Lou S.

If he is exactly 50% or less you are OK. If he is more than 50%, then one limit.

Think of it this way, if the $6K had been paid out correctly, his IRA would have been higher and he would have had a RMD that was slightly higher due to the extra $6K being in his account. But since the Plan is paying it now, the Plan has to satisfy the RMD independently of the IRA. And as I think jpod is noting you may have multiple RMDs to calculate depending on his first 70 1/2 year.

A 2012 (or possibly 2013 if the grace period extended into 2013) 1099-R for the defaulted loan should be issued.

FGC, good points and ones I had not considered. May answers and likely others were based on this being a 401(k) plan as that this the subforum it is in, but that could be a faulty assumption on my part.

I seriously doubt that is true. The folks in HR may in fact have no say but Fidelity is us administering the terms of the plan set by the employer they aren't making them up themselves. Generally for a 401(k) plan you can get money out in limited circumstances: separation of service, death, disability. In-service distribution may be offered but there are limits and if you aren't age 59.5 in most cases won't be available. You may qualify for a hardship distribution if your plan allows for them, you might take out a participant loan as someone else suggested or you could get a QDRO as Fidelity implied.

As a practical matter wouldn't the only people effected by that be people hired exactly on January 1?

Information on In-Service Withdrawals, if allowed, will be in your Plan's Summary Plan Description which you should already have. You answer is likely in there. As others have said, check with your HR on plan provisions but Fidelity is probably correct in this case.

The 2015 ADP is the ADP of NHCEs in 2015 so yes he is included in the NHCE ADP for 2015. The 2016 ADP of the HCEs is all HCEs in 2016 so he is a part of that group too. The 2016 ADP of HCEs is compared against the 2015 ADP of NHCEs. This isn't all that uncommon when an employee crosses the pay threshold to become an HCE, marries an owner, or becomes an owner.

If I recall correctly the deadline is 12 months after the plan year for top heavy minimum. But you could have deduction and 415 implications making it in December.

It would be nice if the IRS had crystal clear rules on this. I'm not sure they do but I suspect they would take the position of "walking back" the controlled group rules for purposes of 415 and extending it under the predecessor plan rules. That is to say I would tend to agree with mphs in his analysis above.

If you have a short plan year either due to distribution of assets or merger my answer would change. I'm not sure there is any specific guidance on point with your question as I would argue you don't have a short plan year and you have until 2.5 months after the end of the Plan year which is 12/31/16. I think there is some recent guidance on terminating DB plans where the 8.5 month minimum funding deadline is from date of termination I believe so you could argue your point that it was due 2.5 months after the August termination date but I wouldn't tax that position to pay an excise tax that might not even be due.

Are you going to file a short plan year return for the 1/1/16 - 8/4/16 "plan year"? Somehow I think not.

I'm going to assume that "a" and "b" are both values that satisfy the IRS rules. In the first - you can change the eligibility. Your amendment should be clear whether or not participants who satisfied the old rule continue to be participants after the amendment or if they need to meet the new rule. Both are acceptable as eligibility is not a protected benefit. In the second I'm sure it can be done I've just never quite seen this exact question. I think I would treat it like a change in vesting schedule. That is preserve any vesting accrued though date of amendment and allow employees with 3 years of service to choose which schedule. Though I'm not 100% sure on this reading of the rule.

I guess the answer depends on when it is defaulted/offset and whether or not the terminated employees has the grace period to repay said loan.

It used to be more common when the PS limit was 15% of pay to have a PS plan and a 10% of pay MP plan. Now I suppose someone could have a DB plan and 401(k) plan. The DB Plan could very rapidly go over the $250K limit while the 401(k) might take a long time to hit the $250 limit.

Well in one of the wonderful (and I use that term loosely and sarcastically here) quirks of the IRC, while you got the pleasure of taking that back as taxable income and not get it in the plan tax deferred you get the pleasure of counting it towards the 12/31/15 balance for the TH determination and as BG5150 correctly pointed out a while ago it gets to hang around added back in for the next 5 years as an in service distribution. Sometimes I think they write these laws with philosophy of - "How can we possibly make this make the least amount of senses and be the most complicated to run" But if I'm reading the rest of your responses and questions in the thread correctly it sounds like you'll owe 1% to everyone who met the 6 months eligibility who did not terminate employment prior to 12/31/16. It is possible you can offset some of this if there are forfeitures from your prior top heavy minimum. I wish you luck. For what it is worth it sounds to me like you are going to have this problem basically forever so you might want to consider changing the plan design to something t hat will automatically pass testing like a Safe-Harbor 401(k) (2018 the earliest you can do this) or perhaps some other plan might suit your business needs better. I will echo others who suggest you reach out to a qualified TPA in your local area. It is possible you accountant could suggest one or two to interview.

Yes the 1099-Rs and other forms are required to be filed. You can file a request for waiver of penalties. I have no idea how successful that will be. I have never tried. Yes, if folks have taxable income they didn't claim they will have to file amended returns for 2015 and penalties and interest will likely apply. I'm only a little more sympathetic than Mike. I'm sure some of the folk "forgot" they got taxable retirement plan distributions and just assumed they received all the tax forms they were supposed to. Though there may be some who just thought they were getting away with unreported income, for those I have no sympathy. And if rollovers were done, it's really just a reporting issue. Taxable distribution on the other hand.

While I agree with your practicality. I believe the IRS from the podium at conferences agrees with Mike's comment that you can't simply "reverse the key-ee deferals."

As Mike correctly states the answers to your questions should all be in the Plan Document. While the determination date for 2016 is 12/31/2015, eligible non-key employees in 2016 would get the TH minimum based on full year 2016 pay, even if your document excludes pre-participation compensation. If your plan document is drafted such that only non-key employee/participants who are employed on the last day of the year are eligible for the TH minimum then you can satisfy the TH-minimum with a 1% contribution (assuming that is the highest deferral rate between you and your partner) just to them. On the other hand if it says all employees even Key get the TH minimum once you and partner get the 1% contribution your are now at 2% with deferral and have to increase to 2% which starts the whole cycle over. But I totally agree with Mike, have that 60.7% figure rechecked.

Create, deposit, distribute.

I'd love to be shown to be wrong but I think the reference to 414(c) in the 415(f)(1) reg is pretty clear that it applies to partnerships as well for the one 415 limit rule. And recall partnership interest is greater of capital interest or profits interest.

Just looked it up. Regulation 1.415(f)(1) relevant part So as long as you are 50% or less you are OK and have separate 415 limits. If you are over 50% one limit.

You might want to check 415 limit. I believe there is a clause about replacing "80%" with "50%" for purposes of the 415(b) and (c) limit but I can't recall if it is "50%" or "more than 50%" for the aggregated 415 limit.

Based on the 2015 instructions (I haven't read the 2016 instructions), it would appear you need to file. See page 2 of the instructions https://www.irs.gov/pub/irs-pdf/i5500ez.pdf I base this on the example in the instruction and this being an ASG but someone may have a different reading then I do. I guess it comes do to do you view the Dr as standalone "employer" or the whole ASG as the "employer". Since for testing they are one big happy family under the ASG, I would take the conservative approach and file.

Thanks Dave great reference. However didn't "recent" IRS guidance on (really) older 5500s eliminate the need for the older forms? And by "recent" I'm thinking around 2 years ago. I thought now you just used the current forms but entered the old dates. Am I misremembering in my old age?