Lou S.

To add to Zeller, neither plan did anything wrong (unless this is a controlled group) and as such there is no EPCRS correction for either plan to enter into. Essentially what will happen at this point is she will get a 2021 tax deduction of $19,500 but will be taxed on the full $39,000 when it is eventually distributed. That is she pay taxes on $19,500 both in 2021 and the ultimate year of distribution. It's probably exactly what Zeller said so my post might just be useless duplication.

I think I've seen case law going both ways over the years if I remember right about who needed to be 100% vested and not. I believe the presumption is that anyone that has less than a 5 year Break in Service who has not previously been paid out as of the termination date would become 100% vested as a result of the termination but I believe that was successfully challenged in at least one case (I don't recall which one) and full vesting of former employee participants was not required. The exception I believe seemed to surround an employer who was dissolving operations in addition to the pensions plan and there was no potential for re-hire of previously terminated employees who did not yet incur a 5 year BIS. There is some good info in this thread below from 2004 that seems to be related to your question (I think the 2015 bump in that thread is unrelated). But I can't recall if there is more recent guidance. I know there has been a lot of guidance on partial terminations but I'm not sure about full terminations.

Presumably the plan was offered but everyone said no. I think we had a plan like that years ago where a Dr. had a plan for his union employees and he had to maintain a deferral only 401(k) Plan for them. In that case it wasn't zero as I think 2 people put in de minimus contributions but when they left no one else ever signed up. The plan ran a number of years with no new contributions. But I think that was than 10 or more years ago that plan terminated. Assuming you have a valid plan that is actually offered to the employees but no one ever signs up I believe you can keep it going as long as you want as long as you keep the Plan document up to date, give the participants any required notices and file the 5500. I'm not sure why you'd want to as a Plan Sponsor but maybe there is some valid business reason for having a Plan that no one uses.

Can't they be pretty basic. Something like... PLAN NAME NOTICE UNDER ERISA §204(h) Benefit accrual under "the Plan" will cease effective (enter date). "The Plan" will be terminated effective (enter date). Plan Sponsor or Plan Administrator Contact Info Date of Notice

It depends some custodians are providing them, others are not. You would need to check with each individually custodian. At a guess I would say "most" of the larger bundled providers have programing it for their quarterly statements by the 6/30/22 quarter that just ended and "most" individual brokerages statements are probably not providing it. The Secure Act requires that the illustrations be provided "at least annually".

Because the DOL feels... ...and has made it a rule for plans to supply it to participants at least annually.

The presumption by the IRS is that you had a more than 20% reduction in eligible participants and a partial termination occurred, the result of which is 100% vesting of the affected participants. However this is not a bright light test, but rather a facts and circumstance determination whether or not a partial termination occurred. You might be able to argue why a partial termination did not occur. Evidence of a voluntary termination on the part of the participant might be helpful to your case that a partial termination did not occur. As to why he should be "forced" the IRS doesn't write the rules with small plans in mind generally. If a partial termination did occur and the participant benefit was forfeited when it should have been 100% vested you have a potential plan qualification issue.

You need to reiterate that they are transferring the assets in a TRUSTEE TO TRUSTEE transfer and the is NO DISTRIBUTION as the participant does not have a distributable event. That is you are simply replacing the asset provider of the Plan and that they are no longer responsible for maintaining the plan after the transfer. It often helps if the new account has the same name and EIN as the old and you can get a letter of acceptance from the new custodian. Of course if it's going from Schwab to Schwab and they still won't do it, I don't know what to tell you.

A lot to consider. Is the Plan PBGC? The Minimum Required Contribution is not the same as the contribution credit under the Plan document. As others have noted the Contribution credit will depend on whether or not participants have meet the accrual requirements in the document before the freeze and/or termination date, with 204(h) notice of course. The Minimum Required Contribution for the year will be dependent on the funded status of the Plan and would be prorated if the termination creates a short plan year.

You need to convince them it's the same Plan and get them to do a trustee-to-trustee transfer. This can be difficult in many cases and can require quite the back and forth with documentation and often times escalating it to higher management to get it done right.

I'm not a CPA but my understanding is the number on box 14a of the K-1 is the number that goes on to the Schedule SE for determining SE taxes and as such is "pensionable" earned income. I don't think you need to audit the CPAs work as to how they got there unless that's part of your service agreement.

Is it subject to Self-Employment taxes for services provided or is it passive real estate income not subject to SE taxes?

I'm not an employment lawyer but I'd assume that you would reduced the elective deferral so as not run a negative check for the cycle. That is if the employer elected $200 but there is only $150 after required deduction you withhold the $150 and give him a net $0 check.

You'll always need a Schedule SB for the contribution year, signed and delivered to the Plan Sponsor. If it's an EZ the SB isn't filed with IRS but is maintained and subject to audit. If it's adopted in 2022 for 2021 under the SECURE Act your first required filing is 2022 Plan year (assuming you are over $250K) in which case you attach the 2021 and 2022 SB to the 2022 filing but if it's an EZ you don't attach the SBs. In your last example, it would depend if you are filing on a cash basis or accrual basis whether or not you are over $250,000 for the 2022 plan year for purposes of required EZ.

Peter, I'm guessing even the minimum will be beyond what this client wants to pay since they didn't file 2020 and don't want to file 2021. And while it should be a "cheap" audit by audit standards it could still be expensive by zero asset plan standards. If the TPA has a good relationship with some accounting firms, particularly if they refer other business their way, they might be able to get a discount of this one knowing it will be super simple. But since this isn't even a 401(k) Plan I still don't understand why they don't (or didn't) terminate it, since under SECURE, they can always adopt a new plan up until the due date of their tax return.

DFVC a Form 5500-SF for 2020 since it was due even though there were $0 assets. Yes they have an audit for 2021 as you have move than 120 participants on the first day of the plan year. Should be the cheapest easiest audit in history one would suppose. Why does the Plan exist? Should it be terminated? Yes it has filing requirements as long as it exists.

What does your document say? Typically in these situations the documents calls for a refund of deferrals and earnings to the extent possible to correct the 415 excess. A 1099-R is issued with I believe code E for the refund. This is so that the employee is not limited in what employer contribution they receive. Though I think some documents may be worded to limit the allocation of employer contributions instead.

Sounds like a problem. If everyone is in their own rate group and you were cross testing and it passed gateway and 401(a)(4) that could make sense. But doesn't make any sense in an integrated allocation where you can't even use the 3% SHNEC as part of the PS base, I'm not sure how you passed testing with only the HCE owner benefiting.

Forfeitures are $X Declare a PS contribution of $X. Reduce the amount of contributions to the trust by $X. Allocate $X to participants.

As I understand it you need the same plan year to combo test the DB/DC so unless you are terminating the DC plan the same date as the DB plan I would think think you would want to make the termination December 31 if you want to combo test the DB/DC together. Maybe someone else has a different opinion. And since this sounds like SH 401(k) unless you meet one of the exceptions, operating at economic loss, or qualified business transaction (generally selling the company) you'll lose the safe harbor status for the year of termination if it's not 12 months.

Scenario 1. Taking monthly AB * 12 is typically what we do and then tell them to take the subsequent RMDs in the same month each future year. Scenario 2. I'm not sure I follow your question. He made an election for how he is taking his benefit and that would continue.

As long as you are consistent and do a final true up at year end, I don't see a problem with doing it through out the year other than it could be more complicated and more chance for potential errors.

It's no longer in a qualified retirement plan once the annuity is purchased so employment status will be irrelevant. Contacts will need to comply with 401(a)(9).

I think Bird is right.

I don't think it falls under the clearly approved mid-year SF amendments and you'd be safer making the change 1/1.