ESOP Guy

Just curious do you normally ask for birth certificates in this situation? In all the decades I have been doing this I haven't worked for a firm where that would be the a part of the normal procedure if a person died without a beneficiary form and the plan said the children were next in line. If the employer and everyone else was saying to us this guy said I had two children named S and D and S and D were saying this is all the children we would move on.

Here is a related discussion with outside links that happened in 2018. There are discussions of to what degree an employer is obligated to accommodate religious beliefs under the law. There was a lot of disagreement you will see. But it might help you start the research and decision process I hope: https://benefitslink.com/boards/index.php?/topic/62193-refusal-to-participate-in-dc-plan-maybe-religous-reasons/

I agree the facts are what they are. I merely pointed out the idea of a person might have multiple retirement dates as a possible side consequence of saying this person terms every year. Since I wasn't sure what the goal of the employer was I just thought I would point it out. If one was trying to do planning such side issues rightfully ought to be part of the planning process. If you are dealing with the facts it is less important.

If the work is real I don't see a problem with this person being called active and no RMD needed. If they want to get a payment to this person amend the plan to allow in-service payments after a given age. I would add treating this person as having terminated- ie retired- every year in a DC plan could cause unexpected results. I have this happen every few years. An employee who meets the NRA definition terminates and is treated as a retiree. The plan has an exception to the last day and 1,000 hour rule for retirees. So they get a contribution allocation in that year. The person comes back and works a little bit during some future year and terminates again. It is clear this person just retired again and didn't have to work on the last day or 1,000 hours to get a contribution. So they get another contribution via the exception. So if you treat this person as termed every year to make an RMD and they have a last day and 1,000 exception do you have to give them a contribution every year? In my mind in order to be consistent it would be a "yes". I don't work on DB plans so not sure what would happen there and you put this under general retirement plan category.

See Q7. It is very clear the 1st dollars from the plan in the year they are 70.5 or older are the RMD. https://www.law.cornell.edu/cfr/text/26/1.402(c)-2 There is no debating it once you read those regs.

Until you have to do the takeover work!

Back when I did balance forward 4k plans and now doing all ESOPs we would show the count with the receivables in people's balances. To BG's example we would show the rec'ble in the assets on the Sch I or H also. I get daily plans tend to think differently. I think consistency might be more important. I haven't seen an IRS agent get too caught up in this level of details.

I have to look up the PTE but if you Google 80-26 loans you can find the rules to see if it fits or not. Not that this helps but add this to the long line of threads on here about why you don't put illiquid investments into plans.

i agree with jpod most likely the 1099 isn't valid. It could be you need to know more about it. If the S corp rented a building off of the owner a 1099-misc is correct but not plan comp. Ask more questions about what the 1099-misc is all about would seem like the correct first step.

The EFAST filters aren't very smart. You can attach a pdf saying there is no report at this time and will amend when you have the opinion. Their filters will see there is a pdf and assume it is the report. They will catch on after time and you run the risk of having the filing declared late with the related fines. But many TPAs do this if there is no opinion on tome.

I don't think Lou needs a cite in this case. If someone wants to claim the terminated over 55 exception applies to this plan and not the original plan the burden is 100% on them to prove it. The plain reading of the rules gives no reason to think that exception "sticks" to the money.

Some other discussions on this kind of topic.

I think what you are describing is legal but wouldn't the document have to say the 2nd part of your fact pattern. To be specific that they enter the year following working 1,000 hours. I guess it could be hidden in the base document but it has to be there some place in order to do what you are suggesting might be the case.

I don't know how that can be legit. I would find the author of the restatement and ask them to explain how that can be done.

Yeah let me be clear when I said they could amend the plan I wasn't recommending that as the best option merely it was an option. I have plenty of clients that issue 2000-3000 W-2s that has 7/1 entry dates that use comp from 7/1 to 12/31. They do wash BG says here. They send me everyone's 1/1 to 12/31 comp and their 7/1 to 12/31 comp. We determine who entered on 7/1 and use vlookups in spreadsheets to get their 7/1 to 12/31 comp. But if the client finds all of that too much of a chore they can amend going forward.

The client choose that provision. If it is too much of a burden to get you the partial year data they can always amend the plan.

Before you decide to use this comp you might want to ask why he is getting a 1099MISC. It has been a long time since I worked with 1099MISC so I am happy to be told I am wrong but it can be issued for a lot of reasons. I believe if the company is paying him rent on building he owns he can get a 1099MISC. If it is something like that it seems like it would be much harder to say that is includeable comp regardless of the plan document because it isn't for services rendered.

I can't tell you how many times this is how I have done testing. I tested until we knew it passed no matter how the unknowns turn out.

Glad it turned out well.

Yes if you are talking in-service distributions I have seen a fair number that allow people who are over age 65 take a fixed amount (say $100k). It is a little more common in ESOPs than say PSP but I have seen it in PSPs.

Not only did almost all my non-ESOP plans only allowed a lump sum the few that allowed installments or annuity you could count on one hand how many people to something other than a lump sum. I am talking about a period of time of over 20 years. Yet, you would often times have to fill out some kind of disclosure that told them about the annuity options and so forth. A lot of work for so little value.

I fully admit I am not a QSLOB expert but I thought one of the requirements of a QSLOB is the separate business has to have 50 employees? That is what kills most small business QSLOB ideas. Code section is here: https://www.law.cornell.edu/cfr/text/26/1.414(r)-1

The plan can exclude the compensation. it just needs to pass all the various non-discrimination testing. It sounds like the primary test to look at is the 414(s) test but you are a bit thin on details. So you might have to do other tests. I have never seen a plan exclude some hours and include other hours. I am thinking that isn't allowed. If the plan can pass testing I guess they could exclude these employees. You seem to imply there are no HCEs which obviously would make passing testing easier.

As an aside if it is determined an estate is the beneficiary that starts a whole new set of issues. If this is a large amount of money than the estate will most likely have to get an EIN. You pay and 1099-R the estate. The estate has to pay the taxes on the income. It is my understanding the beneficiary(ies) of the estate can not roll the funds to an IRA. That alone is one of the biggest reasons to always complete a beneficiary form. So once you get past who gets paid your work might just be starting.

1. If you are a TPA it is your job to make recommendations to the Plan Administrator. You don't want the job or liability of making this determination. As far as I am concerned the issue of who is the new PA is the first order of business. Until that is settled this plan can't move forward on the issue of who is going to be paid this benefit. My guess is some of the lawyers that visit this site can give you better advice than I can on how to help your client move forward getting a new PA. It is their job to determine who is the beneficiary. It is your job to make recommendations to the PA to help them to do their job well.