jpod

Yes, it's "permitted" in the sense that it is not per se illegal; but, yes, it certainly could pose PT issues.

I guess it remains to be see whether a court would defer to the DOL's safe harbor in a private cause of action where the facts are very bad (as FGC posits). Probably, however, we will never see such a case because the plan sponsors who are large enough to be a target for the class action bar probably do undertake the type of due diligence FGC describes, and in fact probably get the IRA fees down to almost zero.

This is quite likely a 406(b) pt whether or not the son is a p-i-i.

I understood the question to relate to the timing on depositing employer contributions for deduction purposes, not the DOL rules for participant contributions and loan repayments.

There are some exceptions, like for certain grandfathered plans, but otherwise the tax treatment of non-qualified deferred compensation for employees of tax-exempt entities is governed by Section 457.

Before attempting to answer I would like to know what the participant is trying to accomplish here. Is he/she one of those folks who simply doesn't want the benefit at all (for religious or other reasons)? That's not really what the term "disclaimer" implies.

No offense to anyone, but I don't understand the interest in this issue. How can you advise a client in any manner other than to suggest that at a minimum it would be very aggressive if not clearly wrong to take the position that retirement didn't occur until Jan. 1?

Assuming the nonprofit is also tax-exempt, and putting aside potential UBTI calculation issues, isn't there a time limit under 415 for counting an annual addition for the current limitation year? Also, does the plan by any chance state a deadline?

Is there a specific eligibility rule? I would think that because it must be a top hat plan it is likely to say that someone is eligible only if the Board or some other person informs him or her that he or she is eligible.

Oh, you meant Sports Authority the sporting goods store? My bad; thought you were talking about a governmental sports authority.

This was not a 457(b) plan of a governmental entity requiring funding per IRC Section 457(g)?

The characterization of the remaining amounts as "trailers" is irrelevant. The money belongs to the beneficiary, either by designation or default per the plan document. Period; end of story. If the beneficiary is the estate, well that's unfortunate.

Isn't there an explicit rule in 401(a)(2) that prohibits reversions until all plan liabilities have been satisfied? If you are worried about bumping up against a March 15 tax deduction deadline how would that be relevant if you are going to use the DB surplus via the replacement plan exception?

There is no tax deduction claimed on the return. You report the Box 1 amount on the wages line on your 1040.

My 2 cents: You should pose your question to those employees who have been sold variable annuities and similar products with their 401k or pension rollover money.

Also, in my experience the 457(b) is viewed by Non-Profit Executives as a vehicle to pour in the full extra $18,000 per year (as adjusted), whether it is elective money or fully vested employer money, in addition to the $18,000/$24,000 available under the 403(b). It would be quite a horse of a different color to tell the Executive that while he may not be able to max out under the 401k plan do to ADP testing issues, he can "make it up" under the 457(b). No, he's not "making up" anything if the mindset is as I described.

How can he rollover the MRD piece? If you're wondering whether this part of his accrued benefit could escape the MRD requirement because it "should have" been distributed when he was 68, I doubt you will find any legal support for that. Aside from what he can or cannot do, the Plan's has a qualification problem due to the failure to distribute at least one MRD.

A short term deferral is not considered deferred compensation for purposes of Section 457(f); consequently, they are taxed when received (or constructively received), not when vested. A deferral that is not a short term deferral is subject to 457(f) (unless it means another exception).

I would think that an extension can't work, either for 457(f) or 409A, if the employee's agreement is required, and obviously it would be required here.

I don't understand your point. It only "affects" your 941s and the W-2 and "income tax filing" (I assume you mean the employer's income tax return) in the sense that you paid the employee less in compensation in 2016 than you should have paid, and therefore the unpaid amount should not be reflected on any of those filings.

Just a further note. I was commenting only with respect to tax/benefits issues. If the relevant state has a broad wage payment and collection law the employer may have some exposure to penalties or other liabilities for the late payment of the employee's wages/salary, in which case there may be something which should be done before or in connection with the late payment to mitigate that exposure. Only a lawyer well versed in such a law and able to confer with the employer directly can help on that.

A payroll administration error, but not a tax error. Employer owes employee money. If it is paid back in 2017, it will be subject to tax and associated withholding in 2017. It's no more complicated than that.

If they were going to repay the loan in full "5 seconds" before the end of the grace period, they would have to repay all accrued interest, wouldn't they? Wouldn't it be illogical to calculate the deemed distribution any other way?

If there is no contingent beneficiary, and the plan does not provide a default rule specifying who gets the money after the designated beneficiary dies, in my opinion it should go to the estate of the designated beneficiary. However, I agree with the comment above that the plan quite likely says what happens in this situation.

Q1: 2016. Q2: No.