Lou S.

I'll add my voice to the chorus or Excess IRA contribution. The one twist would be if the checks or transfers to the SEP-IRA account were from a partnership account in which case you might have other issues. Needless to say he "probably" deducted the contributions to the SEP and will likely have to file amended tax returns for those years.

Sounds like it would violate BRF in a non-safe harbor plan. Sounds like it would completely blow up in in a SH plan as the rate of matching contributions increases at 4% from 0% to something larger than 4% since deferral rates of 0.01 - 3.99 are not allowed.

I believe in some states a participant is allowed to stop the payroll deductions but I'm not a lawyer so I could be mistaken.

The plan can establish procedures to review credit worthiness of plan borrowers. If the plan believes the loan is simply a disguised attempt to circumvent the in-service distribution rules, yes they can reject the loan.

I would argue the limitation of allowing the increase "only to maximum" is dicriminatory in practice and interpret it as increases in the last 2 months are allowed. That said, I'm not sure why in this day and age the Plan doesn't allow changes as frequently as the participant want to fill out new forms but that's a separate issue.

Yes if you are eligible to file an EZ but chose to file a 1 person SF you are not required to file if assets are under $250K. But it only applies to plans eligible to file an EZ not all plans under $250K. You can search the 5500-SF instructions til the cows come home but unless they make changes to the instructions in a future printing, you won't find it.

Only applies to Form 5500-EZ and those eligible to file that form.

I'm guessing there is some contractual language where the custodian of plan assets puts a hold on distributions for "x number of days" when they are notified of transfer to new vendor or complete Plan Termination. I'm guessing this is a large vendor daily valuation platform the OP is referencing as we are running into a similar situation with one of our vendors. I'm wondering what if any leverage the client has with respect to getting distributions processed more timely.

A "couple year later"? Why weren't the paid within a year of the termiantion? Who has been filing the 5500 each year?

$50,000 / 1.0 = $50,000. Therefore the RMD for 2019 is the lessor of $50,000 or 100% of the the current account balance (which would have been the case if the IRA had a loss). Presumably the divisor will be 1 (or lower) for the 2020 RMD which will likely wipe out any remaining balance but you could be in another situation where you wipe out he balance except for the gain between 1/1 and actual RMD next year. Clearly they are paying out under a different method than the one where the divisor caps out at 1.9 at age 115 and above, but nothing wrong with it as long as your are following the rules.

I agree with Kristina. Send him a check and let him know he will be receiving a tax document for the income whether or not he cashes the check. As an aside the participant died in 2016, when did RMDs begin and can you just pay the beneficiary out under the 5 year rule, assuming no distribution have been done since 2016?

Isn't this your answer right here? That is the Plan does not allow it. If the Plan allows for partial distributions the amount above the RMD is subject to 20% withholding assuming it is eligible for rollover. As for taxes owed it would be ordinary income but since it is a death benefit distribution it would not be subject to the 10% penalty on early distribution regardless of the beneficiaries age. I would assume beneficiary could take the whole account and could probably roll to Inherited-IRA.

And the broker doesn't want to go through the hassle of the paperwork for assets that are going to in and out of the plan and for which he's probably not getting paid. But that just goes to Bill's point to maybe find another advisor.

I think technically you could do a 3% safe harbor with maybe notice very other year but as austin notes, good luck with the employee communication and I guess there is a possibility the IRS could rule it abusive. Though it doesn't seem you would not be violating the letter of the law so I'm not sure the IRS would have a leg to stand on, especially if you made sure to dot every i and cross every t with respect to timing of notices, plan amendments and deferral elections.

It needs to run through the trust and he needs to receive a 1099-R. Ask the broker to put it in writing that he'll personally indemnify the Plan Sponsor for any all penalties that may arise from the Plan Sponsor Paying the participant directly outside the Plan. I'm not sure why it's a problem reopening the account but you can open an account in the name of the Plan anywhere and pay it out from there.

Company B has had a 401(k) Plan since October 1, 2019 when they took over sponsorship of Company A Plan.

If Company B did not want a top heavy 401(k) plan it should not have assumed sponsorship of company A's plan, I would have thought that would be part of the due diligence. Rather it should have started a new 401(k) and let Company A wind down the old 401(k) plan. I'm not sure how you get around the successor 401(k) plan rules if you terminate the Plan now.

$38,500 in ADP test as as he exceed his 402(g) limit for the 2019 and 2020 calendar years during the single plan year ending 6/30/2020 and catch-up contributions are not included in the ADP test. He has also used all of his catch-up for 2019 and 2020 so if the plan fails the ADP test there in nothing left to recharacterize.

#1 - When the employee terminates in August he creates an RMD for 2019. A portion of his rollover equal to the RMD is now no longer eligible for rollover. #2 - First distribution must satisfy RMD; RMD must be processed before rollover of balance. It would be nice if the IRS wrote the rules in such a way that the RMD is not requires in #1 since at the time of the rollover no RMD was required at that point, but the IRS has rarely been about what is easy. Even their SIMPLE plan is not.

It is on the Trustee to invest the funds prudently if the participant can't or won't make an investment election. I do not believe you can condition a contribution on the participant providing investment direction. The DOL has set up provisions for default investments with just this situation in mind for Trustees who would like to limit or reduce their exposure to investing the funds on behalf of the participant. I don't think the Trustee can refuse the funds for a participant who does not provide direction and I don't think "must provide investment direction" will be seen as a reasonable business classification by the IRS for receiving an allocation. But if you want to submit a plan with that condition for a DL to the IRS, I guess you could try.

Have you discussed it with the people who helped you set up the Plan?

When did the cure period end and they go into default? 1099-Rs should be prepared and sent for those tax years, late at this point, if for 2017 or 2018. And participant may have to file amended tax returns if they didn't claim the income. If the payments stopped late in 2018 on the second loan it's possible the default occurred in 2019 in which case you are fine on that one if you send the 1099-R in January 2020.

From a nondiscrimination stand point if you pass ACP hard to see where that would fail the BRF test. As long as you can write it into your document you should be fine. Though you might need amendments from time to time as the HCE comp limit changes. One thing to think about is how you will handle a conflict if an HCE terminates early in the year and makes say $30K are they in Tier 1 based on comp or Tier 4 based on being HCE due to prior year comp? It might be moot if you have last day requirement on the match though that is also the one area where 410(b) testing could come into play if you have high turnover. You're allowed to discriminate in favor of one NHCE over another NHCE and you are always allowed to discriminate against HCEs.

The IRS published some lengthy rules on refinancing and consolidation if I remember correctly. When you do refinance and or consolidate you need to be careful that you don't extend any of the loan you are consolidating or refinancing past the original 5 year period of the loan that is being rolled into the new loan.

In DC Plan TH minimum is only allocated to participants employed on the last day of the year, unless your Plan document has language that makes it more generous.