Lou S.

There may be some facts and circumstances that would give weight to the argument that the person in question who did not receive compensation for the entire year was still in fact employed and did performer services for the period. I'm not a lawyer and wouldn't want to argue said facts before an IRS auditor if it came to it.

I believe you can roll to an inherited IRA and retain the death benefit exemption from the 10% tax. But if the spouse treats it as his or her own it loses the death benefit status.

3 plans or 3 accounts? It sounds like you were going from pooled to individually directed accounts and changing the Plan sponsor.

Good question. You may want to contact EFAST directly for an answer. One approach might be to file an AMENDED return with the correct EIN in Box 2b, and complete section 4 with the incorrect EIN in 4b of the original filing.

I think they are excluded from the test since from your original post it appears they have "not performed services" even if they are not technically terminated.

You may be right but I think the largest first half of the year market drop since 1932 is bit more than "regular market volatility". That said, I don't see suspension of RMDs on the horizon for 2022 due to revenue concerns brought up earlier but who knows, maybe it gets slipped into Secure 2.0 and passes before the midterms. I just wouldn't be banking on it.

I'm pretty sure this was cited by congress both times they suspended RMDs. Now the 2nd time they did it, the market rebounded and then some in the same year but it was clearly the justification for it in the CARES act.

https://www.irs.gov/instructions/i5330 If you can show "reasonable cause" they may waive some or all the penalties. I don't know how successful reasonable cause letters are in getting the penalties waived.

You can only do one per year. I forget if that's calendar year or 12 month period or you need to satisfy both. I haven't had one in a while, thankfully. But if the Plan allows for rollovers-in I don't see why he can't roll it back into the Plan. You then also have a pretty clear paper trail of the 60 day rule.

Not that I've heard.

Well if 1 is the only problem. You over contributed for one participant for 2020 but deposited in 2021. Shift the $2K excess from 2020 to 2021 and have them file amended tax return for 2020 with lower deduction. If you have an excess for them for 2021 - move it to someone else along with earnings. If owner was supposed to get 5K for 2020 but got $0, shift the 2K to him and make the additional 3K due. You have an excise tax for the 2020 plan year for failure to meet minimum funding by 9/15/2021 and probably need amended 5500 return for 2020 to report the failure to meet minimum funding. If 5330 excise tax is late, pay the penalty (not you but client). You are in the 2 year window so I think this can be self corrected under EPCRS if you meet the rest of the criteria in the rev proc. but double check that this isn't something that requires VCP.

I think you are OK. Doesn't DC TH-min require employment on last day of the year? So you shouldn't have a 411 cutback issue.

I think the plan was probably deferral and match only and there were a number of eligible employees who did not elect to make 401(k) contributions and did not have any balance in the plan. At least that's how I read the OPs post but maybe I'm wrong.

Is it cross tested with everyone in their own rate group? And have a resolution that the allocation is $1,000 for (list folks who got $1,000) and $0 for (list folks who got $0)? And does that pass testing? But yes treating it as an elective deferral might be best and most correct option but that may open a whole payroll can or worms with timing, taxes, reporting and W-2s as well as potential 402(g) issues that are now after 4/15 if this was done in 2021.

Pretty sure conversions were made irrevocable some time ago by law. Forget which law.

Sounds like you found your answer but it is probably addressed in your plan document. Some documents will call for a refund of deferrals so the participant gets the full employer contribution, others will limit the employer allocation to not exceed the 415 limit.

Bird, I think the issue that the on going plan has no problem making installment payments but a terminated plan dissolving the trust isn't sure how it's going to pay out installment payments and may be having trouble finding someone who can.

I think it satisfies the "principal residence" criteria but I am not a lawyer. That said taking a hardship distribution to buy a property in someone else's name seems like the height of financial stupidity on the participant's part but it's not my money.

I thought they were quite common in the small plan market. I'd report 10% of the assets as the bond amount as I'm fairly certain that most of those increase bond protections are capped at the lessor of 10% of assets or $500,000 if you read the fine print.

I think either is acceptable, though with one man plan, I believe it is more common to open a separate ROTH brokerage sub-account to easily track the G/L between sources and transfer from the non-roth to the roth on the conversions. and if the brokerage house will be responsible for 1099-Rs I would absolutely want to set up a 2nd account for the ROTH piece rather than try to argue with them when the eventual distributions are done.

Assuming you have tracked the sources, generally speaking yes you can convert the after tax source and not the pre-tax source assuming the plan doesn't further restrict this. Basis converted is not taxable, gains on the after tax tax funds converted are taxable and I'm not 100% sure but I think if you are not converting 100% of the after tax source (basis and gains) I believe your need to prorate which potion is basis converted to Roth (non-taxable) and which portion is gains converted to Roth (taxable). And each conversion has it's own 5 year aging period.

My plan document has 4 choices for coordinating language. I'm pretty sure you need to address how the T-H minimum is provided if you don't provide it in both plans. This is from our DC plan, but there is similar coordinating language in the DB plan. We almost always use B. A - The full top–heavy minimum will be provided in each plan (if selected, Plan Section 4.3(i) will not apply). B - 5% defined contribution minimum C - 2% defined benefit minimum will be made in the (enter the name of the other plan) D - Specify the method under which the plans will provide top-heavy minimum benefits for Non-Key Employees:(enter method here) (Must be nondiscriminatory, preclude Employer discretion, and avoid inadvertent omissions).

What do the documents say? If the documents says the 5% TH minimum is provided in the DC plan than the 5% TH minimum is provided in the DC plan even if it is more than what is required for gateway or 401(a)(4) testing.

Seems like a facts and circumstances determination.

I think early on it's going to hurt small employers who will invariably have someone in HR not really suited to the job who implements it wrong or fails to implement it. I think over time as employers and payroll systems get used to it it will be just another feature that is a requirement of a 401(k) plan and will "mostly" run smoothly.