Bri

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.

I think it depends on what sort of relief you want from the VCP application. (Definitely too long ago for SCP.) If you're trying to argue that a group of employees were never intended to be allowed into the plan, and you have some documentation/notes to the effect, you might have an argument to ask them to forgive the missed deferrals. You're telling the IRS where your sponsor messed up and how the sponsor proposes to fix it. It's on the Service to either accept the proposed fix, or make you go back as far as necessary for them to accept your proposal. But if you don't have any evidence as to why they were left out, you might indeed be faced with a mighty amount of makeups.

This feels like "negative 401k" like when a payroll adjustment of any sort has to be processed.

Isn't there something where it's even worse to try to contribute property to a pension plan (DB, MPP) compared to a PSP?

Have her set up a Roth IRA for the funds, new custodian sends funds there?

Vesting is typically granted under a DOL's regulation, where you end up with overlapping full 12-month measurement periods, rather than a proration of hours. Accrual requirement hours are usually pro-rated, though. And eligibility wouldn't typically prorate, but that could be addressed in the amendment creating the short plan year if the sponsor wants to cram more people in sooner than otherwise would be typical.

I just realized there's no "Wow!" emoji option for that one, ESOP Guy...

...and heck, if you're amending the plan to code the overdeposit as a QNEC, that amendment could have whatever other language it might need to "justify" the presence of such a QNEC under the plan if it wasn't permitted already. (I know Section 6D of an ASC checklist, for instance, allows you to indicate whether any "regular" QNECs beyond fix-the-ADP-test types will exist under the plan.)

The DC RMD is based on 12/31/21's account balance value, regardless of any subsequent gain/loss during 2022 being reflected in the final total distribution amount the person will have due.

My layman's opinion - I'd think the 401(a)(9) requires the PA to issue checks regardless of an election. I also think payments have not been pursuant to the participant's affirmative election, so he could make a formal election for "the rest of his benefits" at any subsequent time in his preferred form. And the plan issues a 1099-R for the checks written, even if they remain uncashed and show up on the balance sheet as a payable. The participant might need to cash a couple of those checks to cover the taxes due.