Lou S.

The loan is NOT income unless you default. You are losing if your returns in the 401(k) plan remain at 17% which is well above the historical average return for the stock market. It's not what you should expect on an annual basis. Also factor in whether or not your student loan interest is tax deductible, I'm not a CPA and don't have student loan debt so I really don't know if it is or not. If it is your effective interest rate is lower than 8.5% based on your tax savings. If you can make the 401(k) loan payments w/o reducing your 401(k) contributions and you are reasonably confidnet that you are going to be at your current job for the next 5 years, you may be better off with the 401(k) loan that the student loan. If you're planning on changing jobs in the near future, I'd avoid the 401(k) loan. edit - and as always free advice is worth what you pay for it.

Maybe maybe not. Having taken EA-1 (sadly more than once) I will say the exam was a bear. I have not taken the other two but have heard that passing the other two can be "easier" than passing EA-1. I think it depends how strong your math skills are.

Not involved with 401(k) loans, but here are my opinions (for what they are worth), even presuming that the 50% of balance restriction only applies when the loan is issued: If I correctly understand the original post, the history might look like this: Husband (owner): Had an account balance of $200,000, borrowed $50,000, has paid the loan down to $40,000. Has taken withdrawals of $170,000, so account balance is now only $30,000. Loan offset of full account balance would leave $10,000 unrepaid. Wife (ditto): Same numbers. ["...should she receive a full distribution" - hasn't she already received in cash more than 100% of her account balance?] No matter what, the owners should be compelled (through legal action, if necessary) to pay the remainder of the loan amounts back to the plan. Forgiveness of that indebtedness should not be an option. If it were an option, however, wouldn't the entire amount forgiven be treated as a taxable distribution (i.e., pay nothing more, receive nothing more, but the $10,000 still owed is forgiven, ergo $10,000 treated as a taxable distribution)? How or why would they have been allowed to withdraw amounts large enough to leave an account balance insufficient to cover the rest of loan? Would any of this have been considered a fiduciary violation? A prohibited transaction? It doesn't sound right to me. If it is a pooled account and that is what happened then someone screwed up in allowing the in service distribution. Yes it could very likely be both a fiduciary breach (if husband and/or wife are fiduciaries) as well as a potential prohibited transaction since the plan has esenitally loaned unsecured monies directly to them. I guess we just work mostly with participant directed plans where this really is never an issue.

The restriction is only at the time the loan is taken. After that all bet are off. Why would the wife owe money? Would she just receive a loan offest as part of her distribution should she take a full distribution?

I see no reason why not. The question about qualifying assets does not apply to 1 part filings.

Not sure on this one but there is typically a grace period the IRS allows when new forms are released like this. For example the new 5310 came out in December and while the IRS encourages you to use the new form, they did allow you to use the old form for 6 months I believe. I imagine something like this would be similar but you never know sometimes with the IRS.

Yes I would agree. The advantage of doing a 1 person SF is the ability to e-file.

My understanding is if the Plan becomes disqualified, the whole vested benefit becomes taxable but you might find an ERISA attorney who will take your position and argue on your behalf. good luck it's never fun fighting with the IRS.

totally agree with masteff's recommendation

Participant loan? The fact that he didn't want taxable income doesn't make it administratively unfeasible to distribute as you are probably finding out now. Did this come up because of IRS audit? I'm not sure I follow your other questions. Plan disqualification results in disallowance of deductions (though there are none since no contributions were made), inculsion of vested balance as income for HCEs, inability to roll balance to IRA and a few other things I'm probably forgetting like possible tax implications for the trust earnings in disqualified years. Is it possible to amend now under EPRCS for reduced sanctions? Not ideal but may be better than full disqualification.

If it is disqualifed then 100% is taxable income and if amounts were rolled to IRA you might have penalties there as well. Were the assets distributed in 2010? If so can you argue that it's a closed tax year?

Forgeting the non-discimination issue on availabilty of distribution option for a momment yes you could assuming you found an IRA trustee that would hold such a non-traditional asset.

For RMD determination (or HCE, Key-ee determination) you look at the highest percent ownership an employee has in any entity that has adopted the plan to determine if the participant is a more than 5% owner.

I agree with your logic.

I am not aware of any official guidence but I have heard some argue that accepting rollovers from terminated participant could be a potential violation of the exclusive benefit rule. Assuming the participant has some balance in the plan, I doubt the IRS would challenge a rollover in. No if the participant has a $0 account balance before the rollover in, I think you are in a little grayer teritory.

Do you have source eligibility set up in Plan specs? Also I think an incident to Relius would probably get this cleared up for you fairly quick.

sounds right

Non-issue. Sponsor moved. Send notice to participants but amendment is not required to update a Sponsor's address.

I don't see why not, with usual caveat that provided document allows for payment of plan expenses. I suppose it could technically be argued that it is a settlor function to change vendors which caused the recquired change but personally I think that's a stretch.

It depends on how cautious you wnat to be with documentation. Some plans will accept the participant's signed statement, other plans want a good faith closing estimate, and I've heard of other plans that will only pay a home loan proceeds to the escrow company.

You are doing 2014 testing, I see no reason why you wouldn't use the method in effect for the year year to determine 2014 HCEs. If your plan is amended before the end of 2014 to use the TPG for 2014 I would determine 2014 HCEs based on 2013 compensation AND in the top-paid group in 2013 (plus any 5% owners you may have who are not in in the TPG).

Same table. Is the beneficiary a spouse who is more than 10 years younger than the participant? If so, maybe they are thinking you should be using that joint life table to get a smaller RMD but that's all I can think of.

Don't know on your first question but on the second. Google is your friend http://www.unclefed.com/IRS-Forms/1997/f5500ez.pdf

If employer B had a participating agreement why didn't they just take over sponsorship of the pkan on 1/1/14 instead of terminating the plan? Since they are a controlled group they are considered 1 employer for pension plan purposes and yes I think you have some sucessor plan issues and improper distribution issues.

Thank you.