Bri

Too bad the actuarial costs for a second plan just for the pizza folks would probably outweigh the savings in PBGC premiums by not covering the doctor's office. Now please tell us the doctor's specialty is as a heart surgeon, selling pizzas on the side! Bonus points if one is in the building next door.

Well, assuming no weird gotcha provisions like this being a 2/28 plan year end with a 10/31 tax year and no extension on their return, or that their 404 deduction max is only 50,000... Then this should be fine. (Would this pop up on your radar if the 700K and 300K had been done via separate checks?) I think as long as the sponsor designates the amount by year - that should be part of it.

The PBGC's website uses the example of an attorney owning an insurance agency - just because the guy in charge is a lawyer doesn't mean the nature of the business itself gets you a pass. Like the plan in their example, I gotta figure the PBGC is going to cover a plan for pizza restaurants, regardless of if a doctor owns it. But I would suspect you'd be okay if the plan didn't cover the pizza guys, and only the medical office.

It's sad that Gerald Ford was devoured by wolves at the ripe age of 83. Or 84. (Oh wait, this isn't the humor section)

What kind of cake should ERISA celebrate with?

I just took a peek at the instructions, no help there - that almost insinuates the sponsor must have an identically short tax year. And I've only "relied" on the automatic extension as an "oh bleep" fallback after realizing a 5558 was skipped - typically we'd just do 5558s en masse to try to avoid the issue.

Hey, this is why Plan Administrators make the big bucks to interpret plan documents! Or at least, a good-sized bunch of the small bucks. Good luck!

That might take a careful reading of the document to see how it addresses (if at all) any automatic rescinding of the spouse as beneficiary. I'm skimming a BPD and the one I'm looking at says the designation of the spouse as beneficiary is rescinded upon divorce. Is the spouse's status as primary beneficiary that which is rescinded, or is the FORM with that designation (and making the nephew contingent) rescinded? It wasn't immediately clear in the text I was peeking at.

I think your plan document still has to have forceout provisions in it to start. (Is that the question? Whether or not you can use the auto-IRA rules if they're not in the document?) I think 401a31B is saying you have to auto-IRA balances only if you're mandating the distribution and it exceeds 1,000. But the plan would have to provide for the mandatory distribution in the first place.

and hopefully the transfer doesn't lead to a one-person blackout!

A quick one-page retroactive plan amendment fixes your vesting to 100%, at less of a corporate cost than it would be to track you down to repay. As long as you weren't a Highly Compensated Employee 😜

I believe it's the lending of the money outside the Sec. 72 parameters which specifically gives rise to a prohibited transaction - which is why the 50k limit would be there in the first place. But your guy didn't do that either time. (I vote for "you're fine.")

Actually, the safe harbor TH exemption isn't lost even if non-Key HCEs miss out on a THM. (Thought so, but just double-checked the EOB to confirm.)

Still calendar-based, so one could do all 19,500 in the second half of 2021 and all 20,500 in the first half of 2022 to hit a total of 40,000 in non-catchup deferrals all within the same plan year.

Salary deferrals only. Match would be on top of the 14,000.

Sure. That would also give the beneficiary more sheltered funds rather than a loan default/taxable event to the participant's estate. (Of course the default date may have accelerated upon termination of employment, too.)

I think that's spot-on.

It's not defined as the fifth anniversary of plan participation (with its inherent, really the first day of the plan year in which participation commenced, subtext)?

I can't help but laugh, I've just found I have a client who deposited their first CB amount 9/15 last year, but actually adopted their plan document 9/21 ahead of their 10/15 tax deadline.

Was the forfeiture supposed to be allocated in a prior year under the terms of the document? If so, that's your justification for going back and at least tying it to a year with compensation for at least someone.

If there's no plan, then there's no real plan account. So whatever they set up was probably technically still a corporate asset. But then when the plan is executed, that account somehow "officially becomes" plan assets one way or another. (I might simply say the official deposit date was June 3 rather than May 23, because that's when the funds first became plan assets, piggybacking on the establishment of the plan.)

Can the sponsor be deemed to have transferred the funds from some "clearly not a plan account because there's no plan adopted yet", still-a-corporate-asset, account into a brand new "this is definitely a plan account pursuant to our new document" as of June 3?

My thought had been, If you ran a short year from July 1 to December 1, the owner could get all 27,000 in deferrals and 4% of pay up to 152,500, and there'd be no staff employee to worry about at all. (Is the pay up at the 401a17 limit?)

If you're not adding in the guy via an -11g, but rather he shares under the normal allocation rules of the plan, then I think you could probably avoid anything other than the plan's normal vesting schedule. Another thought would be to run a short plan year starting after the guy's termination date so that he was never eligible anyway - you don't need 12 months to get the full deferrals in. Would a pro-rated compensation limit take a big chunk out of his intended employer contributions, though?

That's just a matter of your plan's specific provision/definition of compensation for all those. Compensation as a participant, versus full year pay, and then as of what date are they considered participants in the 401(k) arrangement. Sponsor choice, to an extent.