ETA Consulting LLC

Here is an excerpt from the Adoption Agreement (ASCi) that my firm uses: You'll notice the opportunity to elect "b". You should be able to find the Rollover Provisions in the document you use. Good Luck! C-2 ROLLOVER CONTRIBUTIONS. Does the Plan accept Rollover Contributions? (See Section 3.07 of the Plan.)  No  Yes  (a) If this subsection (a) is checked, an Employee may not make a Rollover Contribution to the Plan prior to becoming a Participant in the Plan. (See Section 3.07 of the Plan.)  (b) Check this subsection (b) if the Plan will not accept Rollover Contributions from former Employees.  (c) Describe any special rules for accepting Rollover Contributions:____ [Note: The Employer may designate in subsection (c) or in separate written procedures the extent to which it will accept rollovers from designated plan types. For example, the Employer may decide not to accept rollovers from certain designated plans (e.g.,403(b) plans, §457 plans or IRAs). Any special rollover procedures will apply uniformly to all Participants under the Plan.]

Correct. I'm saying that because they have a year of service defined under the terms of the plan, they are not excludable. Had the plan not defined the years of service in that way, but merely let them in; despite not having a year of service, then they would've been otherwise excludable. The determination of whether an employee is otherwise excludable references the age & service requirements in Section 410(a)(1) of the Code. OAN: There has been some debate over the past whether the statutory entry dates in 410(a)(4) of the Code (e.g. semi annual entry) could be used, even when a plan's entry dates are sooner. That's another topic altogether. But, for these purposes, I think how a plan actually defines a year is important. Good Luck!

True, but the plan defines service for eligibility. The plan can define a year of service as merely working 1 hour. When a participant works that one hour, he has a year of service under the plan; and that it what counts. The fact that he met that year 999 hours sooner that he would have had the plan defined a year as 1000 hours does not appear relevant. It would be different if the plan said 'these employees are allowed immediate entry regardless of their service'; but, that's not what happened. Instead, the plan said 'these participants have this much service.' Good Luck!

The key is whether or not each participant has a say on what happens to their balance: If it were a merger, then the Plan Administrator directs everything; which ends in a transfer of all participant balances (without any participant involvement). Since it is not a merger, then each participant receives a distribution and is free to do whatever they want. Some may choose to roll their accounts over into an IRA. Others may choose to roll over to the Profit Sharing. At the same time, the Profit Sharing plan will decide who is allowed to roll funds into it. Good Luck!

A participant's inclusion (or exclusion) from ADP is tied to eligibility service (as opposed to vesting service). So, I think you just answered your own question :-) Good Luck!

I would say the RMD would need to be paid from the plan, but the Alternate Payee will receive it. The rules on when a distribution is paid is still tied to the participant in this case. Now, after that RMD requirement is met, the Alternate Payee (presumably the spouse) will be able to take a full distribution and roll it over. While it's in QDRO status, RMDs will need to continue (and calculated as if the amounts were still owned by the participant). Good Luck!

Once you terminate the MPP, each participant can decide whether to take a distribution in cash or roll over; and that will be an individual choice. Notice that this is different from a plan transfer (e.g. merger of the two plans); under which no participants would be given the choice. With that said, the plan will typically address whether former employees will be allowed to roll money into the plan. Typically, they are not, but the plan should have language to address whether or not they could. Good Luck!

David, I respect you and members of the board. I've posted on this board for years and try to provide insight and participate in discussions where I feel I may have something valuable to add. Sometimes I may get it wrong, and will immediately own up to it by stating 'I stand corrected'. You see, I do not attempt to derive self-esteem from anything that anyone else is doing; I derive my esteem from my own accomplishments. So, I don't 'get off' on criticizing others. But, let's not pretend that we're all blind to Larry's antics. I've never seen anyone (e.g. Other than Larry) lead most of their posts with criticism of others. That is inexcusable. For me, I will not tolerate it. Political Correctness is over-rated.

You're an idiot! If you have a company with 5 employees. All 5 Employees meet initial eligibility and satisfy the accrual requirements for receiving a nonelective contribution that year. The plan has a fix contribution formula of 5% of Compensation for all eligible employees. Please tell me, Jackass, on what authority would any one of those participants be able to elect not to receive their proportionate share of the nonelective contribution for that year?

So, you're now qualified to speak on everyone's behalf? Interesting! When you have a formula written in a plan that defines who is eligible, then allocating a contribution will need to include everyone under that formula. That's basic. The idea of coming in here with that same nonsense you pulled in LinkedIn years ago by antagonizing individuals on their responses is what is not helpful.

When I stated 'elect', I actually took the time to put it in quotes; meaning that you cannot allow a participant to elect to receive or not receive a non-elective in the manner you would an elective deferral. I thought that meaning was clear; and should be to you given your knowledge and background in the industry. If we want to discuss semantics, that's fine. But the idea of jumping on hear and saying I'm wrong is something that should be left in the LinkedIn forums; which I left a long time ago.

It's all or none. You cannot 'elect' out of a 'nonelective' contribution; especially when the plan has a uniform allocation formula. Good Luck!

Sure. No reason why that wouldn't work as long as you meet each rule. Good Luck!

The terminated participant will need to receive the gateway. Typically, plan documents have provisions to address the issue you just outlined. It's important to have the appropriate plan language in place. Good Luck!

If you have $10,000 in an account comprising $5,000 in basis and $5,000 in gains; and have taken $5,000 in distributions over the years for which no after-tax basis amounts were recognized; I would like to hear an argument as to why the $5,000 in basis would not still remain in the account. To me, it's simple math. Regardless of what should've happened, that basis remains until it's utilized. Good Luck!

The first step would be the measure the impact of each participant. Then, any reasonable approach may be done at the participant level. If one participant had taken a distribution and no basis amounts were determined, then you can apply the basis amounts on prospective distributions. If another participant had taken all his distributions, then that would warrant a different method. Whatever you decide, just be sure to document it (as to know exactly what was done and why in the event it's looked at again years from now). Good Luck!

I don't think this could be corrected under VCP; as it really doesn't amount to an operational failure of the plan. Instead, it involves a failure of the payer to properly report the distributions. Good Luck!

Not sure the details, but the plan's language should address post-severance compensation. Good Luck!

To resolve that issue, draft the split effective December 31, 2018 along with the transfer agreement. Effective at that time, those balances will become assets of the new plan (that are merely housed in plan 001 until transferred). You can actually, then, reflect that appropriate portion of the year end balances on the Form 5500 as a transfer out of plan 001 and a transfer in to plan 002. Good Luck!

Yes. This language is actually included in many prototypes. Good Luck!

Again, it was already established in the OP that it cannot be done. The issue expressed in the OP was trying to understand why individuals would be prohibited from rolling into a SIMPLE IRA within the first two years. This was the issue I attempted to shed light on. If that warrants a 'correction', then so be it. Good Luck!

They can be returned now under the plan's procedures for correcting a 402(g) with plans of different employers. There is no rule saying they must wait until 2019. Good Luck!

I would imagine you could reduce the safe harbor match to $1 for $1 up to 4%, and then do a tiered match beginning with $.3333 for each $1 up to 6% and so on. This, alone, would get you started at $1 for $1 up to 6% (while only 4% would be the safe harbor). Good Luck!

I was merely stating why the rule is in place. The OP suggested confusion as to why a rollover into a SIMPLE IRA would be disallowed within the first two years of the SIMPLE IRA. Good Luck!

There are 'basically' four distinct scenarios: 1) Participant dies on or after the Required Beginning Date and spouse is beneficiary 2) Participant dies on or after the RBD and spouse is not the beneficiary 3) Participant dies before RBD and spouse is the beneficiary 4) Participant dies before RBD and spouse is not the beneficiary Each of these has their own set of rules. It helps to be able to determine the appropriate scenario and then apply the set of rules for that scenario. Good Luck!