Lou S.

Unless the IRS deems it a disguised CODA on the ER contribution then the rule about match being counted as part of the 402(g) limit went out the window for self-employed in 1998 if my memory is correct.

Yeah sometime ambiguity in the question makes it tough. I'm sure I've been guilty of doing that a time or two myself. But I have had clients ask if they could make a ROTH Profit Sharing contribution so they didn't have to pay taxes on it only to have to tell, them no it doesn't work like that, if only it were so easy.

I don't think that's what she meant, though I could be wrong. I could be wrong but I think the question was could profit sharing only plans have in-plan ROTH conversions of assets without allowing employee deferrals. And the answer to that as has been stated is NO.

I'm with golfing in that you have a short plan year and somewhere in your document this is probably addressed.

Your plan is effective 10.1.18 and your first plan year is 10.1.18 0 12.31.18 correct? If so my understanding is you have to have to pro-rate 401(a)(17) compensation limit and 415(c) limit for your 3/12th plan year. If your plan year is 10.1 - 12.31 you would look at compensation paid in the plan year. so comp form 10/1 - 12/31.

Distributions will have to continue after death.

How big is the Plan? Amend it now and make a list of everyone with 3 years but less than 6 at the time of the amendment. Make sure you preserve the pre-amendment vesting schedule for that group. In all likelyhood if the plan isn't going to be top-heavy until "a few more years" that group will already have 6 years of vesting and be 100% vested and the TH schedule won't matter for them.

While not directly related to your question, if you left 6 months ago and intended to move to an IRA why didn't you do that 6 months ago when you left? That said if they have proof they sent out the e-mail on 10/26/18 it's unlikely you'll be able to show you had damages. I would suggest finding out when the blackout period ends and rolling your money to an IRA at that point. But as Larry suggests if you feel you've been adversely harmed, contact an ERISA lawyer to determine if you have a claim against the Plan.

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.