jpod

I guess I had been assuming that an annulment always means the marriage was void ab initio, in which case the non-participant was never the "spouse," but now I've learned something. I have also learned from the AO provided by FGC that as far as the DOL is concerned the PA can rely on the state court's determination that the non-participant was a spouse.

After seeing the AO which FGC circulated I agree. Sorry for causing confusion.

I guess it is NOT an open question. Thanks for pulling that AO.

Let's assume a judge decides that the non-participant is entitled to a share of the participant's plan benefits in connection with the annulment. I can't imagine how that could happen, but that seems to be the assumption here (otherwise why are we talking about it). Absent a court decision or IRS/DOL guidance on point, is it not an open question as to whether the non-participant could be an alternate payee if there was an annulment?

Oh, closed years. I misunderstood your earlier post.

It's not a hassle factor; having to pay fica and medicare upon distribution can be much more expensive then necessary. I really would be interested in seeing the guidance you seem to recall as I certainly don't recall that.

Not sure VCP is available if you have absolutely NOTHING, although statements from a recognized Investment Company (whatever you mean by that terminology) that indicate a 401(a) plan is in existence might be enough. I would keep probing with the prior Investment Company and the advisor/broker and anyone else who may have helped the client set up a plan. Again, if there are statements showing the existence of a plan it is very hard to believe that there isn't at least a signed AA.

I don't see any 409A issues either. As to FICA/Medicare issues, you have to plow through the 3121(v) regulations and figure out what should be done with respect to both the years for which the SOL has not expired and for years for which it has expired.

"Assignment of income" doctrine?

Agree with MoJo's observations. The assumption of the plan could really be a convenient solution for both parties, but the buyer and his/her counsel need to be fairly comfortable that buyer would be assuming a plan without any material compliance deficiencies.

If this arrangement will continue I guess he could have a plan that covers both his S corp and himself as a Schedule C independent contractor, so that he can use "pensionable" compensation from both sources. However, nothing that happened in 2018 is relevant anymore if he had not set up a plan by the end of that year (although I suppose he can do a SEP for 2018 and create a 401(a) plan starting in 2019).

Who was the payor? The S Corp? If so why was that done (doesn't sound kosher)?

By any chance are you referring to the case named Carver et al. v. Bank of New York Mellon et al.? It looks like millions of these postcard notices were mailed to plans with no rhyme or reason. I've seen postcards addressed to fully insured welfare benefit plans!

Regrettably, if the employer picks up the tab, it's not really picking up the whole tab because the employee owes taxes on the amount which the employer gives him to "pick up the tab." A full gross up would be necessary which could be in the neighborhood of 150% of the back taxes plus interest. Nevertheless, far be it from me to advise an employer not to be generous if it feels like it's the right thing to do.

Participant made a roth election. Consequently, employer has a tax reporting and tax withholding problem. This needs to be corrected to be consistent with the participant's elected roth treatment. If the first year was 2015 then the sol is still open for all years to implement an appropriate fix via corrected W-2s and 941s. Yes, the employee will owe back taxes to Uncle Sam (and maybe his State) for four years, but that's the tax treatment he elected.

FGC, I was playing the cards we were dealt, but you make a good point.

Assuming they are HCEs, yes, I would think so. There's always COBRA.

Are they self-insured? If not, I don't believe the ACA nondiscrimination rules for insured plans have kicked in yet, but then that raises the question of who is imposing the 30-hour requirement? The employer or the insurance carrier?

That it is identified as "other income" rather than "non-employee compensation," and assuming that is accurate, means that it cannot be considered plan comp (plus, as Mike Preston noted, unless the owner has adopted the plan as a participating sole proprietor the point is moot). I think rent is a very good guess, but in the end it doesn't matter.

Who the heck knows what it means? It could be some sort of special ownership relationship required by the regulations applicable to surgical centers in the state in question. It may not be a trust.

Easy for me to say I admit, but you or your attorney will have to find the right person at Nationwide and work this out. As the sole shareholder of a dissolved corporation you are entitled to money which would have been paid to the corporation. Can't blame the bank for refusing to accept the check. Figuring out the correct tax reporting may be tricky, but that would be Nationwide's problem.

When you say you "shut it down," did you actually file dissolution paperwork with the State of incorporation?

And, I don't see how she can abdicate her role as Plan Sponsor/Plan Administrator. Whether she realizes it or not she signed on to that by accepting authority as executrix.

If she is a duly appointed executrix of the estate of the sole proprietor/plan sponsor? One of her tasks should be to attend to the administration and termination of the plan. Too bad for her if she's not interested in dealing with it.

Yes, without a designation naming an individual as the beneficiary this was bad planning on the decedent's part, especially if there are creditors of the decedent who are going to take a big bite out of it, but so be it.