Bri

Notice 2006-16 lists what mid-year changes you CAN'T do do a safe harbor plan. Roth Rollovers aren't specifically prohibited.

Yeah, bottom-up QMACs are basically the same rules as bottom-up QNECs.

The fee disclosure probably doesn't have the same deadline as stuff like safe harbor or automatic enrollment notices, as well. So you can run with that and update the fee disclosure notice.

One doesn't "receive a QDRO" upon divorce. It's part of the divorce negotiations in splitting assets, used in order to assign a portion of a spouse's retirement benefits to an Alternate Payee. ("Usually" to the other spouse, sometimes the kids.)

Hopefully your plan document doesn't allocate THMs "to all" rather than just non-Keys. And having non-Key HCEs getting a THM would at least make for a more substantive 410b test.

Issue the payments back to a plan-labeled checking account and have the trustee write the checks off that? Or does that make it worse?

Someone filing an incomplete return is probably not going to like the fine print on the 5500 itself: Under penalties of perjury and other penalties set forth in the instructions, I declare that I have examined this return/report, including accompanying schedules, statements and attachments, as well as the electronic version of this return/report, and to the best of my knowledge and belief, it is true, correct, and complete.

And the exemption list in (g) doesn't refer to paid-out folks.

I get this from the law.cornell.edu website: § 2520.104b-10 Summary Annual Report. (a) Obligation to furnish. Except as otherwise provided in paragraph (g) of this section, the administrator of any employee benefit plan shall furnish annually to each participant of such plan and to each beneficiary receiving benefits under such plan (other than beneficiaries under a welfare plan) a summary annual report conforming to the requirements of this section. Such furnishing of the summary annual report shall take place in accordance with the requirements of § 2520.104b-1 of this part.

Is that right? I know the AFN isn't required for already-paid-out folks, but I've never read anything other than a reference to the participants for the year in question, in reference to the SAR. So I end up doing all the participants during that year, including no-balance-ever and no-balance-anymore people. (Even if they were paid out January 3, 2019.)

And if her plan allows in-service distributions at 59½, have her roll all that out and start fresh from a 0 balance in each source.

Just wondering - If the plan isn't going to actually file a 5500-EZ because the assets are less than 250,000, does the Schedule SB still have any 7/31 or 10/15 signature deadline for the actuary? The 5500-EZ and 5500 (Schedule SB) instructions don't actually seem to indicate that affirmatively. Only that it be retained by the plan administrator. Thanks.... -bri

They're not asking for the ADP distributions done in 2020 to be listed on the 2019 5500 as well? That would at least balance the distributions. Of course, they could always change their mind by December 31 and do a QNEC. (That tempers my desire to see it listed as payable, because the expect refund doesn't "have" to be actually paid.)

What is a safe harbor match in the context of a SIMPLE?

Well, I found this on the ol' Google machine, if it helps in a pinch....

And of course, not everything gets prorated, since the 19,500 is still allowable as the deferral maximum. (Just might be harder to pass an ADP test if the owner tries to cram it all in with no staff employees doing anything close to that.)

I came to piggy-back on Gilmore's comment here - It seems like poor logic for employee A to need 1000 hours every year and employee B might only need 500. Geez, a plan sponsor might want to change the initial eligibility down to the 500 level so that NOBODY ever gets to be deemed a LTPT excluded from the plan. (So that they can still use a 1000 hour vesting rule). That's better than making all employees work 1000 hours before they can then later be shifted into a PT position later. (As always, come up with the worst-case scenario and reverse engineer your law accordingly.)

I can "cite" the 5500 instructions, I suppose, if that helps: Short Years. For a plan year of less than 12 months (short plan year), file the form and applicable schedules by the last day of the 7th calendar month after the short plan year ends or by the extended due date, if filing under an authorized extension of time.

The catchup limit definition in 414(v) has a reference to the "lesser of", such as to keep the maximum at the corresponding earnings amount,, but actual 402(g) doesn't appear to.

My vote is for: 1. Fix the 1099-R from the plan for 2019, as there should be one for the proper rollover amount, and one for the RMD amount due as a taxable payment. 2. The RMD payment was an ineligible rollover contribution to the IRA, so pay that penalty tax due for that, if any, and get it out (as adjusted for earnings) from the IRA.

Fact pattern: In April 2018, sole proprietor sends in $18,000 as a head start on her 401(k) for the 2018 year. After the 2018 taxes are prepared by the CPA, the Schedule C shows a loss from self-employment earnings. In April 2019, a distribution is processed from the plan for the 18,000 plus earnings, as a correction of excess annual additions. No income = no contributions. The CPA doesn't understand why the 18,327.15 is considered taxable income for 2019. (At least, not the 18,000 part.) Should the CPA have reflected the 18,000 as a deduction on the 2018 Form 1040 as self-employed retirement plan contributions? Typically with refunds of excess like this, the amount is taxable in the year of distribution. If there had been an 18,000 deduction on the 2018 return, then the 18,327.15 in income for 2019 make sense - just with the suckiness of her tax rate for 2018 being lower than 2019 will be. That's the typical explanation I'd give for an ADP test refund - the 2019 refund income offsets the deduction for 2018 - but in this case, it's a 415 issue. I'm suspecting the solution is either (1) Review the 2018 return to see if an 18,000 deduction is appropriate, OR (2) Change the taxable amount on the 1099-R issued in January so that only the 327.15 gets listed as the taxable amount. But which is right? (realizing there could also be a door #3) Thanks.... --bri

Shouldn't be too hard to hash out, if you check your trust provisions themselves. There might be language saying the Employer, when announcing the trustees, can assign specific duties within any group of more than one. I can also imagine whoever might direct the affairs over the business (after the owner's death) would then have the authority to name successor trustees to the plan sponsored by that business.

I'd have to think the person's not an HCE in the year they're hired (unless they bought into their new company), so hey, the new sponsor might even LOVE the 57,000 contribution for ACP testing purposes (presuming no carveout)! Of course going back to the 415 issue, she'd have to actually earn 57,000 in wages at her new job. And the standard disclaimer to make sure Plan B doesn't have a % of pay limit on the after-tax.

Ah, indeed - the BPD spells out specifically that 411d6's anti-cutback rules don't apply. Thanks for the tip!

I know governmental plans don't have the typical spousal consent requirement. But if there's a plan that had it, is it considered a cutback to eliminate it? Someone's prior TPA used an ERISA document when they shouldn't have. Anyway it's a closed-to-newbies defined benefit plan with a handful of actives left. The plan offers various term certain annuities as well as SLA, which in ERISA-land would require spousal consent. The sponsor is now getting a governmental-entity-specific adoption agreement and I'm wondering if leaving "spousal consent still applies" blank nevertheless requires me to grandfather it as any sort of protected benefit to the spouse. Thanks. -bri