Bri

At least the AFN language specifically says you can skip ex-participants who've been fully paid out by the end of the notice year.

Well that seems pretty easy indeed. Thanks!

My scenario: 2 business partners start a cash balance plan for themselves a few years ago (no employees). Partner 2 is given a 35,000 contribution credit each year, well below his 415 limit. One year, Partner 2 decides to deposit 50,000 instead of 35,000, figuring (a) it's deductible within the cushion amount, and (b) we could always amend the formulas later when the plan terminates so that his benefit is exactly what's in the portfolio. And then sure enough, corporate divorce between the partners at the end of 2019. Partner 2 has contributed a total of 120,000 for himself, but his actual cash balance benefit is only about 114,000, which is what he got paid a few weeks ago. So at first glance, too bad for him, especially if Partner 1 (now basically a sole proprietor, I suppose) has no intention of paying us to amend formulas for the other guy. But now, amid the "divorce proceedings", it sounds as though Partner 1 wishes he could have just paid the guy more from the plan. My question is, what's the typical methodology to increase a CB formula for someone who's an EX employee? Assuming Partner 2 has no service for 2020, what would be the typical way to write up an increase for him? He won't hit any kind of "hours of service" requirement to accrue more. I'm using ASC's checklist-formatted CB plan document, if that matters. Can I at this point increase his benefit either for 2020 (where there may be no service) or any of the prior years (where at least there was), such as to bring his benefits due up to an "appropriate" amount based on the 120,000 he put in? (Not fully up to speed on what sort of retroactive benefit increases we can orchestrate in a CB plan.) Thanks.... --bri

It's not perfect. I'd try to figure out the appropriate earnings, and transfer the excess+gain amount to forfeitures. Make the guy whole through payroll with some "negative 401k". And then use the excess (including those earnings) towards funding the new deferrals from subsequent checks. (So he doesn't specifically get the "benefit" of the market exposure on the extra amounts sitting in his account early.) Plan custodian may "freak" a bit about using the forfeiture account to fund deferrals. But that's not their problem.

I was pretty sure yes, and googling "loan default as rmd" actually brought me first to several prior discussions on these boards, as far back as 2004.

The documents my firm uses specifically defines the exception as "terminates employment after attaining Normal Retirement Age," so I'm lucky. The amusing scenario is when someone retires at, say, 66, gets a final contribution that year. Then is later rehired back part time, and doesn't hit the 1000 hours, so they can't get subsequent contributions until they actually re-terminate.

I've got something similar now. DB and DC plans terminated in November for a one-participant plan, rollovers occurred. DB plan still shows about 3,000 in residual dividends on 12/31 statements. Advisor is going to be backdating the transfers out from the accounts as of 12/31, but they will show as such on January statements. One aspect, from a TPA billing standpoint, is that because the DC plan was completely 0, and the DB plan was under 250,000, that the sponsor technically doesn't have to do a DB 5500-EZ for 2020, but would do a final DC for 2020 and a final DB filing for 2021. What's the typical IRS point of view on this? Do they get ornery if there are assets/liabiliies only netting to zero on a final filing, or do they not consider that legitimately "final"? I think for 1099 purposes, though, I can still show this all as a 2020 rollover. (Owner is taking the haircut, plan wasn't super close to his lump sum number.)

That's what alerted me to check around. Yeah, I couldn't find anything either. This'll be fun to explain to the advisor who ordered up the check tomorrow.

Hi folks Our 1099 coordinator had asked me to confirm that an RMD was processed for a DB plan participant. Turns out the participant elected a full PVAB distribution as a lump sum so that the DC method could be used. The non-RMD went to his IRA. The RMD check was paid directly to a charity. Am I forgetting any issues with that? The plan still does a code 7 for the RMD portion, right? thanks. -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.)