Bill Presson

Maybe I'm asking a silly question, but if the trust is the beneficiary, why is the money still in the plan? Why hasn't the money been distributed to the trust and then the issues are trust's.?

We've done the same on occasion, especially if we're talking about a few days or weeks in to the new year. But what if the check gets lost or if the participant never cashs it?

Don't confuse a couple of issues here. If a participant gets a check in December of 2020, then he gets a 1099 for that money representing a 2020 distribution. Regardless of when he cashes the check. A plan can't shut down until all the money is gone. So money in an account because the check hasn't been cashed IS still a plan asset. That's why wire/ach/certified checks should all be used for a plan termination.

I have always recommended having the employer pay any fees to anyone that is related to the employer (stockholder, family member, etc), just to be safe. WCP

Here are my general rules (because there are always exceptions): 1. If a 401(k) plan is going to be deferral only, I recommend against it or prefer they go somewhere else. Past experience shows that they almost never work out successfully. 2. If an employer qualifies and the limits are acceptable. a SIMPLE IRA is quite often the best choice instead of a 401(k). I know that doesn't work here because of the employer contributions, but I still often recommend it. 3. While our industry exists because of "state" supplied rules, I'm generally opposed to state run programs.

I understand it was terminated. Were all of the accounts distributed as well? That's possible but could be they are still in place. If not, I would recommend re-opening them or opening new ones. It's gotta be fixed.

The deferrals need to go to the SIMPLE. The 401(k) didn't exist when they were withheld.

I still don't understand the "why" of having one spouse have a 401(k) and the other have a SIMPLE IRA. Even if they actually aren't a controlled group (which I'm still skeptical about), it's easy enough to make them a CG and it wouldn't be a multiple employer plan. It would just be a single employer plan with a husband and wife.

This calls for professional tax advice. The Owner needs to hire someone to help solve this problem.

Happy Holidays, Jak! WCP

If it's a controlled group, then the group can't sponsor a plan other than the SIMPLE (edited to say SIMPLE instead of 401(k)). https://www.irs.gov/retirement-plans/fixing-common-plan-mistakes-simple-ira-sponsor-with-a-related-business And if it's a controlled group and the spouses are the only employees in their businesses, it would be silly to not have them covered by a single 401(k).

If it's a QDRO, you have to do whatever the QDRO says, so that might limit the choices. If you are the alternate payee, many times you can just take a complete distribution and set up your own payment schedule. But if the QDRO awarded you installment payments, that's what you'll likely have to do. Too many variables for advice here, I think.

Open an account at a US Bank. Have the direct deposit go there. Then arrange a wire transfer between your banks. This is not an ERISA or retirement plan issue.

You really need an attorney to assist you.

With it being an asset sale, the termination can be 12/31/20. It could even continue into next year. The employees are all 100% and considered terminated. So watch the coverage and discrimination tests in the contribution.

You need to contact your HR because we can only answer generally without seeing the plan documents. There are really two possibilities: 1. Your plan matches each payroll and ONLY considers that payroll in the calculation. If this is the case, there's nothing to be done. 2. Your plan matches each payroll and then does an additional calculation at the end of the year. We call this a true-up. It's not required but many plans do this. If this is the case, then you'll get your additional match under this calculation. Your HR dept can tell you which applies.

I understand your point. But that wasn't my point. If they are concerned that the plan will be top heavy, then when it is top heavy, the 3% SHNEC does satisfy the TH contribution requirement. So, my question to the OP stands: what is the concern?

It's also very likely that Lincoln shut off new money into a fixed account paying that high a return.

I just don't know if I've ever seen an ESOP actually hold the stock of two separate companies. I'm thinking EBECatty is likely correct on this.

Also, if the plan is providing a 3% SHNEC, then it satisfies the top heavy contribution requirement. So what's the concern??

It's amazing to me how many people seem to ignore this. I've seen administrators with a caseload that were paid 95% of the total billing. The owner couldn't figure out why they were losing money. While I was at the CPA firm for 12+ years, their plan was 2.5 times. And they ran it pretty narrowly.

Are you saying the same ESOP owns 80% of both companies?

Typically we'll forward an email where the documents were already provided and ask if they need any help with something.