BG5150

Just stream of consciousness thoughts: Did the sponsor get distribution instructions from the participants? Or did they just pay people out? Even if you allow a retro-active amendment for in-service withdrawals of PS money, it seems like these distributions were coerced, and not voluntary. How was vesting handled? Everyone 100%? If so, IF you do the in-service amendment, then you may need to amend vesting, too, if the source was not originally immediately vested. That in-service withdrawal provision would be a protected benefit. Could they terminate this plan, and adopt a new plan for 2021 with only PS and the 401(k) option available effective 1/1/22?

^ I agree

We do this for all our plans. Offers most flexibility. Pro-rata, integrated (only at TWB) allocations under this method both pass on contributions basis. If you want to integrate at a different level you will need to pass nondiscrimination testing. Be aware of your firm's pricing policy. A lot of firms I worked at/with charge more when there is a non-safe harbor formula in the doc, regardless of whether the client issues a profit sharing that requires cross testing.

I think that it's an (un)intentional back door to a site that acts as a middleman between ARA and candidates (I could be wrong) I sent ASPPA an e-mail about it.

That's not how my interpretation on how refinancing plan loans works. The first loan does not get repaid, but merely gets absorbed into the new, 'refinanced' loan. That is how you get around the thorny two-loan problem. If the plan only allows for one loan, you would not be able to take a second loan in order to pay off the first. With refinancing, there are never two loans at the same time. But, under the rules, the amount outstanding from that first loan must be paid off no later than 5 years after its origination.

Good point, CB. I knew we kept you around for a reason.

Is this for 2020? or 2021? If 2021, has the owner taken and comp yet this year? How much? Has he made any deferrals yet? More importantly, the wife? Any comp yet? Any deferrals yet? Also, husband can get the entire $33,750 b/c he won't go over 415 limit. (Assuming the PS is not pro rata in the document. (And like you presented above)

Plan doc says participant can defer up to 100% of comp. Compensation for plan purposes is 415 Comp. But as we all know, certain taxes are taken before the 401(k) can be deferred. So, if I make $5,000 this pay period and I want 100% of my pay deferred. But, $350 is withheld for various taxes (like Soc Sec). Now my check is only $4,650. ER deposits $4,650. But my compensation is $5,000. My SPD says 100% of comp, which is 415(c) comp, no exclusions. Where does it say that $350 cannot be put into the 401(k) plan? I understand the logistics, but cannot reconcile the semantics.

What is the ownership structure? C-corp? S-corp? Partnership? Sole prop? Don't forget, owners' comp gets reduced by their share of the Employers contribution to the staff as well as reduced by the ER contribution to themselves. So if this is a partnership or sole prop (I will sexist-ly assume the husband is the owner here), the husbands comp will be lower than $290k if he gets more than $10k in ER money. (And if the wife is W2, the comp will be lower by her contribution) . So the 25% of comp is a moving target. At least, that is how I understand the rules.

AND, the original loan amount must be repaid by the end of 5 years from the original. For example, old loan $5,000 over 5 years. After 3 years, $3,500 balance left. Refinance for additional $5,000 for 5 more years. The amortization schedule must have the original $3,500 paid off within 2 years (or, by 5 years after original) Or, at least that is how I understand the rules.

But where does it say that they can force to an IRA if a participant is not lost, just unresponsive.

Right. So, in this case, they don't need a bill, at this moment, from the funeral home.

Plan terminated. MOST of the assets paid out. One recalcitrant participant keeping brokerage account open, and not heeding calls to distribute the account. About $50k in there. Participant is NOT lost. She still works for the company. In fact, she answers the phone! Can the plan administrator still force her out? What is the cite?

Did you call Relius?

I didn't think documentation was needed up front any more. Just must be able to produce it under audit.

The OP said there are currently no employees. Would you have the doctor and spouse establish the plan then have to wait to participate?

Isn't there a simple payroll software program out there that can do this? I bet there's even an app. Something like Intuit? Does Quickbooks do that? Even if the cost was $1,000 for the year, wouldn't it be worth it if the spouse could get $10,000 into the 401(k) piece of the plan?

What is the penalty if this situation isn't kosher?

Ah. Noted.

The default withholding for RMDs (and any other distribution that is not eligible for direct rollover treatment) is 10%. The participant can opt out of the withholding, or change it to something else by completing a Form W4-P.

DOL doesn't audit. They investigate. Sounds more sinister.

Remember the withholding requirements of the RMD. You MUST withhold 10% UNLESS the participant elects otherwise.

In this case, the owner, plan sponsor, plan administrator, fiduciary and trustee are all the same person. Turns out, we have a form that our firm used in the past. It seems to touch on all the requirements to be a qualified disclaimer noted above. I do not know if the form was ever looked at by a lawyer, though.

*thirded

Well, I guess the plan doc DOES say the Employer "intends" to comply with 404(c). (Similar language in the SPD.)