Lou S.

You say he needs 1,000 hours for accrual but only worked 800 hours so no, he does not accrue a benefit. If there is some other rule in the plan that would cause him to be credited with an accrual, or partial accrual year, then he might qualify but you'd have to RTD.

It's possible, but unlikely, that what he is doing is fine. Does he (or his spouse) have earned income or W-2 compensation other than his pension? Have the deposits to the IRA been less than the annual IRA limit and less than or equal to his earned income? Are the deposits to his wife's IRA - spousal IRA contributions? Were they both under age 70 1/2 in the year's this was done? Did he treat the pension payments as taxable income in the year received and the deposits as ROTH-IRA contributions? Is their income below then amount for making eligible ROTH-IRA contributions? If the answer to all of the above question are "yes" then he's probably fine. Otherwise, it sounds like he has Excess IRA Contributions for each year he has done this for himself and his wife. Excess IRA contributions are subject to a 6% excess tax each year they remain in the IRA.

Are they on the enrollment/election forms? If not I'd send a supplemental notices that says something like "While the information on ABC and XYZ mutual fund on the prior notice is correct, please note that the Plan has not made either of these investments available to Plan participants. Please disregard information on these two funds. We apologize for any inconvenience" and call it a day. If the funds are included on enrollment materials, then I think you start a new clock.

Has he been contributing the 415(c) annual addition limit, or the 402(g) annual 401(k) limit, or maybe both through combo of ER and ER contributions? Typically when you hear backdoor roth inside a plan it involves making after tax voluntary contributions and then converting them to roth inside the Plan. This usually only works in 1 man plans where you don't need to worry about ACP testing, plans that cover only HCEs so again no ACP testing, or larger plans that easily pass the ACP test even with the voluntary after tax contributions. As for the back door IRA you seem to know what that is and how and when it works which is separate from the plan so I won't go over that one.

Short of spinning off company B employees to a new company B plan (before Company B ceases to exist) and then terminating the company B plan I am not aware of a rule that would let you cash out the terminated employees from the current plan.

The distribution limits are individual and plan. That is an individual is limited to one $100,000 limit for COVID-19 related distributions in 2020 for all eligible plans or IRA that they are covered under. If an employer has multiple plans, it should take steps to not exceed the $100,000 limit per participant across all it's related plans. If an individual is a participant in multiple unrelated Plan's and IRAs it it possible that they could take multiple distributions from plans exceeding the $100,000 limit that the Plans may process as COVID-19 related based on the participant's self certification and be fine from the plan stand point, but when the tax payer files their taxes for 2020, they are limited to treating up to $100,000 in aggregate withdrawals as COVID-19 related subject to the special tax treatment. As for loans - The increased $100,000 limit is separate from the distribution limit and the affected employee can do both, but the $100,000 increased limit, like the current $50,000 non-COVID-19 limit is across all related Plans of the employer. So if the intention in to take $200K ($100K loan and $100K distribution) I agree with Bill Preston above on what is probably the most efficient way to do it. If the intention is to $200K covid distribution between DB/SEP, the participant is out of luck.

I think ERISA frowns upon this as it's the Plan Administrator's obligation to retain plan records on determination of benefit payments, not the participant's burden to show they are due payments. In fact I believe some of that is how we got ERISA in the first place so many years ago.

I'm not sure how common it still is but we have had participants in the past receive the SSA letters and come to us even though we have an old Sch SSA or newer 8955-SSA showing they were reported with code D to remove them.

That would seem correct.

You are correct, I was not remembering correctly. It appears you can continue to exclude them from employer contributions but if they are included you have to credit a year of service for 500 hours instead of 1000 hours.

why would it? the secure act just allowed for 401(k) entry for "long time" part time employees, it didn't say anything about changing the definition of a year of service for vesting

I'd search your BPD for "short plan year" and see if you come up with anything relevant. Ours says something to the effect of "pro-rate based on days or months" and made in accordance with various DOL regs.

Have they adopted a plan but not set up a trust to accept the funds? Of do they not have any plan at all? If t he later I agree with Bill, no plan, no right to take deferrals.

So the Trustee is going to lend money to someone to purchase the home that the Trustee is going to live in? Do I have that correct? If so, see RatherBeGolfing above.

I agree with Mike & Bird

SAR is a Title 1 requirement. It is not required for plans that are eligible to file an EZ.

Sole Prop sponsored prior to 2020. Corp adopted for 2020 but Sole Prop didn't sign on as adopting employer. I'm with Bird, have Sole-prop adopt now retro to 1/1/2020 as adopting employer. Tell them to get back to you when they want to remove the sole-prop from the Plan.

Unless there is some accounting trick I'm unaware of, I don't see how you can deduct more than your net earnings from self employment income.

It is still required if it's an eligible rollover distribution that is not made on account of COVID-19.

Normally you would need to process the RMD. However for 2020 the CARES Act has eliminated RMDs for defined contribution plans so no you do not need to do an RMD for the partcipant this year.

If your safe harbor formula is 100% of the first 10% I agree you are fine for ADP but have ACP testing. I think there are a couple of options with the ACP testing like testing it all or just testing the piece that's in excess of 6%. If your formula is 100% of the first 4% safe harbor plus a discretionary match of 0% of the first 4%, 100 of deferrals from 4-10% I think you have a problem with the increasing match nature of the discretionary piece.

It depends on the service provider and the terms of the service contract but if there is a per participant charge, the terminated participants with a balance are usually included in any billing charges.

If the DB plan had a pending RMD then that is not eligible for rollover to the IRA. The CARES Act did nothing to change that for DB plans. Did he already satisfy his RMD for 2019? If so he might not have a 2020 RMD as he paid out the assets in 2019.

File Form 5500-SF as 1 participant plan electronically and save the acknowledgement file? I don't know that the IRS verifies processing of the EZ. Save proof of mailing, either by certified mail or over night delivery receipt.

I honestly don't know the answer to your question. But I would guess if you had evidence they elected a lump sum and have plan records that they are no longer included in any plan reports, especially if those reports have other long time terminated employees on them still owed a benefit it would probably carry a fair amount of weight in any argument in the Plan's favor that the participant had in fact been paid out. Back in the day when records were all on paper and sometimes stored off site in a warehouse in little boxes it made sense to purge such records. Now with the cheap electronic storage keeping them virtually forever is an option. Of course that doesn't help when a participant who has been gone since the early 90s resurfaces now with a possible benefit claim.