Lou S.

@ESOP guy, DB RMD so the rule are a bit different than DC Plan The 4/1/2018 satisfied his RMD for 2018. It doesn't sound like he needs another one. Since you are converting the annuity to a lump sum on termination (I'm assuming this is small plan and all paperwork is in order) I would check if the 4/1 payment was at least as large as the RMD would be under the account balance at term divided by his 2018 factor. In a DB Plan this generally is but there could be cases it is not in which case you may have to make a second payment to make up the shortfall,like maybe excess assets being allocated up to 415 limit, though you could apply the 4/1/18 payment against that. I haven't run into that situation in practice so maybe some who has can chime in. Hope this makes sense.

Had a participant get one earlier this year. Fixed with simple letter but a PITA to deal with the nonsense.

You can continue to use the document but your old provider is no longer updating it for you for any law changes. You will not be able to use their IRS Opinion letter and your plan may now be considered an individually designed plan that you are responsible for updating for any IRS required changes. Typically your new provider will restate your Plan on to their document for a variety of reasons including not having to read through someone else's document provisions and having reliance on their own Opinion letter.

WCC is correct, B taking over the 401(k) Plan in 2017 will "disqualify" the SIMPLE-IRAs for 2018 I asked an unrelated SIMPLE-IRA/Qualifed Plan question the other day, I'd suggest looking at dan.jock's reply in that thread that would show the effects on the SIMPLE-IRA for B if they did take over the 401(k) Plan. The PDF is quite useful. In this particular case I'm guessing B would not want to go through the kind of hassle that would be required at this point of the year if there is any kind of participant in the SIMPLE-IRA. With respect to your question about possible partial termination for Plan A, if all of the employees except owners are being terminated by A and hired by unrelated employer B as a result of asset purchase, I'd be pretty confident Plan A has experienced a partial termination requiring full vesting of affected participants.

Is there a cost for enrollment?

Since it is an asset sale would B keeping the SIMPLE-IRA for 2018 and starting a new 401(k) plan for 2019 and A terminating it's 401(k) Plan as of 12/31/2018 be an option? If so that might be the path of least resistance. Not saying it would make all parties happy just might be the easiest solution.

Jim, Dan & Larry thanks to all 3 of you.

What are the penalties of starting a Qualified Plan in a year when a SIMPLE IRA is in existence? I know you are not allowed to terminate a SIMPLE-IRA mind year but what if no one elects to make contributions to it? In 2017 on advice of prior accountant, 2 employee shop, both 50% owners set up a SIMPLE IRA for 2017 and continued for 2018. Contributions for 2017 were funded. No contributions have yet been made for 2018 and the 2 owners will be the only eligible employees of the SIMPLE IRA in 2018. They are having a much better year than expected and their new accountant would like to do a 401(k) plan with PS component to maximize deduction. If they establish a 401(k) with PS what is the affect on the following 1 - The existing SIMPLE IRAs that hold only the 2017 contributions? 2. The SIMPLE-IRA if no contributions are made for 2018? 3. The SIMPLE-IRA for 2018 if contributions are made for 2018? 4. The newly formed 401(k) Profit sharing plan? I know you are not supposed to have a SIMPLE-IRA and Qualified Plan in the same year but if the penalty is remove the $0 of 2018 contributions along with the $0 of earnings, is there really a penalty for having both?

It is pretty simple for the company to exclude 'some' HCEs by having a cross tested formula that has everyone in their own rate group and then just have a resolution saying which HCEs are getting a 3% PS contribution. I'm pretty sure that will always pass testing since 100% of the eligible NHCEs are getting a 3% safe-harbor non elective so you'll always pass the ratio percentage test at 100% or more. I'm guessing the plan is drafted correctly, but that could be a bad assumption on my part. That is to say bobbyM35 the company probably can get away without giving you any additional contribution but as others have suggested getting a copy of the safe harbor notice would be a good start.

It depends when it is processed. If you catch it before 12/31 and process the distribution, the code would be 8. If you catch it after 12/13 and process it between January 1 and April 15 you would use code P.

I believe that is correct. You refund the deferrals and earnings and forfeit any related match. 1099-R code is E. I believe it is taxable in year distributed but I don't know if there is any formal guidance on this. It is not a 402(g) violation so there is no double taxation to worry about. What I am not sure of is whether this falls under SCP or VCP is required.

I love Larry's answer of definite maybe. Here is a flowchart I've found pretty helpful in the past. It usually comes down to how well the trust was drafted. https://www.aicpa.org/content/dam/aicpa/interestareas/personalfinancialplanning/resources/retirementplanning/downloadabledocuments/benflowchart.pdf

There is no prohibition in the code or regs from taking a loan from a rollover source of funds. The plan document and/or loan program may place restrictions on the source(s) of funds that may or may not be eligible for loans.

They are trying to get a deduction twice for the same money. And no that's not allowed as far as I know.

The forfeiture account is not a participant. Why does the plan still have forfeitures in it if everyone was paid out? Forfeitures should have been reallocated to participants or used to pay fees according to the terms of the document. edit - if the forfeitures are being used to pay admin fees can you show them as a payable at EOY and show a zero balance final return?

We have done this on a few occasions in the past. I don't see any prohibition against it. You can make the refunds once you have all the data to calculate them. If it is daily valued, yes we would calculate G/L though the date the refund was requested, I don't think the IRS would ever challenge that as an unreasonable position.

You could word the amendment to grandfather in the union employees, but if you do that make sure it is OK with the CBA as well as the OK with the Plan Sponsor. Allowing union employees to participate but not others could be a big no-no with the union that collectively bargains benefits for its members. I believe it is "typical" to exclude the union employees both existing and prospective when such an amendment is executed. Though I could be wrong as my experience with union employees in or out of plans is limited.

A hardship to acquire your principal residence should not present a problem.

Is this a controlled group or multiple employer plan, I think the answers might be different in each case.

Short of reviewing the TH test to confirm it's accurate, you have not missed anything wrt to the qualified plan.

For calendar year 2016 he has a maximum catch-up of $6000. You failed the ADP test for PYE 6/30/16 and recharaterized $1,500 as catchup so he has $4,500 possible left for 2016. Since he defered the full $24,000 in CYE 2016, of the $15,000 deferred 7/1/16-12/31/16 $4,500 is catchup and $10,500 goes into the test for PYE 6/30/17. In 2017 he has not yet hit the 402(g) limit so all $12,000 goes into the test. For the 7/1/16 - 6/30/17 PYE the deferral in the ADP test are $10,500 + $12,000 = $22,500. If the plan fails you can recharaterize up to the 2017 cacthup limit of $6,000.

You file it now and pay whatever penalty the IRS assess or try to get the penalty waived.

Yes.

If your new corp simply assumed sponsorship under an amendment or resolution of your old plan, you have one plan that had a change of sponsorship. If you are the only eligible participant and assets are under $250,000 you are not required to file form 5500-EZ If you formally terminated your old plan and rolled the assets to a new company plan then you need to file a final Form 5500-EZ for the terminated plan event if the assets are under $250K

You probably have partial terminating on the date all the employees no longer work for company A. The practical implication being full vesting of affected participants how no longer work for Company A While Company A will presumably no longer have common law employees, Company A will probably exist for some time for receivables and closing the corporation and the owners may even still draw a salary or bonus. I see no problem with terminating the Plan on 12/31/18 instead of 7/15/18, assuming there is a valid business reason which is likely easy to justify. Now if they are trying to make the PS contrib for 2018 to owners and exclude all the employees under a last day rule, the allocation is almost certain to fail non-discrimination testing unless all the terminated employees are HCEs. If the Plan has fail safe language that language is likely going to pull back all the employees terminated on 7/15 back into the allocation of the PS contrib. But you'd want to read the terms of the Plan document to be sure.