Bird

I'll give a cautious "yes" but you need a custom document of some sort. It's very likely to be FUBARed. I'm not sure who is trying to accomplish what, but a possible workaround is to set up one SEP with one investment company and let the participant roll over to another IRA(s).

Whatever. I would terminate it 12/31, and don't care what the doc says. The business has to wind up its affairs and going back to the original Q, yes it can make contributions after the termination date. Somebody tell me what's gonna happen if I choose a 12/31 term date and the plan has some provision about "the company is deemed to terminate its participation in the plan" (which is different from "the plan is deemed to be terminated").

Also think about how significant it is to terminate the plan on 12/1 versus 12/31. There's nothing that says the plan has to terminate on the same day as the partnership, and it might simplify things (no pro-ration of max comp or dollar limits). If it's going to take more than a month to wrap things up and pay everyone out, then it won't make any difference in filing.

That's really a question for your document provider. I believe you can do an amendment and don't have to restate, but don't recall for sure...in my practice and with my provider (Ft William) it is just as easy/easier to do the restatement (and be 100% sure about it being ok) than to even think about an amendment.

We do not get a tax id number for plans on those platforms. I don't know if it is best practices or not, but (despite working in this field) I hate doing something that is pointless.

What is "right" may depend on the waiver, and exactly what she was waiving. It sounds like the original beneficiary form was invalid, so act as if it doesn't exist. If the wife actually disclaimed benefits, then they go to the next in line according to the terms of the plan, which is likely the son but needs to be reviewed. But I'm not a lawyer and this is a case that probably needs one...

I think the allocation language was posted in a way that we wouldn't normally state it: eligible to receive allocation if employed on the last day of the plan year or if terminated, worked more than 500 hours during the year that boils down to "employed on the last day or worked 500 hours." That's NOT a last day provision, so anyone with 500 hours has earned the right to the existing formula, and it is too late to amend. You could adopt a new plan and merge as of 1/1/16.

No offense taken. You are right on the technicalities. On the practicalities, I think it is safe to assume that the participant didn't report it. I'm not going to reward that failure by giving him basis. If you want to insist that a 1099-R be issued now, that's reasonable. But I can't ignore the fact that it wasn't reported.

I get that deeming a loan and reporting it are two separate events. But the deeming is merely bookkeeping, where the reporting/taxation is what really matters for all practical purposes. If you're not going to report it, then you can't create basis just because it should have been reported.

That's reasonable.

I'd call any kind of adjustment like that "other income" (which is where earnings go, so effectively, earnings). One might ask what difference it makes to amend returns starting in 2007 (or earlier) knowing that the first year is a fudge no matter when you do it, and just showing the proceeds in the year received. Depends on what the TPA is comfortable with (and I guess there is plenty of money to pay fees ).

For some reason this has been an itch that needs to be scratched. Let me be clear, I'm not trying to be argumentative, just having a discussion. If we are going to talk about the best interest of the plan, then it doesn't matter if we are talking about a single year's fees, or a pre-payment. It will never be in the best interest of the plan (participants) to use forfeitures to pay fees that would otherwise be paid by the plan sponsor. To do so is to take money that could be allocated to participants and...well, to not allocate it. But, it is allowed, and the point is that to use the standard of the best interest of the plan is a slippery slope. Which sends me on a tangent about the DOL's proposed fiduciary rule...the intent of it is worthy, and they have correctly identified a problem - most brokers and "financial advisors" are getting more than they deserve (for the record I am a broker). We have lots of choices of share classes when using a platform, and the choice of share class directly affects broker compensation. I'm fortunate to work with a lot of high asset/low participant cases, and can often use a share class that pays me 25 bps (instead of 50 bps or 75 bps) without impacting other (direct) recordkeeping fees. I feel that's reasonable for me and reasonable for plan participants. I'm not too worried about the DOL "coming after me" in this situation, but if I am a fiduciary, I really have to use a share class that pays me nothing, if available. Another slippery slope that I don't think they fully thought through. (Sorry if this isn't totally coherent but I just ran out of time and energy.)

I'd argue that if a 1099-R wasn't filed then the loan didn't default and there was no deemed distribution - nothing happened. Given the very ugly fact pattern, and forced to accept it, I'd just treat 100% of the money coming out of the plan later as taxable (assuming no Roth or after-tax contributions). How could one possibly not issue a 1099-R and give credit for basis?!

I wonder if the accountants always know what spits out of their systems. When in doubt, I ask the accountant "what is s/he paying self-employment tax on?"

OK. I respect that viewpoint (but from there it would never be prudent to use plan assets to pay fees).

According to what you wrote, they should have been allocated in 2013. Are you going to allocate on 2013 comp? That what should happen...(but see below). The amount involved doesn't make it "ok" but that's what I would do. (See comment in other thread about being practical .) Actually you might want to review your document on when forfeitures must be used - our document (Ft Wm) says they must be used by the end of the year following the forfeiture, and I'd have no problem accruing it for 2014 if you are still working on a 2014 val and actually paying it in 2015. Disposition of Forfeitures. Amounts forfeited from a Participant's Account shall be used to restore forfeitures or reduce Company contributions (or reallocate as Company contributions) made pursuant to Article 4, or to pay reasonable Plan expenses to the extent specified in the Adoption Agreement. Effective for Plan Years beginning after the adoption of the 2010 Cumulative List (IRS Notice 2010-90) restatement, forfeitures cannot be used as Qualified Non-Elective Contributions, Qualified Matching Contributions, Elective Deferrals, or ADP test safe harbor contributions (Code section 401(k)(12)). Any such disposition of forfeitures from a Participant's Account shall be made no later than the end of the Plan Year following the Plan Year during which the forfeiture occurred.

I agree. Exactly what I was thinking. Absolutely no way is it reportable.

Mmmm, I'm not sure. If the plan says you can use forfeitures to pay fees or allocate to participants, then I don't see one having priority over the other and don't see it as a fiduciary breach. On a practical level - and I am nothing if not practical - I don't see it being raised as an issue on audit. I kind of see it as stickin' it to 'em (the IRS) for having such a dumb rule. As an aside, how many times have you seen incompetent providers such as (starts with Pay and ends with X) have a startup plan with a profit sharing contribution in the first year, for say 5 participants, and then the plan grows to 25 participants and someone forfeits and they allocate $100 across 25 participants and create accounts for $.25 or whatever that would have never otherwise existed? Kind of off point I guess but I'm making the case for creative use of forfeitures paying fees.

What's the problem? I'm not saying I do it all the time but have had 2 or 3 years prepaid.

Have them pre-pay your fees.

To the original question - no, I don't think you can do a force-out to an IRA for more than $5000 unless/until the plan terminates. To the side conversation about what happens to stale checks - yes, the money gets moved from the plan account to a general account, but in my experience, if the check doesn't get cashed, it will eventually get re-deposited into the plan account. Rather unpleasant as a 1099-R has been issued and the participant is off the books. In one case we were able to find the participant and re-issue. Other cases (small amounts) we have forfeited the money...right or wrong, whether the plan says you can or not.

I think so...can't cite anything.

This is so idiotic and annoying - they think they are protecting themselves somehow but they are really exposing themselves for denying benefits for no good reason. I would bet just about anything that if you call their bluff on it they will process a distribution without the spouse's signature. I think I ran into this BS once and did exactly that - refused to even try to get the spouse's signature and basically challenged them to force us, and they caved. It's probably a "thing" for them to ask for it but not really require it.

My definition is terminating employment (for any reason) and being eligible for Normal Retirement - same as yours, I think. I would not want to specify a reason in the plan document.

This is what we used, on letterhead/memo of the sponsor: The xyz payroll system stopped taking your 13% 401(k) deferral, unbeknownst to us, sometime after January 2015. We migrated to a new version of xyx at the end of February and suspect it occurred at that time. You did not receive any pay from [sponsor] from the end of January 2015 until the May 1st pay date as a result of your leave of absence. In the month of May, you received three pays; one on May 1st and two on May 29th. Your 401(k) deferral was not deducted during these pays. You have elected to resume your deductions starting immediately and they will resume on the next pay. As we discussed, you will be increasing your deferral to make up for the missed opportunity. This is your right so long as you are within the applicable limits set by the IRS. Corrective contributions will not be made since the failure was for a short time and there is sufficient time to correct the failure by increasing contributions. Should you have any questions about this, you can contact the plan's third party administrator: [TPA]. We are sorry for any inconvenience this system error may have caused.