Lou S.

If it is only one participant and he is over 59.5, then yes getting any kind of evidence that the first ROTH contribution was 5 or more years ago should be sufficient to process as a qualified ROTH distribution and you can breath a huge sigh of relief. And old W-2 should ROTH 401(k) or a statement such as Paul suggests should do the trick. If you have other participants with ROTH, you have bigger issues with determining the ROTH basis and first year of ROTH contribution for all similarly situated participants I'd suggest a retainer billed in advance if you have to do a massive project to reconstruct that because the prior TPA/Custodian/record keeper, either didn't track it or didn't transmit it and the Plan Sponsor who is also probably the Plan Administrator seems negligent in it's duties with respect to service provides some how.

Request copies of his W-2 from 5 and 6 years ago?

I don't believe it is impermissible under the Internal Revenue Code, at least I've never found anything that says you can't, but it might be prohibited by the Plan's Trust documents, Investment Policy and/or the Plan Trustee who oversees the investments. If it is allowed by the Plan document and the Trustee will allow it, they you do have all the pitfalls you mentioned and possibly several more which can be quite easy to run a foul of and while I'm not an accountant I think you might lose some of the advantages allowed in the code, like depreciation of the asset which oddly I think applies to race horses for tax purposes. It is not something I'd be interesting in touching, even if it was technically allowed, but you might find someone out there who would, though it might come with additional record keeping fees.

If he's already contributed $55,000 to the DC plan for 2023, you are going to have problems deducting a $140,000 contribution to a DB plan unless there are employees that would make this a PBGC plan due to the combined plan deduction limit. If he hasn't made any 2023 contribution and is on extension, limit the DC contribution (not including 401(k), if any) to 6% of pensionable pay. If you are setting up for 2024, talk to the plan actuary before making any contributions to either plan to make sure you don't get into nondeductible contribution issues.

Oh that's different. I don't recall if hardship is a protected benefit, you may or may not be able to amend that out, but if the Plan has in service at 59 1/2 and/or severance of employment already you'll need to preserve that for all current participants at least for funds currently in the plan and any earnings thereon or you'll have a prohibited 411 cutback. Accounting for pre and post amendment balances by source for all participants seems a nightmare and just asking for trouble. Oh and then telling folks that some of their is available when they terminate and the rest when they turn 65? That sounds like a fun conversation.

Make sure the owners know that the no pre-65 distribution rule also applies to them as well as any "executives" then might hire.

A plan can allow for no distribution prior to normal retirement age. Though I believe that's much more common in a DB plan with annuity only options. I don't see why you couldn't do it in a safe harbor 401(k) Plan, but I'm not sure you should do it.

The surplus isn't that small. We'll know YTD payroll in a couple weeks and and can compare Plan assets to hypothetical balances and can do a Plan amendment to eat up most if not all of the surplus in a nondiscriminatory 2024 pay credit. The pay credits were frozen as 12/31/23 with this potential in mind. But judging by the responses so far I think we'll make a push to get the participants paid out in Q3 and then terminate the Plan.

Haven't come across this one before but just trying to get the timing right with the PBGC and required participant notification- Small Cash Balance Plan fewer than 10 current and former participants with balance, owner died last year, his widow inherited the shares (she is now the 100% owner and the Plan Trustee she also has a pending death benefit as beneficiary) and the business has been running under a prior contract but that contact is running out so all employees remaining employees were given notice and end of June will be the last payroll. The company is staying in business through the end of the year at least to wrap any loose ends and such and for compliance reasons terminating effective December 31 might make the most sense from a compliance and testing standpoint. The plan allows for distributions upon termination of employment so what happens if we pay out all the participants before we go through a formal PBGC termination? The plan is well funded all PBGC premiums are up to date and there is a small surplus that will be allocated to participants per the document. I've never done a PBGC termination after all participants are paid out, assuming they can get all terminated employees paid out relatively quickly. Is that going to be a problem with the PBGC? I know you are not suppose to payout active employees during the PBGC review and termination process but these will all be terminated vested as of 6/30/24. So it seems we could pay them all out.

Let them know you'll be buying an annuity with a QJSA unless they can get you a finalized QDRO? They can't hold the Plan termination hostage by saying we don't have a QDRO 2 years on.

Definitely not my area of expertise but if the farm has been in the family for 200 years, wouldn't there have been some step-up in basis along the way as prior owners passed on and left their sharers or interest to future generations? It sounds like you need a good tax accountant who is well versed in family business transfer and sale and that's not really the focus of this board. On the bright side, long term capital gains tax rates are much lower than ordinary income taxes, at least at the federal level, state taxation may vary from state to state quite a bit.

And amendment can't be effective for the year if it has a prohibited cutback of benefits. Adding after-tax is an expansion of benefits so should be fine. Though it will be subject to ACP testing, just so you are aware in case you were not. The second part is a bit trickier if you can do it or not. If anyone is entitled to an allocation under the old formula you won't be able to change the formula until next year. However, if no one has yet earned the right to the allocation formula then you could amend this year. generally speaking if your current plans has a last day requirement or an hours requirement that no one has yet met you could do the amendment effective in the current year, provided it's adopted before anyone has accrued a right to the old formula. Safe harbor 401(k) plans have a few additional levels of hoops to satisfy where you might not be able to make the change even with a last day requirement, you'd have to double check on that one if that's you situation.

Yes if she's leaving for disability the code would be different and you follow the plan terms to determine total and permanent disability. But the OP says the participant is leaving/retiring in 2024 at the age of 56, so if the only issue if the 10% penalty then no need to even worry about disability definitions since they are separating after age 55 and qualify for the waiver if the payment is from the plan to them and not through a conduit IRA.

How do you enter into a collective bargaining agreement and not keep a copy? Yes you can file a late 1099-R, as you have discovered, penalties apply. The participant is probably fine as the taxable amount will be $0 if it was properly rolled over. But the plan has a duty to file the 1099-R and supply to the participant. At most he'd need an amended return showing ~$1.5M distribution, but report it as non taxable rollover.

If deferrals started with payroll but couldn't be deposited because of the custodian, you have late deposits. Simply deposit the payments along with the lost earnings, file the 5330 and decide if you are going to though the DOL late contribution program or not. If the deferrals didn't start you can calculate a QNEC on the missed deferral opportunity and deposit that, but I think you might just be able to self correct and start the deferrals 3/22 as the delay was "short" and folks have 9 months to catch-up the missed deferral opportunity.

No 10% penalty if taken from the plan if on account of separation after age 55. 1099-R code would be 2. Plan's NRA doesn't matter in this case, just the age at which he separates service.

Ignoring the public relations issue with the employees for the employer changing their mind after notifying the employees they would be getting a PS contribution, unless it's required by the plan document then it's not required to be made. They could give a supplemental notice something like - we regret to inform you but the prior notice of a 2023 contribution was distributed in error, there will be no PS contribution for 2023 - something like that. That said I am not a lawyer and I don't know if the initial notice created a de facto contract obligating the employer to the PS contribution when they notified employees. Were corporate minutes filed approving the contribution? Have they filed a tax return claiming the contribution?

You can have two 401(k) plans that each exclude the other but why would would you want the head ache? I'm not sure if this allows you to file 2 EZs or if you have to file 2 SFs (assuming they don't need a long form because they have some weird assets which would not surprise me given t he facts you have presented) but you can probably file 2 EZs.

I'm not sure I even understand what the question is here is or it's application to QDROs but wouldn't this be a question for an attorney who practices in the state in question and has some knowledge of ERISA if a QDRO might be applicable?

My understanding is if there is another taxable distribution where the participant is receiving funds then you withhold on the total including the loan offset. If there is no cash distribution, like the participant is rolling over the rest to an IRA, then you don't withhold. This understanding is for Federal Tax withholding but I believe most states that have withholding on qualified plan withdrawals mirror the Federal rules though I don't know about MI specifically.

Presumably what you want to do is restate the Plan from the Vanguard document to the E-trade document retaining the same Plan number 001 and simply transfer the assets from one brokerage to the other, unless you already have a plan document that isn't brokerage house specific in which case you just need to transfer the assets.

Yes 401(k) that offer annuities have always been subject to those rules. At one time you could not amend it out as the IRS viewed it as a 411 cutback, but now you can as some law changed it if you meet certain notice and timing requirements. I think the change was in the late 90s or early 00s but I forget which piece of legislation allowed you to remove the QJSA/QPSA from non-pension plans.

Under the code yes, but what does the document say about compensation?

It would be up to the Plan Administrator but if they had sufficient evidence and believe that this is his primary residence (where his W-2 issued, his drivers licenses, a power company bill in his name, etc.) , I don't see why it would not be approved.

I'd vote with you. No 5330, reflect the earnings in 2024 when received.