david rigby

Take note: there might be advantages to creating a DB plan now, using a very low benefit level, and amending (ie, increasing) the benefit later when additional income is available. Ask your actuary.

…. or better.

Data as of September 30, 2019 (Monday) Moody's Daily Long-term Corporate Bond Yield Averages Utilities Industrial Corporate Aaa NA 3.01 3.01 Aa 3.21 2.97 3.09 A 3.35 3.31 3.33 Baa 3.68 4.07 3.88 Avg 3.41 3.34 3.38 Moody's Daily Treasury Yield Averages Short-Term (3-5 yrs) 1.55 Medium-Term (5-10 yrs) 1.61 Long-Term (10+ yrs) 2.03 Observation: Comparing the Avg rates to 12 months prior, current Bond rates are about 100 points lower. Comparing the Avg rates to 6 months prior, current Bond rates are about 70 points lower.

Agree with the advice above. While very unusual (and very undesirable, from the plan's viewpoint), if the "plan administrator" is saying the payment form can be modified, then maybe the plan does allow it. It's up to the lawyers to inquire.

Don't forget: If you are still within 60 days, you can do a rollover (all or part). This is described in the "Special Tax Notice", which you should have received at the time you elected your distribution.

Maybe. The tax withholding is a default percentage, not the actual tax.. You will include the total distribution in your total taxable income when you file your tax return for he year. Depending on all your income/deductions/credits, you may owe more or get a refund. It appears your distribution was eligible for rollover to an IRA. To the extent you rollover some or part of it, that portion will not be part of your taxable income.

My point is vesting, and therefore the correct date for the first RMD.

Oversimplified (hence misleading). ERISA (et al) limits the degree of discrimination, but does not prohibit it.

Top heavy?

Might is the important word. I've seen examples where the "CPA firm" just waves its hands at whatever the owner wants/says, and such review has no integrity.

Don't overlook the value of an amendment to document this. Even if it's administered correctly, it is useful to have adequate documentation so all understand what/why/when.

Merge the plans?

That sounds correct. Note that the test for the 2019 audit is based on the B-O-Y participant count.

The precise definition prob includes something like "...first day of the plan year that includes the fifth anniversary of plan participation". Thus, the NRD is fixed when he/she becomes a participant, and subsequent changes in the PY have no effect. IMHO.

Sounds like someone was trying to purchase key-man life insurance and thought the cheapest method (ie, tax-advantaged) is to use plan money for paying the premiums. (Just a hunch, there is an insurance broker somewhere who has the ear of the client/executive.)

You might want to read the plan and/or the SPD. I think both will indicate that the loan is an investment of the plan; ie, it's the plan's money being loaned, not your money.

Warning. Technical terms in use.

As a Moderator, I'll take this opportunity to comment about a previous post/exchange in this thread. Let's keep our discussions civil. Please. You know who you are. There is no value here in using demeaning words or phrasing.

Well, the premium is based on participants, but the eligibility is based on employees. From page 38 of the 2019 instructions: "Small-Employer Cap qualification – If the plan qualifies as a small-employer plan, the Variable-rate Premium may be capped at an amount lower than the MAP-21 Cap. Determining whether a plan qualifies for the Small-Employer Cap – For this purpose:  a plan is a small-employer plan if the aggregate number of employees of all contributing sponsors of the plan and all members of the contributing sponsors’ controlled groups, as of the first day of the Premium Payment Year, is 25 or fewer,  the aggregate number of employees is determined in the same manner as under section 410(b)(1) of the Code, taking into account the provisions of section 414(m) and (n) of the Code, but without regard to section 410(b)(3), (4), and (5) of the Code, and  employees are counted as of the first day of the Premium Payment Year, not as of the Participant Count Date or the UVB Valuation Date. Note that a plan with 25 or fewer participants does not necessarily qualify for the Small-Employer Cap because the eligibility criterion is based on employees, not the Participant Count. For example, if a plan has 15 participants, but there are more than 25 employees (taking into account all employees of all contributing sponsors of the plan and all members of their controlled groups), the plan does not qualify for the cap. Also note that a plan with more than 25 participants might qualify for the cap. For example, consider a contributing sponsor with 20 employees, all of whom are participants in a plan. If the plan also covers 15 former employees who are either terminated vested or retired, there are 35 participants in total. This plan would qualify for the cap (assuming there are no other contributing sponsors and no controlled group members)."

One hopes that the participant will receive a copy of the "Special Tax Notice" so he will have some information about taxation. Perhaps he will even consider doing a rollover, thus giving him a greater degree of control over the timing of his taxation. Perhaps he will even consider spreading his IRA withdrawals over 2 (or more) years which might help to minimize the tax impact.

At the risk of being picky, before making any payment to the participant, make sure he has reached a date on which payment could be made. Just because he "...has now terminated employment..." does not automatically mean he can be paid now. RTDD.

Um, is there a potential incentive behind this "encouragement"? As CuseFan implies, any similar plan provision might be in the best interest of the advisor, not necessarily in the best interest of the participant.

Has a 5500 been filed? If prior 5500's filed, and no PBGC filing, it seems likely someone has already received a letter of inquiry. Is it possible the plan is exempt from PBGC?

Piggybacking on Luke's comment, is the intention to redefine NRA as (for example) 50/20 or age 65?

No. Inquire whether there is anything to be gained by changing the plan year.