Lou S.

I would assume the loan would be coded 4 as it is an offset and not a default. If it is treated as a default after death does the form allow for code 4L? I think it is pretty clear under any reasonable interpertation of the rules that the 10% penalty does not apply in this case.

I don't think there is anything in the code about restoring earnings. I think you just need to restore the amount forfeited w/o earnings when partial termination is determined.

you and mojo have it correct but for completeness the TH minimum in a DC only scenario is non-keys get the lessor of 3% of pay or the highest allocation rate of any key ee (allocation rate includes 401(k), er contribs and forf realloc). If all keys are getting 0% then that is the highest allocation rate and no TH min is required even if plan is TH. Though it does bring up a potential question about "complete discontinuance of employer contributions" in the context of partial plan termination. Though that's a different question entirely.

And I agree, I've never heard a good argument for establishing basis or carrying forward the deduction to future year.

Mike I thought it was 4972©(4) that made them not subject to the excise tax. That is it for purposes of the excise tax it is "treated" as deductible if required under 412. https://www.law.cornell.edu/uscode/text/26/4972

Yeah you can't deduct more than your income for schedule C employee. But if I recall correctly the IRS doesn't impose the 10% penalty on non-deductible contributions anymore for self-employed if it is required to meet minimum funding.

The practical implications generally come when you are paying someone out who is not fully vested.

And probably get some advice from your CPA who may or may not have run into this situation before. While the failed ADP test after rollover is somewhat common I don't think the rollover then transfer to new IRA is that common in this situation so he may or may not have seen it before.

Claim one on your tax return. Keep really detailed records of everything that happened in case you get audited so you can explain to the IRS that Fidelity issued the 1099-R in error since the funds came form Schwab who issued a correct 1099-R. I'd probably also send a formal letter to Fidelity requesting they issue a corrected 1099-R, they may or may not do so but having the letter in your files would bolster your case should the IRS raise questions.

Have you tried contacting PenChecks? I think they have an IRA rollover program. It's been many years since I worked with them but they were very good and easy to use last time we had need of them.

I'm not an expert on government plans. In fact I don't work with them at all. However, what you are describing does not sound like wages for services rendered. It would be extremely unlikely that you would be able to defer them in to a 403(b) or 457 plan.

If the document allows the TH minimum to be offset by matching contributions received, yes.

If it is an error, usually the IRS will simply ask you to fill an amended return with no penalties. Assuming it wasn't willful neglect and assuming it doesn't change the type of form that needs to be filed: such as EZ, SF or long form 5500 with audit.

Is the child eligible under the plan? Would you exclude an eligible NHCE who worked 1 hour in the plan year? The risk you have with a minor child is always, will the IRS challenge the position that they are actually an employee of the company or not. But there is no de minimus pay limit that I am aware of.

I don't see why the new company can't start a plan. If it was a stock purchase my answer would be different. If company B wants to allow loans to be rolled in, they could. Most plans don't.

Besides the ones you've mentioned, anti-alienation provisions would apply as well.

Yes it is permitted.

sounds like a mistake of fact. I'd forfeit it and use it to fund the next payroll. It was money he received erroneously due to payroll error.

Maybe I'm crazy but I think you are missing the forest for the trees. A small error was found on one payroll and fixed on the next, I don't really see a problem.

I don't see a problem. The plan is ending for legit business reasons.

He can fund the full $24,000 from 1/1/15 - 6/30/15. For ADP purposes his deferral would be $18,000 (since you state he has no deferrals from 7/1/14-12/31/14) as $6,000 is catchup and not subject to testing.

This why you don't pre-fund the defined contribution plan and or SEP. What you have is non-deductible contributions to the defined contribution plan subject to the excise tax. Good luck.

Interest accrues until the loan is paid off, defaulted or offset.

I would think it is uncommon for a plan not to have language to address refunds where someone is in 2 unrelated 401(k) plans. I don't write plans so I haven't checked the LRMs but I'd be mildly surprised if that wasn't addressed somewhere in the LRMs.

hmmm, that's an interesting thought to intentionally violate 402(g) in the 2nd plan. could you then go back and recharacterize the excess contribution in plan one as excess deferral in plan one? I think the answer is yes. I'm not sure I see a problem with that in the regs.