Lou S.

So it's fraud. Don't be a willing participant. Outline his EPCRS options, recommend an ERISA Attorney, resign if they don't want to do it. Then the only question is do you want to report him to the DOL or not.

I believe it goes back to the original owner. The question for me would be whether the successor beneficiary RMD is under Pre-Secure rules (and can continue to stretch) because the the original IRA owner died Per-Secure or if the successor beneficiary must satisfy the post Secure rules (10 years with RMDs in the first 9) since the original beneficiary died post=Secure and that is when the successor beneficiary because entitled to the account. I honestly don't know the answer but I'll almost certain the answer is NOT no RMDs in year 1-9.

Is it addressed in the 403(b) document? I know our 401(a) document has a revocation on divorce clause, does your 403(b) document have something similar?

Assuming the election was validly executed I don't see where you have a problem...unless it triggers coverage issues which is a large part of the problem with irrevocable elections that Bird eludes to in post above especially in the micro plan market if the election is made by someone who isn't always an HCE.

Assuming that owners name is the beneficial owner of dynasty trust/owners name then I believe that owners name is considered to own 37.04% of the company. For HCE determination, attribution under §318 a child (both minor and adult) are deemed to own the stock of their parent. Thus by attribution the daughter is deemed to also own 37.04%. The results would be different for §1563 and Controlled Group determinations.

Are you trying to close out the plan as of 2022 to avoid 2023 5500 filing?

And don't forget your plan is top-heavy since the owner once made a contribution I'm assuming the top heavy ratio is 100% since the employees haven't been given the opportunity to defer.

The check was validly issued to the participant and presumably a 1099-R will be issued. Refer the husband to an ERISA attorney. Let the attorney give him an opinion whether or not he can roll the proceeds to his IRA some how in the 60 day window even if it requires a private letter ruling.

Maybe Peter but in this particular case it might be hard to argue the inadvertent part for someone who was a 5% owner who had been taking RMDs and then for some reason seems to have stopped "about 5 years ago" as the OP puts in their post. Your highlighted text is interesting. As for what the IRS will deem a reasonable time frame in practice I can't say for sure but looking toward existing current guidance on the IRS self correction program it seems like correction within 2 years would be deemed reasonable. Beyond that might get into some gray areas on reasonableness. Maybe the IRS will use one of their ever popular facts and circumstances approach unless they publish a bright line deadline in future guidance or maybe they will deem any self correction that is done is done in a reasonable time frame.

Then it would simply be a gain/loss item. The question then becomes whether or not it is subject to UBTI.

I'm confused. Does the Plan have an investment in a Real Estate LLC? And does the Real Estate LLC payout something like dividends that are deposited to one of the Plan's Trust accounts? If so wouldn't they be treated as earnings?

Just a guess. These are individual brokerage accounts for each participant, the guy who didn't take the RMD used to be the head hancho at the company and his golf buddy broker told him he didn't need RMDs because he's not a 5% owner anymore? But yeah as Jakyasar says, something doesn't sound right here.

I'm a little confused by the timeline. Has it always been the same TPA? What does the TPA service agreement with the client say? Is the Participant being asked to pay the Plan Sponsor's VCP submission fee? If I'm the participant my response is here is my lawyer's phone number.

I agree with CuseFan approach assuming this is an NHCE. Maybe a simple amendment that preserves the the 417(e) lump sum as of date of the request for participants who submit a request for payment in 2022 but is not processed until 2023 due to administrative delays beyond the participant's control. Oddly specific but I would think it would cover this situation and make everyone happy. Might be a question about whether such an amendment might take your document out of prototype status but I think the IRS would be OK with it. Especially if the plan is "well funded" and the participant has always be an NHCE.

What was the reason for the delay? If the sponsor was pushing for it to be done in December, why didn't it get done? Was the participant late returning paperwork? I don't think you can process it now using the 2021 417(e) rates as you would not be following the terms of the plan.

Ultimately it's a decision of the Plan Administrator to interpret the terms of Plan and make a decision. That said unless the Amendment specifically states that the reduce hours requirement will only be applied prospectively to employees after the Amendment is signed then I would be inclined to interpret in favor of the participant that the 800 hours requirement would apply retroactively as of the adoption of the amendment.

I could be wrong but believe if you have language to forfeit sooner than the earlier of 5 yr BIS or payout then your document also has to have language automatically restoring forfeitures if the participant is rehired within 5 years.

Without actually reading your document I can't say for sure but my best guess is they entered November 1, 2022 when they met the 6 month rule.

When you say "reverts to plan year" what does that mean in this case? What do your service spanning rules says?

To expand on Bri, Catch-ups don't count toward any applicable limit (which includes 415(c)) You still need to have compensation to make a 401(k) deferred contribution, that is you can't defer compensation you don't earn, but you can go over the 100% of pay limit or the 415 dollar limit if employer contributions push you over the regular limit but not past the catch-up limit plus the regular limit assuming 401(k) contributions are at least equal to the catch-up limit, the participant is old enough to qualify for catch-up, and they plan allows catch-ups.

Yes In theory. In practice you may have some trouble with payroll taxes.

I don''t know of any provision in the code that would let you use a Plan suspense account that way in a QPR or any qualified plan.

Bird, I though they made ROTH Conversions irrevocable a few years back. I agree with Cuse fan but it seem like the conversion itself is an excess IRA contribution and you would withdrawal the excess from the ROTH under the IRA procedures +/- G/L for withdrawing excess IRA contribution before the due date of the tax return.

I think they have made this needless complicated and introduced the potential for errors from: the participant, the payroll departments, the payroll company, the TPA, the custodian, and the educational materials and or deferral election forms and systems. That's not to say that these errors will happen but there is the potential for them at multiple steps in the process.

I'm pretty sure he will require a T-H minimum as he was an eligible for participant for of the year, was not a key employee, and is still employed on the last day of the plan year year so he would appear to fall into the 416 definition of who must benefit. And the TH minimum is on 415 compensation so that would be his full year comp maybe I'm wrong but that's been my understanding of TH. And that will also a trigger a gateway for the individual since he's a NHCE. At least that would be my understanding. And as for the gateway the 5% rule is on 415 comp but the 1/3rd rule is on 414(s) comp which could be different. Though I think for gateway you can limit to comp while a participant if you do that uniformly for all participants. You can ask FIS how their document addresses the situation.