Lou S.

She can roll it directly to her ROTH-IRA. As you note it will be subject to income tax.

Sort of. You have to preserve the right the accounts at the time of the amendment. So you could potentially have an accounting headache for the next couple of years as the value of partially vested account in-service distributions at the time the amendment is executed must be preserved. Effectively after the term of the vesting schedule you'd have the amendment you want.

I hope you are correct but what if the situation was a 401(k) refund required after rollover? Because in that case it is clear that even though at the time you could roll it over to an IRA, it retroactively becomes classified as a refund that was not eligible for rollover and has to be removed from the IRA. The oddities of the pension tax code that don't always seem to follow logic is the only reason I question it and I can see the IRS arguing that termination of employment in 2019 even after plan termination and rollover creates an RMD for 2019 based on 12/31/18 balance that must be removed from the IRA. I honestly don't know if the IRS would take that position, but I can see them doing so.

Unfortunately I think I agree with you on both counts, including the "no cite" that I've been able to find either.

A safe harbor 401(k) Plan will be terminating 12/31/2018. 2 active participants are over age 70.5 but are not 5% owners and have not separated service. Are they required to receive a 2019 RMD from the Plan if they are still employed at the time the distribution is made in 2019? If the are not required to take an RMD and they rollover 100% of their balance due to Plan termination but later separate service after the rollover but before 12/31/2019, is a retro active RMD triggered for 2019?

Does the participant have income as defined by the Plan for 2018 prior to her death? Does the Plan say that participants who die during the Plan year receive a share of the allocation? Will the person who now controls the business declare a profit sharing contribution for 2018? If the answer to all 3 is yes I don't see a problem.

We've put in 401(k) plans in December before with no issue. The problem is usually non-discrimination testing but if you have ONLY HCEs eligible you don't have a problem with the testing.

I don't see how an ACP refund is a "qualified ROTH distribution". Say the same situation occurs with a participant over age 59 1/2 with 5+ years of ROTH making only ROTH 401(k) and he receives an ADP refund. Are you saying the gain on that is not taxable?

I think so. In this case you would process from the ROTH. Let's say for sake of argument that refund is $1,000 and it represents $900 in deferral refunded and $100 in gain refunded. The 1099-r would show $1,000 refunded, $100 as taxable gain and the ROTH basis in the account would be reduced by $900. Maybe we are saying the same thing just differently.

I'm not sure how. Isn't there a different code on the 1099-R for an ACP refund than for qualified ROTH distribution?

I believe the conversion is an irrevocable election so I'm not sure how you would unwind it.

401(a)(17) is the year beginning in - so 2017. 415(c) is the year ending in - so that would be 2018.

@cuse and @larry - the only reason I can see someone wanting to roll in in that situation is the ability to take a participant loan

Process from the ROTH, prorate ROTH basis and earnings.

Which entities have adopted the 401(k) Plan? Are there any controlled group or affiliated service group issues existing between A, B, C, D? If there are controlled group or affiliated service group issues, what does the document say about entities what have not adopted on as a participating employer?

Leaving aside the issue of rolling out the ROTH piece to a ROTH-IRA to avoid the RMD altogether on that portion, we are working on that for future years ,the question I have is this - Lets say the ROTH-401(k) piece has a RMD of $5,000 and the "rest" of the traditional non-ROTH assets has an additional RMD of $20,000. Assuming the Plan's administrative policy allows, can the participant chose which sources to take the full plan RMD of $25,000 from or does the RMD have to be prorated between ROTH/non-ROTH? I was under the impression participant could chose since it is a "PLAN RMD" and not a "SOURCE RMD" but I've been unable to find definitive support that clearly allows it. I also assume the Plan should have procedures in place for how it treats RMDs where participant is non-responsive as to how the RMD will be allocated but that's not really an issue for this particular RMD.

I'm confused is your discretionary match 0% on the first 4% and something above 4%? If yes I think you have more testing than just ACP.

I think if you quickly catch the error on payroll by going over in 1 plan a negative contribution on the next payroll to fix would "probably" fly. I know we've done it on occasion, not sure if it would hold up to a detailed audit or not. That said, two plans just follow the procedures for doing a 402(g) excess refund which are probably spelled out in the Plan and likely include the participant requesting it.

If he is considered benefiting under the plan than his IRA contribution would not be deductible when he files his tax return.

No that is not a match, that is a Cash or Deferred Agreement (CODA) and would be treated as a 401(k) contribution by the employee and not a matching contribution as I understand it.

See code section 401(a)(13) and regulations thereunder. BG5150 and Larry Starr are correct.

2 & 3 represent a brother sister controlled group. If 2 can pass testing excluding the employees of 3 your are fine. If 2 can't pass coverage excluding the employees of 3, you have a problem.

The Plan should have review procedures. Despite how much the Trustee may personally dislike the ex-employee unless there is a valid legal reason for denying the claim, you might want to let the Plan Trustee know that he might be in breech of fiduciary duty. Not saying this is the case here but often when this happens there is a dispute about money the ex-employee may owe the company (or owner) and sometimes criminal embezelment (sp?) charges may be pending. Usually the anti-alienation provisions of ERISA with respect to the Plan don't care about those other issues but sometimes they do. If it gets to that point though it's usually best to get a qualified ERISA attorney involved in the process.

Someone has to do the combined testing and you are right PEO Administrator is unlikely to be the one to do it.

I don't really understand your question. Company A & B are a controlled group and need to be tested together for pension purposes.