Bri

Well, you used to be able to file one-participant plans on an SF, though. Checking the "one-participant plan" box was supposed to prevent it from showing up on the public disclosure site. In which case maybe the plans shouldn't be viewable, but probably that doesn't rise to a real "issue". Under penalties of perjury, the sponsor didn't say it was a one-participant plan on the return. Gasp!

I will say, if you've got just the owner and two children, you don't really have nondiscrimination/coverage to worry about. Ha, what's the worse sin - backdating the document or backdating "I'm not interested" election forms from those kids who still want to share in the inheritance some day? 😈

Bird, where is that 25% limitation on employee deferrals indicated? I'm peeking at 408(k)(6) which seemed like the obvious spot, but didn't see it.

Isn't that saying just that the annual additions limit is 100%? So if the person defers 90% of pay to the SARSEP, the employer contribution will be capped at 10% for 415 purposes....

Only the excess transferred over is a "real" transfer for lines 8j and 13 purposes. The rollovers are treated like you'd do for normal 5500 stuff, on the benefit payments value line 8d. Look at it as, you're presenting the financial summary, all the gains and payouts and contributions net to the final 100K, and you show that as a transfer out on 8j so that the assets balance to zero. Then on 13c you show where that 100k went.

CBZ, I noticed you avoided being RATIONAL with your sample percentage. (Better than assigning (1+i)/(2-5i) as a fraction of one's retirement benefit to a beneficiary.)

Any thoughts on adding a line to the election form that this election will apply to any subsequent 401(k) plans sponsored by the Plan Sponsor or any member of its controlled group?

I had a client like this - Had a top heavy 401(k) plan with a safe harbor match. (Imagine HCE owner and spouse, then 50 employees doing no 401k for themselves.) Then had a huge influx of Davis-Bacon jobs so that they wanted to allocate those amounts as plan contributions. I suggested those go to a separate plan with no HCEs in it. 401(k) with SHM kept its TH exemption while some of the 50 employees had prevailing wage plan contributions of varying levels. No other nonelective contributions to either plan.

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.