Bill Presson

I've got the other infamous one, but not that one. Maybe Lance Wallach has it? 😁

@Peter Gulia if I can't rant on message boards, where shall I rant?

I'll never understand why M&A attorneys aren't sued for ignoring retirement plan issues prior to the transaction date.

If it's offered, then you do have to offer it to all. But it's not a protected benefit so you don't have to offer it forever. Get the current people to sign off on not wanting insurance and then amend it out for future offering.

I think you could have stopped offering it as an option years ago. But, as you said, most people don't do this purchase in their plans anymore. Typically, the policies would have been purchased, paid for 5-8 years and then sold out of the plan. If they didn't do that, they probably didn't think it through OR the agent didn't care about the plan to begin with. At some point, assuming the guy retires, the policy will have to be surrendered or he'll have to buy it out. Is there any good reason to keep the policy in place any longer? If not, surrender it and put everyone out of their misery.

Remember that I am not an investment person, but a few thoughts: 1. doing something "for investment purposes" doesn't determine whether it's a PT or not. Might impact whether there is UBTI, but not PT. 2. I think allowing this investment as you describe it is a very, very bad idea. 3. Perhaps they could find a good REIT or ETF that would scratch this itch.

FWIW, this isn't me. 😁

1. You can’t close one 401(k) and open another less than 12 months apart for the same business (which this is because of controlled group rules). The real issue is whether the document allowed you to count any contributions from the new entity since it didn’t adopt the plan in 2022. That’s a document issue that Vanguard has to answer. 2. There’s a place on the 5500 to show that the prior 5500 was filed under a different EIN. 3. I recommend you hire someone that does this work and not try to resolve it yourselves.

You can’t defer more than you earn. You can have catchup contributions go above compensation only if there is an employer contribution to push the number up. But with zero compensation, that’s not an option either. Maybe he doesn’t deduct something this year so he has income to defer on?

Plan participation doesn't impact that determination.

If it’s an ASG, she’s key and so are the kids.

Assuming he's 100% vested (same really applies if less), then typically he would get 100% of whatever was in the account when it was liquidated and sent. So he did get earnings whenever it was processed. And I don't believe that the brokerage firm wasn't able to see what the participant was invested in at the time. Not that it really matters, but they're saying they can't run a report from X date to liquidation? Please.

Is the plan pooled or participant directed? How often are valuations done?

Obviously the employer was in error. But I don't believe the participant asserting that she doesn't look at her pay confirms. Anyone on a tight budget does. And anyone that is 62 and a Luddite, I guarantee is reconciling her checkbook constantly. She knew. If I was the employer, I would let it stand. But I would offer to give her an employer loan of $X to cover the extra federal taxes to be paid back over the next year.

Time to have them lay all the cards on the table.

Is it possible, the policy is supposed to be allocated to a single participant? Probably the one paying the premium personally? which shouldn’t be happening.

That would be incredibly unusual. Who owns the policy? I’ve seen “key man” policies owned inside a plan before (though unusual) but the plan pays the premiums.

Thanks for this reminder, Peter. I don't think we remember to lean on this often enough.

Yes.

Are they getting SHNE? If so, they have to get gateway also.

Yuck. Tell him to roll his own money to an IRA and make the investment and not taint the plan.

Holy crap, Batman.

And a pox on all the M&A attorneys that still don't bring in the TPA to get these things done timely.

Agreed. If the plan had last day requirements, I would argue the other way.

You have until 11/30/2024 to make the plan SHNE for 2024 with a 3% contribution. From 12/1/2024 until 12/31/2025, you can make the plan SHNE for 2024 with a 4% contribution.