PensionPro

See rules for B-Org groups.

This is a fact-specific question and requires knowledge of state family law but VERY GENERALLY SPEAKING a judge has the authority to modify or vacate a divorce decree after the decree is final. On what basis is the plan questioning the judge's decision to vacate the divorce decree? The plan probably needs the services of an attorney who is familiar with your state's family law.

My understanding is that it does not in itself create a prohibited transaction but creates the potential for prohibited transactions so would not recommend such a course of action to my clients but ymmv.

It can all go to the IRA. Those assets will be subject to the RMD rules under the IRA for subsequent years.

Math looks fine to me. I am assuming that C is not adopting any plan.

Great points! I am going to recommend he talk to an ERISA attorney and/or tax advisor. No point in making a client's problem my problem. That said, I am always curious about the statute of limitations on these types of transactions.

This letter from the IRS Office of Chief Counsel explains the issue very clearly especially in a 401(k) plan and reflects the IRS' serious view of the matter. https://www.irs.gov/pub/irs-wd/00-0245.pdf

he can terminate the plan.

I agree with your approach. It is a prospective client's plan so we are interested in giving them the correct viable options. However, I am curious about the application of the statute of limitations. Is the IRS in a position to audit this plan 1 for the 2010 year?

Plan 2 was adopted immediately after termination of plan 1, well within 12 months.

One person 401(k) plan wanted to move investment companies in 2010, was advised he had to terminate plan and adopt a new plan. Participant was less than 59 1/2 and no distributable event. Assets were rollover over to IRA and never withdrawn, it is still in the IRA, so apparently no tax consequence. The new plan is terminating now in 2018. The owner wants to fix the failure in the first plan. What is the fix at this point? Can he ride the statute of limitations and do nothing? Appreciate any insights! Prior discussion here: https://benefitslink.com/boards/index.php?/topic/56188-successor-401k-plans-correction-thoughts/

Amounts contributed (or treated as contributed) to a plan are deductible subject to the rules and limits in section 404. This is the case without regard to whether the amounts are used to pay brokers’ commissions, administrative or overhead expenses (such as trustee or actuary fees), or cash benefits. Revenue Ruling 86-142.

Let's say a pw contract requires $100 per hour. Everyone gets paid $100 in cash except for those who elect to defer who will as example receive $90 in cash, they defer $5, and receive $5 match. There may be a tax qualification issue but I am not quite sure. I would be wary if the eligibility requirements are not immediate for deferrals and match meaning some of the pw employees are eligible, and others are not. I would feel uncomfortable proceeding when the plan provisions are inconsistent.

How are prevailing wage plan contributions if any made to employees who work on prevailing wage jobs but elect not to defer?

OP is describing basic SH match formula. We have a lot of plans that offset the SH match with PW contributions. However, based on the language in the OP I am not certain of all the details of how it is being implemented.

yes give it a shot since the employer's intention is reflected in employee communications. make sure you show it does not affect coverage, non-discrimination, etc. Worst case scenario is they say no and you have to make qnecs. The IRS made some concession on a VCP filing we did in a similar situation.

The OP is titled "controlled group issue." If the spouses have a minor child the two entities/employers will continue to be a controlled group.

Maybe others on this board can chime in. In my opinion, The employer can not exclude certain HCEs administratively without properly reflecting such provision in the plan document, SPD, and annual safe harbor notice. It is questionable if they can include a provision that limits contributions to those HCEs who are employed at the time the contributions are funded.

You should request it. https://www.irs.gov/retirement-plans/notice-requirement-for-a-safe-harbor-401k-or-401m-plan

Discretionary nonelective contributions are different from safe harbor nonelective contributions. The section you cited does not seem to relate to safe harbor nonelective contributions. The annual safe harbor notice might be more helpful.

In theory, yes. However, the plan needs to contain provisions stating who receives the employer contributions, and that information is required to be disclosed to you in the SPD and in the annual safe harbor notice. Did you receive the annual safe harbor notice for 2017? If not, you should request a copy. If the plan reflects the employer's practice and you received the proper notices, then no. Otherwise the DOL is the agency for administering and enforcing participant righyts.

Recently, the 7th circuit held that ERISA does not preempt the Illinois slayer statute after the plan administrator initiated an interpleader action. The court determined the slayer statute applied even when the the plan participant's wife was found not guilty by reason of insanity. Moral of the story: simply paying the designated beneficiary may not always be the right course of action. https://tax.thomsonreuters.com/checkpoint-ebia-newsletter/seventh-circuit-erisa-does-not-preempt-slayer-statute-no-plan-benefit-for-spouse-who-killed-participant/

Is OP talking about the US Senate? In that case 25 is a very small number for dishonesty!