jpod

QDRO: I am just throwing it out there, but if it coincidentally happens to be 409A-client, or can be fixed per the IRS Rev. Proc. without any penalties, the fact is that the employees who contributed are employees of a for profit so I think that the document purports to be "sponsored" by the tax-exempt entity is not fatal even if a little weird.

but the employer/plan sponsor was discovered to be a for-profit

Any chance that the governing plan document, and elections made thereunder, are 409A-compliant just by coincidence? Or, if not compliant can be fixed to be 409A-compliant under the IRS' guidance?

Extremely unlikely in my experience that BPD allows withdrawals at/after NRA while still working (other than RMDs for 5% owners). If in-service selections were not made in AA most likely no ability to withdrawaw even at NRA.

I believe the conundrum is that the participants cannot be located, not merely that they are unresponsive.

IF you are going to allow investments that can throw off UBTI you are going to have to contend with the prospect of having to file a 990-T and pay the UBTI if the plan's total UBTI is above the filing threshold ($1,000, I think). If a tax is owed and its attributable to two or more participants there needs to be a fair allocation of the tax liability to those participants' accounts.

I am not convinced that it is too late to secure an extension. Nothing which I see in the Form 4868 or its instructions suggests that filing the 1040 prevents you from later filing a (timely) 4868 and securing an automatic extension.

The opening post suggests that the individual is an unincorporated Schedule C filer, so that leaves me with this question: Is it a fact that a 1040 filer cannot secure an automatic extension after filing the 1040?

Boy, I doubt it. The transition rule was intended to provide some breathing room after arm's-length acquisitions. I doubt a redemption of an existing owner qualifies under even the most liberal interpretation of the statute or regulation.

What kind of substantiation of bankruptcy risk did IRS require?

If he has the cash (outside of the Plan), or is willling to take out a mortgage, he can probably get a speedy EXPRO prohitibed transaction exemption to allow him to buy the property from the Plan, per a solid independent valuation of course.

Don't let your life be controlled by bullies. If your client wants to pay you for a dissertation on the qualified plan rules, well maybe you should accept that assignment, make sure it is perfectly precise and does not cite authorities which could prolong this ridiculousness. Absent that, tell the lawyer to go have fun with himself elsewhere, if you know what I mean.

Why would you need to do anything more than show the plan language that says only an employee (if not an actual eligible participant) can roll money into the plan?

. . . and make sure the two businesses do not comprise an ASG under Section 414(m).

What needs to be corrected? Did the plan sponsor change? If Company X is plan sponsor of Plan A there is no plan sponsor change just because Company Y buys stock of Company X, unless after purchase Company X was merged into Company Y and disappeared, but even if that did occur it is itself no big deal from a tax qualification perspective.

I would check to see if the Adoption Agreement (or the BPD) says something like "no amendment is valid unless a new Adoption Agreement is signed by the Employer." I don't think that would be fatal (I agree with QDRO above), but it's a possible headache.

I assume you are talking about contributions for the owner. Pretty certain it is lumped in on the same line on page 1 of 1040.

You could say that but I think most people would say you were wrong.

If my status as an active employee and my work obligations to my employer end at 5pm on 12/31, I have entered into retirement on 12/31. Stated differently, unless that status and those obligations end at the instant the ball drops on Times Square, I would view myself as having retired in the current year.

The regulations extend the transition rule to asset sales, so there is no doubt about that. My concern is whether in an asset sale the transition rule is available to the plan left behind with the seller that would otherwise flunk coverage due to the departure of all employees except a couple of HCEs.

Facts are fairly simple. Corp A owns 100% of Corp B, operating separate businesses. Each has a 401k plan (calendar plan year) with different structures and each has comfortably passed ratio percentage year after year. Before the end of 2015 Corp A will sell virtually all of its assets to an unrelated buyer, and all of the employees will go with buyer except Corp A's CEO and CFO who will stay on payroll for a while to handle a variety of clean up and other matters and will receive compensation. Corp A's plan will not be terminated. CEO and CFO will be HCEs for 2016. Does Corp A's plan get the benefit of 410(b)(6) through 12/31/16?

Assuming there is some legal (non-tax) obstacle, can the concept be implemented by providing for a matching component?

Yeah, why would you want to charge yourself a high interest rate only to be taxed on it on the back-end? It is in no way shape or form economically comparable to an after-tax contribution. Perhaps if the interest is going to be in your account for 40+ years the tax deferral on the subsequent earnings on that interest will make it beneficial, but I am skeptical and too lazy to do the math myself.

I never heard the knee-jerk reaction to Rabbi Trusts described in quite that way, but I will definitely steal it and use it in the future. In many cases, however, particularly elective NQDCPs with many participants, a Rabbi Trust is a good thing to have as it eliminates the participants' angst over sticky fingers.

Albany, I am sure you realize this but just because there is a controlled group and the other employer is much larger doesn't necessarily mean you have a coverage problem. If you had said, simply, we have a coverage problem i wouldn't be commenting.