Lou S.

We send a letter along with the refund expaining the tax implications, but yes that's the way the 1099-Rs work.

If you have an excess deferral in 2020 and issue the corrective refund after December 31, 2020 but prior to April 15, 2021 you would issue a 2021 Form 1099-R in January of 2022 with code P, indicating that the it is taxable income in 2020.

If the husband and wife are W-2 employees then the 401(k) contributions need to be run through payroll and be reflected on the W-2s. If they are self-employed partners they would deduct their own 401(k) contribution on the 1040.

As to the separate testing for participants with less than a year of service, that sounds like a software testing issue. Our system has a check box to either test all together or test statutory exclusions separately. Maybe try rewording your question to your software provider. If you are doing general testing with ABT then I'm pretty sure you can't exclude the terminated with less than 500 from the 410(b) test.

Look into the rules for Multiple Employer Plans and consider having Company B be an adopting employer of Company A's Plan.

Apply the vesting to the correction. 60% of the correction plus allocable income is refunded as excess aggregate contribution and 40% of the correction plus allocable income is forfeited to the Plan.

That's what I was going for, Zeller just spelled it out much better than I did.

Your Plan documents should spell out and coordinate who gets what top-heavy minimum and where. If a person is in the DB plan but the 5% contribution in the DC plan is being used to satisfy TH min, you want to make sure he's eligible to get the 5% TH minimum in the DC plan if he accrues a benefit in the DB plan. Which may or may not also trigger a gateway contribution as well.

The loan itself cannot be rolled to an IRA as IRAs are not allowed to issue or hold loans. The outstanding balance of loan can be rolled to an IRA if it is a qualified plan loan offset (QPLO). If it is a QPLO the participant has until the due date of their tax return with for the year of the QPLO occurred to roll the funds to an IRA. They would however have to come up with the funds.

The match as stated appears to fall with the the rules that would not violate the deemed not-top-heavy status for 2020. That is if the 3% NEC and match as stated are the only allocations (no PS or forf realloc) you don't have to worry about TH for 2020.

That's a good question. I'm not sure even the IRS knows the answer. I guess you could be correcting a failure to provide benefit when due. That is the participant had a valid election to receive a distribution under the plan that was not processed due to clerical error and is no longer available due to CARES Act expiration at 12/31/20. I would think this is something that could be fixed by VCP but I'm not sure it fits into an easy check box example in the rev proc.

Forfeit and offset future match. That's what I'd do.

If you have fail safe it's probably spelled out in detail and without discretion in your master text. I'm pretty sure ours reads something like 1 add back active NHCE with the most hours until you pass or run out of them then go to 2. 2 add back NHCEs who terminated closest to the end of the year, if more than one on the same day add all that terminated on that date even if more than needed. So in our document you'd add back employee A who terminated 9/28. But your document may be drafted differently. And I'll add my voice to the chorus of 11g amendments if you want maximum flexibility to pick and choose who gets added back in to pass testing.

Qualified Participant Loan Offset (QPLO)? That was effective 1/1/2018 so not that new but not that old either; is that what you are thinking? Qualified loan offset is when you offset a loan due to termination of employment or plan termination. In those cases the participant has until the extended due date of their tax return (10/15 following the year of offset) to rollover the balance to IRA or qualified plan instead of the usual 60 days. You add the Code "M" to the 1099-R to indicate QPLO. Other than CARES I can't really think of any other recent loan changes or guidance.

It sounds like your ex was awarded 1/2 of your payments in the divorce under the DRO that the administrator then determined to be a QDRO and started making separate interest payments. I offer no opinion as to whether or not this was correct, just trying to get a handle on what actually happened. Have you discussed this with your divorce attorney and whomever drafted the DRO? As the two above mention the Plan Administrator is following a court order that was issue to the Plan, if the DRO meets the requirements of a QDRO they have no option but to implement what the order states.

I don't work on government plans either but this certainly sounds problematic. I'd be tempted to turn the question on its head and ask the people who want this done what regulation or guidance can they point to to suggest that what they want to do is allowable? And if they don't have than suggest they consult with ERISA counsel about requesting a ruling from the IRS that what they want to do is allowable.

FWIW - 2019 5500-SF one man was accepted by EFAST with acknowledgment file in case anyone else runs into this situation. Thanks Bird.

I have one last off calendar 2019 form year to file for a 1 man plan. In the past we filed SF 1 -man but for 2020 year the form no longer exists. Can I still use the 5500-SF one man for a non-calendar year plan beginning in 2019 and ending in 2020? If I can't use the SF, can I electronically file the 2019 Form 5500-EZ or does it need to be filed on paper? That is can only the 2020 Form 5500-EZ now be filed electronically or can the 2019 Form 5500-EZ also be filed electronically.

If it's a court order authorizing payment of child support for the minor child but I believe in that case the minor child is the alternate payee even if the gauradian is the one that receiving the payments and using them for child support and the taxes are the responsiblity of the partcipant. But maybe a QDRO expert (which I am not) can shed more light.

The safe harbor non-elective has to be for a 12 month period to qualify as a safe harbor contribution but you can limit new entrants to comp from date of entry if the document allows. You sated you have no new entrants to the plan after 1/1 so my reading would be 12 months of comp for the safe harbor non-elective.

Plan Disqualifiction?

Because former clients rarely tell us of an address change and the ones that do aren't generally expecting a bill for preparing additional IRS forms? If the client reports the move prior to the final form 5500, then we'd use the new address on the final form. That doesn't seem to be what you're contemplating in this situation which is a move some time after the final return has been filed.

How would that help for OP question? The OP wants to convert existing pretax plan money to ROTH, the only way to do that is through a 401(k) Plan that allows both ROTH contributions and ROTH conversions. I'm pretty sure new Money Purchase plans can not have a 401(k) feature and by extension no ROTH conversions either.

A lot depends on the plan terms, the age of each of your parents and when the payments for each form of benefit were supposed to begin.

I believe that sounds correct though the QPLO (Qualified Plan Loan Offset) 1099-R code would be M1, M2, or M7 depending on the situation. Is code M3, M4 loan off set on disability/death an option? I hadn't really considered those before but I imagine people with outstanding loan die or become disabled from time to time as well.