Lou S.

I though the IRS guidance on In-plan ROTH rollovers and In-Plan ROTH conversions pretty clearly stated that you could not have those provisions without also allowing on going ROTH deferrals. I'm not sure if that extends to accepting rollovers from outside or merging in assets from a plan that allows ROTH to one that does not (in a corporate transaction scenario in essence creating a frozen from new contributions ROTH source).

I agree. I see no reason why an employer can't be made on behalf of a deceased participant unless the plan terms prohibit it which a SEP would not. I also agree that a deceases person could not make an election to defer, however if they had an election to defer a percentage of Sch C income or dollar amount conditioned on having sufficient Sch C income to support it I could see the surviving spouse honoring the election and making the deferral.

First you might want to check to see if your Plan Document has fail safe gateway language just for this situation, I know our old prototype and current volume submitter both have such language. If the Plan does, then you just allocate the gateway and assuming you pass all the other test than you are done, no need for amendment. If the Plan doesn't have such language then yes this sounds like a classic 11(g) amendment situation to correct the failure.

As ETA says if it is a SIMPLE-IRA the answer is no. If it is a SIMPLE-401(k), I'm not sure.

My opinion is adding In-service distribution should not present a problem, but the IRS may or may not differ. I believe there are several threads on this specific question if you do a search. But do recall some sources are not available for in-service before 59 1/2 (or possibly later in some circumstances) even if you add in-service if that is an issue in this case.

Yes. Or amend one of the plans to match the same PYEs in case you need to aggregate in the future.

Which Plan Sponsor? The one rolling the money out or the one accepting the rollover? As for the money going out if the participant elects elects a rollover to The Former Participant 401(k) Plan FBO Former Participant I don't think the "old" Sponsor has any duty to vet if the plan accepting a rollover is a qualified plan unless their procedures require a letter from "new" Sponsor that they will accept the rollover assets which should pretty much cover them. As for "new" Sponsor who sets up a business; who is to say he doesn't have a sole proprietorship to sponsor the business? Now if it he doesn't or he never has any future contributions other than the rollover it is possible the IRS could disqualify that plan but that is a problem for "new" sponsor, not the old. Which are you working with or are you working with both? I would at a minimum make "new" sponsor aware of the issues with the 401(k) Plan that could cause problems. That said I fully understand him wanting to self-trustee a 401(k) plan to hold the nontraditional assets to save on IRA trustee fees for said assets which can run 1% to 2% annually.

Because that would violate the DB accrual rules.

Is this a business transaction that will change the ownership structure?

I usually refer to the IRS chart on rollovers here http://www.irs.gov/pub/irs-tege/rollover_chart.pdf I seem to recall you can't move a ROTH-IRA -> ROTH 401(k) plan under any circumstance. There may be some instances where you can move a ROTH 401(k) -> ROTH 401(k) {I'm thinking more plan-to-plan transfer as opposed to rollover election} but I may be confused on that; it may only be be in-Plan Roth conversions that are allowed.

The loan limit is at the time the loan is issued. His account balance after that is irrelevant for existing loans. It only effects his ability to take new loans, if allowed.

Is it a per payroll match in the document? Do they have discretion to change it? If both are yes, I don't see a problem with the change.

Is this one employer with two divisions or two employers? If they are two employers are they members of a controlled group of affiliated service group or are they unrelated?

You don't need those schedules if you can file and SF.

I think if you are using a program or the DOL site it will force which column it is supposed to go in. Though for the individual items they generally go in the (a) column with the subtotal in the (b) column. For fees they would go in 8(f), again generally in the (a) column. Our software put the following question 8 items under (a) (a)(1) (2) & (3), b, d, e, f, g, j and the other 8 item questions under (b) c, h, i hope that helps you.

A fee affects the g/(l) not the ROTH basis which is the actual amount of ROTH contributions and does not change. The participants basis is $1,000 because that was the amount of AFTER TAX ROTH deposits that they made which are recoverable tax free.

Trying to send off our Extensions Form 5558 via UPS for proof of delivery today and the IRS address on the form is simply Department of the Treasury IRS Ogden, UT 84201-0045 No street address. Can we use the 5500-EZ filing address for private delivery service? Internal Revenue Submission Processing Center 1973 North Rulon White Blvd. Ogden, UT 84404 This address is not in the 5558 instructions but is in the 5500-EZ

Is it written in the document as 5%? Was 5% in the safe-harbor notice that was distributed to participants? If the answer to either of these questions is "yes", then you can not reduce it until the next year Plan year. If the document says "at least 3%" and the safe-harbor notice says "at least 3%" but they historically have done 5%, then you are probably fine with doing 3%. And by "funding" do you mean on a per payroll, monthly or quarterly basis? If yes, I would be very concerned with changing it mid year.

What are the current allocation conditions to receive an employer contribution? If participants have satisfied those conditions you can't cut them back.

How much did he own before the sale and is the ESOP leveraged?

If you want to follow the terms of the document, deferral would change from 0 to election on 1/1. Is there a reason the forms were turned in late? I mean did the participant get an enrollment package at the end of June? Or did they get one in May an just sit on it?

The plan document should spell out how the assets are allocated when insufficient to cover all benefit liabilities. Section 7.12.1.20 of the IRS internal manual may be helpful http://www.irs.gov/irm/part7/irm_07-012-001.html- though after looking at it probably not. See Rev. Rul. 80-229 - I think this is the one that spells it out pretty clearly and I don't think it has been superceeded. I think there was discussion of similar situation in this thread http://benefitslink.com/boards/index.php/topic/12131-distributions-from-terminated-small-db-plan/

I'm a little confused by your description does the trust own the shares of the company (or 100% interest in an unincorporated business)? I assume the original owner is the beneficial owner of the trust and is carrying on the same business, no? If so you might have an EIN change along the way but essentially you have the same ownership structure for pension purposes when you look through the trust. That is he went from owning 100% of the business as the shareholder of the company to the 100% owner of the business which he now essentially owns through his trust.

There are absolutely some fiduciary issues with the owners taking their money and leaving the rank and file with the bill.

The short answer is it is required by law. And the bond doesn't protect against losses from poor investment due to individual direction, it protects the participants from theft by a plan official with access to their account.