hyper-technical accountant might say there was a transfer of liabilities from one company to another which might have some balance sheet implications, but the accountants I work with wouldn't care either. So I say go for it.

It's the participant's option to 1) take the policy in-kind as part of a distribution (cash value is taxable), 2) surrender it within the plan and take the proceeds along with the rest of the money, or 3) leave everything alone for a while and revisit 1) and 2) later. It helps to think of a policy as any other self-directed investment (whether the rest of the plan is self-directed or not).

I say you can remove it. If you can't because someone might retire, then you couldn't ever because someone might work 1000 hours, or might be employed on the last day of the year. Are they entitled to anything on the day the amendment is adopted? That's what matters.

I don't know of any. But I've seen brokerage accounts that were laden with fees and just as "bad" as some platforms. But...brokerage accounts tend to be used by smaller plans, and it's unlikely that the dollars involved are worth a participant actually filing a lawsuit, and certainly not enough for a lawyer to take it on a class action/contingency basis. FWIW

It's hard to know if you are seriously interested or fishing around for...whatever, but this (TPA) business is highly specialized. I could see someone having a good relationship with a TPA firm or even an employee of a TPA firm and wanting to take that to another level, but randomly saying "I want to be a TPA" is a little odd. I feel like we're missing something.

I agree Tom, you saved me from some typing. I can see being threatened, but certainly not indignant about the proposal.

Earnings should be Ending balance + withdrawals - deposits - beginning balance. But that will give you actual earnings, so I'm still confused about why "using actual earnings is not reasonable." Maybe I'm still missing something.

I agree with Reed, it doesn't matter. But if it did matter, you'd use the actual beneficiary and ignore the incorrect form naming Spouse #1.

ASPPA will no doubt take credit for fixing this "problem" that wasn't really a problem.

I would guess that the owner is still employed by his corporation. After all, he "...is continuing on with his Corporation for two more years in order to fully accrue his benefits in a defined benefit plan." How is he accruing benefits if not employed? So he's entitled to a contribution, and you fail the 410(b) coverage test, and either have failsafe language to fix it or have to do an amendment to fix it. It might have been better to tidy up the language ahead of time but it seems fixable to me.

"Returned" the money to whom? Participant ID shouldn't really be an issue; I see lots of FBO accounts (and hate 'em but that's another story) and they don't necessarily require a participant ID; anything/everything should be in the name/ID # of the plan, but allowing the participant to self-direct. The participant is not the investor, the trustee is. At the very least they can open an omnibus account which will effectively all be for that participant since no one else will have an interest in it.

I might have to re-read it a few times but it seems that the prohibited changes are pretty much limited to SH type contributions. It will be interesting to read how the tight-panties group sees it.

Section 108(f) of WRERA. Ask the other person for a cite for her position.

We'd show it as a gain - don't recall if it has ever happened in our plans but that's effectively what it is. (My comment about a "sudden influx of money" was about how, if someone had NOT been showing CSVs as a plan asset and the policy is surrendered and money comes back into other assets, that presents a reporting issue.)

The way it works, we have one bank account for EFTPS stuff. We process all of the withholding, but it goes under each client's (plan's) ID. 1099-Rs and 945s are done under their numbers. So it's not exactly like an omnibus account. I'm not crazy about the responsibility either but didn't see an alternative. The couple of times I used Penchecks it seemed like I was doing all of the work. Not bad-mouthing them but that's just how I saw it.

GBurns, I'm not sure what you are asking but we effectively treat insurance just like any other asset: If BOY value = $1000 Premiums = $500 EOY value = $1400 then there was a $100 loss. Yes we use CSV for mutual funds (not that we see B shares any more) and annuities.

We do it - we have a separate EFTPS account and use the IRS program for processing. I can't say it's the most user-friendly thing but we are used to it.

Well, I'm not filing a return with zeros on it. And fwiw, either this is not a universal problem... or our clients are not calling us if they get the letter, which is hard to believe... or, the letter boils down to a reminder of the need to file if applicable, and not a demand for a filing, and it can be ignored.

Agreed, most vendors won't take checks and the participant has to write a check to the plan sponsor who then has to make the loan payments. I'd say the clock starts when the check is received. If the participant is late it is not a failure to remit timely.

I think it is appropriate to report insurance cash values as assets. Without looking anything up, I think there are parts of the instructions that talk about contracts with insurance companies that do NOT require reporting, but that is where a plan is offloading liabilities, e.g. buying an annuity contract. In real life, purchasing a life insurance contract in a plan is absolutely just a transfer from one asset to another - the policy will happen to have little or no value at the end of the first year, but so be it. For anyone who thinks they shouldn't be reported, then the question is: suppose the insurance policy is surrendered and the money is invested elsewhere, how do you report that sudden influx of money? As far as what to do with a policy for a participant entitled to a distribution, now you will experience why insurance in a plan is so bad - policies effectively get trapped. If the participant wants to keep the policy, and they take it as a distribution, the cash value is taxable (minus accumulated PS-58 costs, if anyone was keeping track of that). They could just surrender it and roll over the proceeds. They can buy the policy if they have cash sitting around, and the money that was used to pay for the policy can be rolled over. Or they can borrow most of the money out of the policy (the loan proceeds become part of the rest of the account and can be rolled over) and then take the stripped-out policy as a taxable distribution (maybe the cum PS-58s will cover some or all of it) or buy it for the reduced cash value. Either way you wind up doing a lot of work...