jpod

What is his RBD? If it is not until April 1, 2019, maybe he doesn't want to receive the RMD until the 2019 tax year, which is fine, but in that case he won't be able to do the rollover until he takes the RMD.

Yes, I don't understand at all the voluntary insertion of J&S as the normal form. If you want people to have the opportunity to procure an annuity, they can do so via rollovers to an individual retirement annuity.

ERISAAPPLE: The judge can provide a remedy with respect to retirement plan assets too.

CuseFan: How is that different than any other marital asset which an unfaithful spouse is in a position to run away with? I don't know what the thinking was in 1984, but my guess was that the focus was on DB plans that already would have had the annuity structure built in. What I never could understand is why they extended the requirement to DC pension plans, which, I think, rarely offered an annuity option. I don't know what the answer to the public policy question is, but an annuity requirement doesn't seem to be a practical answer as the additional burden on plan administrators is likely to be immense.

Maybe you will feel that this is "easy for me to say," but if you do not have an immediate need to convert all of the 401k investments to cash and instead intend to maintain them as long term investments for your retirement, those investments will (most likely) recover and continue to grow over the coming years.

Not likely, but it couldn't hurt to ask your previous employer.

Under these facts there will not be an MRD for 2018.

Isn't there some provision in ERISA, enacted by REA in 1984 as part of the QDRO rules, that says an alternate payee is to be treated as a "beneficiary" for purposes of ERISA? If so, then would it not still be a one-participant plan exempt from ERISA and eligible for the IRS filing rules for one-participant plans?

I think you'll hear a big collective sigh of relief from those firms and others.

I can only speak for myself but I was merely making a suggestion that may be useful to the OP should he inquire further, rather than simply ignoring the employee or refusing to even discuss the matter with the employee as others have suggested.

One more observation on top of my comment. Based on my experience working on m&a transactions, my guess is that one of the goals - advocated by both the people running the deal and the HR staff on the receiving end - is to make sure that this is as seamless as possible for the employees moving over, in which case they will absolutely freak out if they hear about this.

Is it clear that the powers that be - i.e., the people running the deal, as opposed to merely those involved in plan administration - understand what is going on here? If someone told them "by the way, all of these people with outstanding loans are going to get screwed" and explained why, I would be surprised if they didn't force some kind of fix here.

Larry Starr: Of course he/she would be wrong, but so what? Clients don't like to have aggravation, much less paying professional fees to explain to an IRS agent why he/she is wrong. I was only suggesting that the paper trail leading down the path of least resistance would have been to deposit the check then write another check.

An aggressive IRS agent will/may say that the transfer of IRA assets to his profit sharing plan in order to make contributions for his employees is a PT, in which case his entire IRA blows up for tax purposes. One would hope that the IRS would agree that it should be treated as a constructive distribution to him, followed by a contribution of his personal funds to the profit sharing plan, because that's how it is being tax-reported, but I'm not sure if there is any legal authority out there to cite.

I don't think it was implied at all. I suggest you read it again, especially the beginning of the second sentence. The tax reporting isn't necessarily indicative of the way the money got from point A to point B.

I am sure there is a very good(?) reason for doing this, but I can't think of one. Anyway, if this individual is going to do this, I suggest that he first take the IRA distribution and deposit it in his personal checking account, then write a check made payable to the profit sharing plan, rather than some type of direct transfer. That will eliminate the appearance of a PT with respect to the IRA assets.

An employer may not wish to ignore complaints grounded in good faith religious beliefs, even if it could ignore them without any legal risks. Employers have many more HR concerns than simply what is legal and what isn't. The point being if an employer can respond to a good faith religious objection to the employee's satisfaction without placing the plan's qualified status at risk, and without over-complicating plan administration, the employer may wish to hear some ideas.

Assuming there is a religious discrimination issue in the first place, the employer's obligation is to make a reasonable accommodation. In our analysis, we concluded that there could not possibly be an issue requiring any accommodation (at least under the law in effect at the time of our analysis, 2 or 3 years ago). By the way, to the extent relevant, there are mutual funds available for 401k platforms that hold themselves out as being Sharia-compliant.

Sorry for hitting submit too soon. Even though it is a SHNEC, can't you amend the plan to make EMPLOYEE'S NAME ineligible prospectively? Assuming you can, then that is a basis for discussion, but under no circumstances should you pay or offer to pay additional cash in lieu of plan contributions. By the way, we have looked at this and concluded that there is no requirement under Title VII to accommodate the employee in this scenario, but if you wish to do so and the qualification rules don't get in the way you can do it.

Even though it is a SHNEC, can't you amend the plan to make EMPLOYEE'S NAMEkick this employee out,

Bird, agreed. Sometimes the square pegs just don't fit into the round holes.

Buckaroo, did you ever figure this out? I have that exact scenario.

Just curious: What does it cost the employer to maintain this plan each year, all-in (your firm's fee, custodial fees, etc.), just for the owner to be able to borrow up to $50k?

I am not sure about how you describe it (forfeiture account in a db plan?), but certainly plan expenses can be paid with plan assets if the plan document says so.

We can't help the OP without knowing what the plan says.