Lou S.

It's been a while since I've seen this one but we used to get it occasionally and often enough to added it to a form letter as one of the check the box entries. I don't recall ever getting any push back from the accepting institution. q The distribution due the participant named above is from a Plan intended to qualify under Internal Revenue Code §401(a).

Notice of Intent to Terminate must be distributed to participants at least 60 and not more than 90 days prior to termination in DB plans covered by the PBGC. Rocknrolls2 covers the 204 h notice requirement of pension plans, generally DB, Cash balance, Money Purchase and Target Benefit. As he notes, section 204(h) does not apply to profit sharing plans. There may be a best practice to notify participants in advance of the termination of a profit sharing plan, but I don't think you are going to find an IRS citation to that effect.

Good question. I've never really thought about having different hours requirements for a year of accrual for different classes of employees but I'm pretty sure our pre-approved document only allows once such definition.

Review the incidental benefit rules?

Excess Deferral = 402(g) refund. Excess Contribution = ADP refund Excess Aggregate Contribution = ACP refund. With an excess deferral the amount over the 402(g) limit is taxable in the year deferred but the gain/loss is taxable in the year received. With an excess contribution or excess aggregate contribution both the refund and the gain/(loss) are taxable in the year received.

The 1099-R for an ADP or ACP refund should be the net amount after reflecting the loss. I think you get a different result if it is a 402(g) refund but I'd need to go back an review since it's been a while since we've had a 402(g) refund with a loss.

I believe all employer contributions that are 100% vested can be elected as ROTH which would include safe harbor contributions. I think the 100% vesting of employer ROTH is because the employee is paying the taxes on 100% of the contribution so the IRS doesn't want forfeitures of ROTH. And while it's technically currently available, there is no IRS guidance that I am aware of on how the income is reported to the employee and what withholding rules may apply. So I'm not sure if anyone is currently doing this.

Agree with truphao. If the entity is the same with the same EIN just making a different election on their tax filing I doubt you have any changes other then updating the entry type in the adoption agreement which depending on your provider may or may not require an amendment. If it is a new EIN, it will be a new entity and you'll want to amend to make the new entity the sponsor. But I think just switching from S-corp to C-corp or the otherway around, you may find that nothing needs to be done. If they change from a Sole-prop or partnership to Corporation, in that case you will have a new entity and will need some amendments to have the right plan sponsor.

You can always recommend they consult qualified ERISA counsel.

I'm not sure if you'll get consensus on the item. I would say the most conservative is to file on the late filer program with a new 5500-EZ but as others have noted the only change on the filing you have is a new date on the signature line. I think it will come down to if you believe there never was an original SB or the client just can't find it. I'm assuming you've contracted the prior actuary?

Well what some folks are saying is that if the IRS Audits the Plan they "might" disallow the original filing since the client does not have a timely signed SB that goes with the original filing. As I see it if you do take the engagement there are 3 possible ways to proceed (assuming everything checks out at the contribution is in the right range). 1. Sign SB, put in the file. Be done with it. Argue with the IRS IF they challenge that position. 2. File and amended 5500 that has no change but is signed by the client after the date you sign the SB. 3. File using the IRS late filer program on the theory that the original was not a complete filing. How you proceed and what level of risk both you and the client are willing to accept will determine which path you chose.

If you take on the client outline the scope of your work and let them know what some of the pitfalls may be and estimated costs. When is the last good valuation and Schedule B? From there you can probably map out a strategy for the client. Assuming 2020 was "good" you'll need to match that valuation and work forward. You may find that the 2021 contribution is more than the MRC and less than the max deductible when you do the 2021 valuation. That would probably be your best case scenario. But you may find they did not meet the MRC in 2021 or they contributed more than the max deductible for 2021 in which case you have a different set of problems for the client to correct.

I don't believe the IRS has given a bright line. If they have I am not aware of such guidance. I believe it is fact and circumstances. In your case for example maintaining a second defined contribution plan might weigh in your favor for a longer period, particularly if the plan covers substantially the same group of employees, makes recurring employer contributions and has a vesting schedule that is similar to the frozen plan. But the ultimate decision rests with the IRS.

When the complete discontinuation of employer contributions is deemed to have occurred, then you will require full vesting of all affected participants in the 401(k) Plan.

Sounds like a perfect use of self correction by plan amendment to conform the plan's terms to it's operation. (again assuming this is an NHCE and not the owner's kid)

If they have self-employment income subject to the self-employment taxes then yes they can defer from that. If they only have pass through income not subject to self-employment taxes then then don't have "pensionable" income.

Have both entities adopted the Plan? I'm assuming yes. If so why wouldn't you simply aggregate his comp from both entities, limiting the aggregated comp to 401(a)(17) limit for 401(a)(4) testing? I don't use Datair but it might be an issue where it's having trouble reconciling the same individual in the plan having both SE compensation and W-2 compensation. You might get a different result for deduction purposes since in ASG each entity has it's own deductible limit based on camp paid by the entity

I believe he can waive his right but I also believe it requires a QDRO. Obligatory, I am not a lawyer disclaimer.

It's not PBGC. Assuming they have met minimum funding, you would seem to be introducing conditions not in the Code, Regs or Plan Document. I'm not saying your position is the wrong one, particularly when the benefits were probably skewed towards the HCEs in the first place, but the Sponsor needs to make the decision they feel is best for them assuming it falls within allowable guidance. Some sponsors will agree with you not to short the employees, others want every last dollar they can get for the owners. You are in a grey area for sure, just make sure you present the options that a legal within the framework of the Code/Regs/Plan Doc and leave the decision to the Sponsor. I will say there are also scenarios where straight proration might be shown to be discriminatory, I think integrated plans may fall into this situation, but I haven't looked that closely.

It's not PBGC, follow the terms of the document so if the Document says to follow a 4044 allocation even if not PBGC then follow the terms of the Plan. On the other hand if the Plan says for non-PBGC prorate in proportion to the PVAB (in this case the hypothetical account balance) I don't see why you couldn't do that assuming it's non discriminatory.

Would it qualify to avoid eviction or foreclosure?

I know next to nothing about 409A plans but it seems if they are paying the taxes and penalties on their mistake they are trying to "fix their mistake". It seems like they should also pay any fees you have with your CPA if you need to file an amended return because of this, but that's something you probably need to take up with them.

Could it be the plan simply didn't want to give participants the option to delay the first distribution so they don't have to process 2 in one year? Though I'm not sure how you get the first one processed by January 1 if say a non 5% owner terminates on December 31st.

If the document allows she can delay until her husband would have received RMD. If leaving it in the Plan, it's probably best to leave in the deceased husband's name at least until she turn 59 1/2 unless there are other reasons she needs to access the funds but she might want to discuss with her estate planning attorney or financial advisor. The main reason being is if she rolls it over into her name she will lose the ability to treat distributions as death benefit distributions that are not subject to the 10% excise tax.

Is she a participant and elected to rollover the balance into her own? What does the Plan say about paying out death benefits and the required timing?