Lou S.

Non-PBGC plan, what does the document say? I think there is a Rev-Proc (80-229 I think) dealing with underfunded non-PBGC plans in termination that allows reducing benefits is in a "nondiscriminatroy manner" one of which I believe was pro-rata reduction.

Yeah, I don't think you can change the in status form of payment due to QDRO but I've been wrong before.

Is the benefit in pay status? The plan probably allows a spouse to elect out of the QJSA so they would probably have the same options in a QDRO. Though I don't think the kids would qualify as an alternate payee unless it was a support order. Though I'll be the first to admit I'm not the most knowledgeable about what can and can't be done in a QDRO beyond some of the real obvious basics. There are a few QDRO experts on this board so hopefully one of them can chime in for you.

Have you considered making the maximum non-deductible IRA contribution each year for yourself (and your spouse if you are married) and immediately converting to ROTH IRA? As for why your employer won't "safe Harbor the plan" - it is probably a cost issue. I to like the use of safe harbor as a verb. And yeah the the tax savings on $8000 sounds minimal compared to the compensation you're currently making. Sure it's annoying but a lot of folks would kill for your problems.

thank you! very helpful.

I'm a bit confused on the difference between "In Plan Rollover to Roth" and "In Plan Conversion/Transfer to Roth" Anyone have a quick cheat sheet or link that explains the difference between the two and whether you would want to add one, the other or both to a plan when adding ROTH contributions to an existing 401(k)?

Did the IRS give a citation for that or just a comment from the podium? Though for what it is worth, I actually agree with their position on this one.

I would say that qualifies. Building an addition probably would not, but building a home from scratch would.

What if they never make the match? Is this pooled or individual accounts? What do you do if a participants needs a match refund but doesn't have a balance in the individual account? I think the technical right answer is to wait til the match is funded and pay the excise tax on a 5330. That said if you do the refunds before 3/15 and the match eventually gets funded, I don't think that's a problem. The problem arises when the client changes its mind about funding the match or goes into bankruptcy and can't or won't fund the match and you've already made refunds. What do you do then?

Yes. Sounds like owner is getting what amounts to a leveraged loan from the plan until the forfeitures are allocated. That is he has the use of the money until it is allocated. Possibly a prohibited transaction. Not to mention the potential to "forget" to allocate the forfeitures at some point. If they are concerned about fees they could probably open up a low/no fee saving account in the name of the plan to hold forfeitures.

What does the plan document say? I know you can exclude all HCEs from the safe harbor and I'm pretty sure you can exclude just some HCEs from the safe harbor, since you can almost always discriminate against a subset of HCEs, it is just a question of what your document will allow and how it is drafted.

Was it a stock sale or asset sale? I think that changes the conclusion. If it was a stock sale she was a 5% owner in the company acquired and I think under the "once a 5% owner always a 5% owner rule" she needs to continue RMDs, that is her stock is simply no diluted to less than 5%. If it was an asset sale (assuming they are unrelated companies no CG or ASG) I don't see her as a 5% owner in the new company so no RMD required. I agree with you we'd "fix" the 2014 RMD same as you are doing. edit - I should have read your original post better - since you mention it is an asset sale, I would agree no further RMDs are required for her until 4/1 of year following separation from company B.

No they all went on the new payroll in 2014. They remained on the old payroll through the last pay period in 2013. Thanks.

Controlled Group A (a controlled group with 3 companies X, Y, and Z is downsizing) and sells the assets of company X to Employee M who is employed by CG A but has no ownership in any of X, Y or Z. This happens December 2013. Employee M starts a new Company B where he is 100% owner and hires all of the employees of company X on 1/1/14. Company B establishes a plan 1/1/14 with identical provisions of Plan A and grants past service with CG A to all employees for eligibility and vesting. Controlled Group A spins off the employees of company X in Plan A into Plan B. No employee in Company B earned over the comp limit in 2013 to be an HCE of Company B in 2014 but several who were hired by Company B on 1/1/14 earned over the comp limit in CG A in 2013 and would have been HCEs in CG A but for the asset sale and transfer to Company B. Both plans A & B and all tax payers B, X, Y & Z are on the calendar year. Am I correct that Employee M is the only HCE of Company B in 2014? There are no other more than 5% owners employed by B.

Why do they still have the plan? Why not terminate it or merge it with their PS/401(k)? Assuming they have another DC plan. Amendment would have to be prospective.

If you want the PYE to be 12/31 and the Plan to start 10/1, then yes there would be a short plan year. I'm not sure in this case you can retroactively adopt the plan back to 1/1 and still be considered to satisfy the 12 month rule. But perhaps someone else has direct experience with that.

Well I'm not sure you can "correct" the taxable distribution at this point but you should talk to the Plan Administrator about their loan procedures, particularly the the part about how they deal with a participant on an approved leave of less than 12 months and whether or not they allow payments to be suspended. If it can't be "fixed" and you do repay the loan, get something in writing from then that your are paying off an after tax loan and that your repayment, at least of the defaulted amount, will create a nontaxable after tax basis in your account. Good luck.

It is likely the SDB was not setup properly to require a trustee signature to release funds but rather only the participant. Or the Brokerage firm just allowed the participant to do it without trustee approval. Either way, I would agree that a review of plan's administrative procedures is in order so there is no future repeat of this incident. Surprised it happened with an NHCE, it is usually some owner who goes off on his own and does it on the "advice" of his investment guru.

yep. that's 12 months after final distribution so they would be good to go then.

#1 - I think amendment is still the correction method though the last procedure "may" have added distribution as an option, you'd need to check the rev proc. If refund is allowable I assume it would not be subject to 10% penalty and would be taxable in year received. #2 - I assume he does not qualify for in-service distribution? Can plan be retro-amended to make this in-service OK? If yes that might be easiest, though it does open a potential in-service can of worms. As for recovery, that would be best option though I'm not sure what the procedure is if ee does not comply with request. If their is pre-59.5 401(k) money leaving w/o distributable event that is not eligible for rollover and causes potential plan qualification problems as well.

There is no RMD required in the IRA. This assumes there was no IRA balance on the prior 12/31 and all RMDs from the 401(k) were completed (that is if it is the 1st distribution year a 4/1 and 12/31 RMD might have been required in the 401(k)).

It is unlikely the discretionary match calls for discretionary amounts/rates varying by employee similar to some cross tested plans that have everyone in their own allocation group but as Jim asks, what does the document say?

Yes. he needs to wait 12 months from the close of the other 401k plan to start up a new 410k plan. So no new 401(k) plan until October at the earliest. edit - I see I'm too slow

You can still have a 12-month suspension. It's just that Safe Harbor Match plans MUST have the 6-month period (at most). I think. Yeah and I think you can even have no suspension depending on what hardship rules you use. Our plans currently all use the "safe harbor" rule on hardships (not to be confused with safe-harbor 401k plan or safe-harbor allocation formula...) so sometimes I forget to mention some important details. Thanks for adding that!

Not a problem, we also use the Corbel Doc and it is OK in both prototype and VS.