jpod

I would add that it is at least prudent, if not required, for the PA to be suspicious and act accordingly. By the way, with no spouse, siblings, lineal descendants or parents, who is the default beneficiary?

If someone mentioned this earlier I apologize. Is there any way the PA can find out how likely it was that the decedent was in a position - mentally and physically - to make this beneficiary designation on the date in question? The PA doesn’t need certainty, just enough info or lack thereof to help it decide what to do next. I would also ask the employee if he knows where the decedent was when the designation was made and if he was with her at the time and if so who else can verify that. Also, did decedent hand it to him when finished and if not how did he get it. Would not have this conversation over the phone as seeing his face while responding could be helpful too.

I hear what Chippy is saying. 1099s are of no direct relevance in determining maximum deductions. It is the Schedule C and, to a certain extent, the Schedule SE. Sure, the top line on those Schedules will include "1099 income", but (a) they may have other income legitimately reported on the Schedule C/SE which was not reported by the payor on a 1099, and (b) all of the business deductions are reflected on the Schedule C.

Fwiw, if the "trigger" in 409A terminology is "separation from service," moving from employee to IC status may not be a separation from service for 409A purposes if he will continue to provide services to his former employer as an IC. It could be, but it may not.

I am retiring from my firm and the active practice of law at the end of this month. The BenefitsLink daily news feed has been a very important practice tool for me, and the message boards have provided a diversion that has been both educational and a lot of fun. I expect to continue to lurk and maybe participate occasionally, so this is au revoir and not goodbye. Best wishes to all for a healthy and happy 2020.

Let's assume it is a 3(c)(11) collective investment trust, in which case all of its assets are automatically deemed to be "plan assets." Hard to believe the facts are as simple as what cmtoe says they are, but if they are, it would seem to be a per se PT (because most, if not all, of the 25 bps fees are unreasonable compensation). Not only the provider but also the plan fiduciary that selected this for the plan has exposure.

Ugly is an understatement. More like fugly. I am not aware of any path to a good either. Just out of curiosity, what was the source of the excesses? Was it money already taxed or was it pre-tax money that came from some sort of non-qualified deferred compensation plan? If it is money that hasn't been taxed yet, some might suggest to withdraw it (plus the accumulated earnings on it), pay the income tax (including the 10% penalty if applicable), call it a day and hope for the best. If it was money already taxed, I have no bright ideas.

Well in that case i would think it would take about 2 seconds (figuratively speaking) to re-open the account, or open a new one, whichever is simpler.

As to the 401k plan, what's done has been done but in terms of a new mortgage I would first ask if the option to make non-traditional investments extends to all participants, including the employee. If not, you have a qualification issue. As to the DB plan, they should consult an ERISA attorney, but about ERISA 404 issues first before considering any real estate issues.

Surprised that it would be a "hassle" because this should be a common occurrence for daily-valued plans, but I agree with Lou's suggestion in his last sentence if push comes to shove.

Is there/should there be a concern that if the totality of the compensation is unreasonable then the TPA is engaged in a PT?

If I were addressing this scenario from a legal perspective first I would want to know what, if anything, the TPA's 408(b)(2) disclosures say about the prospect of the RS exceeding the agreed-upon fees.

I was just throwing it out there, but after re-thinking it perhaps it could be viewed as nothing more than an eligibility condition that does not violate 410(a). I have to agree with the consensus that this is an absolutely terrible idea given that the DOL's QDIA rules should provide about as much protection as anyone could hope to have.

Peter Gulia: I didn't read all the posts, so I apologize if this has been stated. Possibly a "definite allocation formula" issue?

I don't know if this has already been said above, but if a third party is going to be hired to be a 3(16), it needs to be understood that the third party needs to act under its discretionary authority and not seek the employer's blessing first. With that said, the first time the third party takes some action which it believes is appropriate but the employer hates it is likely to get fired.

If someone wishes to avoid the 20% w/h (for example, because his income is low enough after deductions that the money will be taxed only at 10% or 12%, or maybe even 0%), he can first roll an age 59-1/2 distribution to an IRA, then take money out of the IRA with no w/h.

Perhaps overly conservative on my part, but since I have never had this come up if I were in your shoes I would check the 410(b) rules to make sure that the exclusion for union employees isn't ALL OR NOTHING, i.e, whether you lose the ability to ignore the union employees in your headcount if you in fact cover one of them. Of course I am not in your shoes and perhaps you already know that this is not a problem.

I kinda did mean it. If he likes his job or his compensation, or better yet both, I was suggesting that he think about this practically. Not really legal advice or other professional advice, just something I might say to a friend or one of my children.

Probably Self-Directed Brokerage Account, as opposed to a platform with DIAs through Nationwide, but you're right we don't need to know as that would be of no relevance to the issue at hand

Yeah, but why is that important? If they defer after 10/31 but before 1/1/20 they will still get the tax benefit for 2019, so there must be some other reason (unless there's no reason).

Also, I have to say that two things here don't make a lot of sense to me: (1) that someone at the 401k broker/record-keeper/whatever would share this information with you; and (2) that the employer would set up a SH plan if (even in only his mind ) there would be no other individuals eligible.

Lenny, hold on a second. Nobody likes to be taken advantage of, but I will throw this out for you. First, you better be 100% sure that the facts you think you have are accurate, otherwise you will probably be fired (I know I would fire you). Second, assuming you have all the facts correct, your employer may fire you anyway. Yes, that would be illegal under Section 510 of ERISA, but is this aggravation worth it for a 3% of pay contribution? Third, even if your employer agrees to fix the problem and doesn't fire you, what would your work days be like going forward after you have dropped a dime on your employer? Unless you are prepared to have a miserable existence at work or quit your job, i would think carefully about contacting the DOL (because of a very modest 3% of pay).

The relevance of the 10/31 plan year is not clear to me when talking about elective deferrals. Care to elaborate?

To simplify, I think, the question here is whether she work enough hours for the Sub S to become eligible by virtue of THAT employment alone. It sounds like the answer is "no," so problem solved.

Larry Starr: I suspect in NJ Spouses cannot be completely disinherited by a will, and if he died intestate clearly the spouse is entitled to some portion of the estate. You're right we don't know the facts other than that the OP says they were estranged, which if it's relevant in applying NJ law that is a factual question for a trier of fact. My point being i am not sure that you can use a non-probate asset like an IRA to avoid the spouse's entitlement under the law, whether there is a will or not. For example, let's assume the decedent had $0 except for his IRA. I am not convinced that the surviving spouse can be completely disinherited. I admit that i could be wrong, but i am not convinced yet.