Lou S.

I'm not a lawyer and bankruptcy is not my specialty but my understanding is Qualified Plan Assets fully protected. Traditional IRA and ROTH assets protected up to $1M adjusted for inflation. I think it's up to around $1.25M since the passage of the law. States can grant higher limits but it varies by state. Rollover IRA if traced back to Qualified Plan generally get the same protections as Qualified Plans. A decent summary can be found... https://www.investopedia.com/ask/answers/081915/my-ira-protected-bankruptcy.asp

Bob, a large contribution by your employer in 2017 to take the tax deduction under last year's tax law with the probable anticipation of making a smaller contribution in 2018 and using the prefunding balance due to the December tax law change might explain the jump in the prefundng balance.

Must have or are supposed to have?

Run to the DOL, don't walk. Save as much documentation as you can. I'd be very concerned by a company that is not making payroll.

Yes.

Why on earth would you add amounts that have been forfeited back into a top heavy test? They weren't distributed to the participant in the 12 month look back period and they aren't part of the participant's balance on the determination date.

The answer to most of your questions is "maybe". As Mike suggests you should discuss the options for the Plan's funding and possible in-service distribution options with your Plan's actuary who should have far more details than we would on this board.

I believe Pencheck, Millenium Trust, Nationwide and several other provider all setup rollover IRAs for lost participants. Call around and find one you like that will take a missing participant without an address. You can also look into the PBGC missing participant program which was recently expanded to cover terminating DC Plans.

This is from ASPPA about 3 years ago, I don't know if things have changed in the last few years https://www.asppa.org/Resources/Publications/Plan-Consultant-Online/PC-Mag-Article/ArticleID/5125 There is more in section 2 of the article that is worth reading through. Not sure if anyone has any more recent experience with this issue and the IRS but this was last info I recall on the topic when doing a continuing ed through ASPPA webcast which agreed with the article as far as I recall.

And another thing to consider even if this is a proper transaction - if it's the Cash Balance Plan that holds the property - you can seriously mess up the minimum funding and/or maximum deductible rules if Cash Balance Plan is the one that owns an interest in the property if you fail to properly value it each year. In short if the guy really is trying to buy a 2nd home with his retirement assets it's a big no no as Larry has correctly already pointed out twice now.

I'm going to say Larry is almost certainly right in this case that this will in fact be a Prohibited Transaction, but Jpod is also correct that there is a slim possibility that this is proper investment of the plan. bpenfold, if this is allowed, that being a very big if - the Plan need to be the registered, titled, deed owner. you can't simply take the money out of the plan, buy the place, and list the property on the balance sheet. And yes you need an independent appraisal every year to determine fair market value. there have been 2 replies while I was typing so sorry if this was covered.

I'm pretty sure if your Plan's definition excludes bonus from match and the plan passes 414(s) testing on your definition of comp you are done. I don't recall this throwing you out of Safe Harbor or or requiring any additional ADP/ACP testing. If someone has a citation to counter that I'd be interested because we often don't do a lot with excluding comp in practice because in small plans 414(s) is often a problem.

What is the plan's definition of compensation? Is the definition non-discriminatory under §414(s)?

Did the plan pay her more than her account? I'm confused.

Real estate can be purchased the devil is in the details and they can be tricky. A 2nd home for the good doctor, err I mean client. is almost certainly going to run afoul of the prohibited transaction rules. Don't forget your annual fair market appraisal, possible annual audit requirements if you are a small plan that no longer qualifies to waive the audit, and your increased bonding requirements. Suggest your client consults with qualified ERISA counsel who deals with real estate transactions to make sure they know all the PROS and CONS of real estate investments in a qualified retirement plan and to make sure they are not running into a prohibited transaction and the plan will have enough liquidity to met all of its distribution needs.

Thanks Mike, you are correct. For some reason since he was 76 I just made the assumption that RMDs had been ongoing.

If the RMD has not been made for 2018, he has a required RMD that must be paid.

Corbel, Relius or FIS or whatever they are called these days sent an e-mail saying they are reviewing IRS letters for accuracy and will send shortly and that document update is scheduled "summer" release.

I usually need to make a chart to make sure I've got the deferrals, catch-ups, and 415 limits in the right years. You have to make sure you are not violating 402(g) or Catch-up in any calendar year. And you have to make sure you don't violate 415 in the limitation year. It's usually pretty easy to follow when a guy puts in the max deferral per calendar year, it can get confusing when you can can't use catch-up rules when you aren't hitting the max. My understanding might be off but I don't think you can bring the prior calendar year limit into the current limitation year, but you might be using some the prior year limit in current limitation year if you exceed the catch up in the 2nd half of the prior calendar year that falls in the current plan year. The timing of the 401(k) deposits can also come into play.

In this case you will need to limit catch-up to $6,000 for the 2017 year. There is no catch-up for the 2016 year because he did not exceed any applicable limit.

Didn't he have a 2017 RMD due 4/1/18 and doesn't he still have a 2018 RMD due by 12/31/18?

Since the earnings are not leaving the plan and will be taxable when received I would not think that they would be reported on a 1099-R now. I would think that you need to move allocable earnings from the pre-tax 401(k) source to the after-tax when you do recharacterize .

How about just not allowing loans? Whether or not it is legal is a question I'm not sure about but it does seem to add a great deal of needless complexity, in my humble opinion. For NHCEs you are restricting them from making deferrals making it more difficult to pass ADP testing. For HCEs you are basically saying you can't take a loan if you want to make deferrals. You are almost effectively saying HCEs can't take loans because most of them won't want to give up the tax deferred savings. Either way it is unlikely to make the employers most valuable employees happy. If the Plan is a safe harbor 401(k), especially a safe harbor matching plan I think you have a problem with the provision as you are effectively restricting an eligible participant's ability to make deferrals and receive safe harbor match that is not an allowable exclusion. Lastly if the plan allows catch-ups anyone with a loan now has an effective deferral limit of $0.00 so if they are over age 50 even if you say they can't make regular deferrals, you have to allow them to make catch-up contributions. All and all it sounds like a bade idea to me but if you can make it work, more power to you.

^Yes. Assuming everything else works out. After making the PS contribution, $6K of his deferral would be recharacterized as catch-up to avoid a 415(c) violation. For 415 purposes he would be considered to have $2,400 deferral, $51,600 PS, $6,000 catch-up.

Since he filed for divorce I'm guess she wouldn't have given spousal consent but I don't see where spousal consent was in question in this case. As I understand it participant requested a distribution and a wire was sent on Friday, he died on Sunday, and the funds were credited to his account on Monday. The spouse was claiming she was beneficiary and entitled to the $2.7M payment but the plan argued he had no accrued benefit as of Friday when the funds left. The court sided with the Plan. Could she have Joined the Plan that a (Q)DRO was coming freezing his account from payment after he filed for divorce but before he took a distribution?