Lou S.

Without getting into the wisdom of whether or not you should do this or if Pencecks is a good solution for this, the answer should be in your plan document. That is if payment of Plan expenses is allowed from Plan Forfeitures, then yes this would very likley be considered a legitimate reasonable expense that could be paid from Plan Forfeitures.

It would be unusual for someone to have enough income to be able to make a max ROTH-401(K) contribution and a max ROTH-IRA contribution but also have low enough income to qualify to make ROTH-IRA contributions. However, if you have someone who fits that specific fact pattern there is no prohibition against it.

The best way would be to return the RMD plus earnings to the participant's IRA and have them take the RMD from the IRA where the funds are deposited. It doesn't necessarily have to be the same IRA that sent the funds for rollover. I'm assuming the participant doesn't have a separate IRA they could take the RMD from but it wouldn't hurt to ask.

That would be my understanding.

Well which year it goes in the ADP test is one and if there is a match which year you get the deduction would be another. But yes for calendar year deferral limit it wouldn't matter much.

My guess in 10/31 is this Thursday, 2 days from now and if they want to defer the 402(g) limit in the year ending 10/31/2019 instead of the year ending 10/31/2020 there is some time pressure regarding payroll.

I often make typos like that. But they are two very different questions. Didn't want folks giving you advice on how to correct excess deferral if that wasn't the problem.

Yes it needs to run through payroll and has the same deposit timing requirements as the other employees. I assume the thread title is a typo and refers to 401(k) deferral and not a $40K deferral.

I agree with you 100%. I was just throwing out an idea she could run by competent QDRO counsel to see if that might be an option that makes all parties happy. It seems to me her 2 biggest concerns are preserving the 100% survivor option with popup while also avoiding the concern that her ex might delay benefits as long as possible to keep her from receiving them. But maybe I misunderstood the OPs question.

Does the Plan allow for benefits to commence at NRA even if the participant is still working? If so perhaps a compromise might be to have your soon to be ex-husband agree in the QDRO that benefits will not be delayed past his NRA even if he continues to work. QDROs are not my area of expertise so I'm not sure this is possible. I know the QDRO can't force benefits that are otherwise not payable so it may not be an option.

If you mean can you use unused deduction in year X and bring them forward to year X+1, the answer is no. I think that used to be a possibility long ago but don't think it's been a thing for over 30 years. That is your max deduction in 2018 was say $1M but you only contributed $600K Your max deduction in 2019 is say $1M again you can't add the $400K from 2018 and say your max deduction is now $1.4M if that is what you are asking.

#1 resigning with a letter why is certainly one option. #2 completing the Form 5500 accurately and to the best of your knowledge would seem to be a requirement, regardless of whether or not you suspect it will trigger an audit, which it likely will. Since I think you would have to report party-in-interest transactions, failure to pay benefits when due, a reversion of assets to the employer, and possibly other transgressions. #3 I don't know what the legal rules are regarding this, though Peter G seems to have it covered better that I could. Though I don't think there is a prohibition on directing participants to the DOL should they call your office.

I'd look at this way. The SH Notice is an IRS requirement and potential qualification issue so unless you are amending out the SH for next year I'd do the SH Notice for sure. Whether or not he distributes it to himself and his wife is between him and God. The QDIA notice is a DOL requirement, since the Plan is no longer subject to Title I pretty sure you don't have to do this one, though as Bird notes might not be that difficult to crank one out and send with SH Notice. The final question is, if he closed his practice is there some reason to not terminate the Plan and distribute to IRAs? Is he going to have some trailing income he wants to defer?

The way Relius explained it to me in the past was that "In-Plan ROTH Transfer" are for monies that are not currently distributable and "In-Plan Rollovers" are for monies the participant could elect to receive as a distribution. So if you want to allow for maximum flexibility, select both options.

I don't know Luke you bring up an interesting point. You can accelerate payments for termination of employment or termination of the Plan. I'm not sure what other reasons the IRS would accept for legally accelerating the payment of the note and making it due and payable immediately essentially. If you did have such a provision, I would assume it would have to be part of the promissory note, included in the Loan Program and not be subject to arbitrary discretion of the Plan Administrator. It's not something I can say I've thought about before.

as ratherbereading points out, she should contact the Plan Administrator for the 401(k) Plan and request distribution paperwork.

Yeah it seems like they've gone into lock down mode. It's very odd. And yes distribution fraud seems to be a growing business.

Isn't situations like this one of the reasons the ERISA Fidelity Bond exists?

He has a 2019 RMD which must be taken prior to the rollover. He can delay the RMD until 2020 but the plan would have to remain open into 2020 and he would have to take his 2019 and 2020 RMD from the plan prior to rollover.

Shouldn't they Plan Trustee or Plan Administrator make that determination? What did the Participant Fee Disclosure about Plan Audit Fees say?

If I understand the facts correctly he needs a $10,500 refund to pass ADP, $500 of which is 402(g) excess that should have been distributed by 4/15 but was not. If that correct? If so I think you need to refund $10,500 as Excess Contribution to pass ADP since the 402(g) refund was not completed. Had the $500 been timely refunded by 4/15 you would only distribute the $10,000 since you don't "double refund" but since the refund wasn't made you need to remove the full amount to satisfy ADP. As for the $500 402(g) excess deferral, he should have already picked that up on his 2018 tax return as income.

I agree with QDROphile and to add, I you can eliminate the new Loan Feature in the spun off plan by plan amendment as the offering of loans is not a protected benefit, but you have to administer the loans that come over in the spin off as they are already plan assets subject to the terms of the loan note.

One thing I'm not sure of but if it is allowable may help. Shift just enough NHCE PWs to the ADP test to improve results but leave enough to pass the General Test with the HCE PWs.

I don't think you can refund the Prevailing Wage contributions as they are not salary deferrals. And I think you are correct that if you shift NHCE PWs to ADP and not HCE PWs you need to test the HCE PWs under the general test which if you don't have other employer contributions is problematic. But I will say we don't work on any PW plans currently so I haven't run into this in practice. I'm pretty sure you are allowed to run the ADP test without the PW contributions but that may result in larger refunds.

They lose the get out of top heavy free card for 2018. So if the TH ratio on 12/31/17 was more than 60% they have to satisfy TH minimum contributions for 2018. They lose the ADP/ACP free pass too, have to test for 2018. Since they are at 74% on 12/31/18 - they are TH for 2019. It's a bit too late now but given the facts the client should probably have been advised to keep the safe harbor through 12/31/18 and remove it for 2019 while also informing them of the TH nature of their plan and the implications.