Belgarath

Might be tough to condense into 15 pages. I'm reminded of a "Peanuts" cartoon. Frame 1 - Peppermint Patty sitting at a desk - frame entitled "History Test." Frame 2 - "Explain the Civil War." Frame 3 - Peppermint Patty saying, "Explain the Civil War?!" Frame 4 - "Use both sides of the paper if necessary."

Wow, I wish all of our employers would do this. When I think of the headaches and errors that would be prevented... But in answer to your question, no, I have no suggestions. It is possible, depending upon how it is presented at the meeting with the employee/HR, that an auto escalation might improve deferral percentages. "You deferred 3% last year. This year it automatically goes to 4% unless you elect otherwise. Sign here." It might overcome a certain amount of inertia.

It is at least theoretically possible that the TPA isn't charging any more for the regular 5500 than they would charge for the SF.

If you are not in a community property state, you MIGHT be able to structure the businesses to rely on the "spousal noninvolvement" clause in IRC 1563(e)(5). Also, you would need to make sure there are no minor children. So a lot of "ifs" but at least a possibility. You'd want to have the CPA and an ERISA lawyer involved, as there may be other issues involved with such requirements that would, in terms of importance, override any qualified plan considerations.

We have the fees specifically disclosed in an appendix to the SPD. If they change, we do an SMM. So when it comes to a specific distribution from a plan, an additional disclosure not necessary, although some platforms do have it on distribution paperwork. And, some administrators put it on the form anyway. Personally, I would not. As far as I'm concerned, if properly disclosed in the SPD/SMM, that satisfies it.

So a little more. It appears the route that will be taken is to spinoff a portion of the plan to one of the new employers, and the other new employer will assume the assets and liabilities of the remaining portion of the plan. So far, so good. Now, this won't take place until sometime next year. Current plan provides for no allocation conditions for PS allocations. I'm thinking that to keep things cleaner, they should amend now to impose a last day/1000 hour requirement for next year, so that the existing plan will have no obligation to make any contribution for the "spinoff" employees. Does that make sense? Then when it comes to coverage/testing, each plan will just be on their own - transferor plan will just use full year 2017 comp for its remaining employees, etc., and spinoff plan will just base on comp from date new spinoff plan is established. Am I all wet on this? I should know better than to consider such questions on a Friday afternoon. Thanks.

An absolute disgrace. "We're going to charge you for a service that we won't perform in a timely fashion, and we're going to make you responsible for any adverse consequences that occur because we didn't timely perform the services for which we charged you in the first place..." How do these people sleep at night?

2 years of service.

Unanswerable question for me. Totally dependent upon facts and circumstances. If the gain or loss is small, then I'd just pay them out. If gain or loss is large, then you have to consider the issues already discussed. "Small" and "large" gains are in the eye of the beholder, so I can't give you any hard number. You give it your best shot, and present the alternatives to the Plan Administrator, who will then decide. Or more likely, ask which alternative you recommend...

Hurray!

Yes. https://www.irs.gov/retirement-plans/403b-plan-fix-it-guide-your-403b-plan-doesnt-limit-the-total-employer-and-employee-contributions-to-not-exceed-the-irc-section-415c-limits

There's really no standard answer for this - it is heavily dependent upon facts and circumstances. Most plans provide for a special valuation at such time as the Plan Administrator deems appropriate. So in extraordinary circumstances, you can do an "off-anniversary" valuation. This, however, is a very slippery slope, especially if a HC is involved. As an example of where it might be appropriate - suppose the total plan assets are $500,000 as of 12/31/2015, with $400,000 of that belonging to the owner, who retires. By the time the distribution is made, the assets have dropped by 20%. Under the "standard" valuation practice, owner would get $400,000, and everyone else would be left with zilch. So some sort of special valuation would have to be done in such a situation. If you do it for one person, then you have to consider whether or not you need to do it for everyone. If not, what are the objective parameters you are going to establish for when you do and when you don't? So a tricky issue, with no answer that works for every situation.

Yeah, as John mentions, this is a standard provision in nearly every plan I've seen. I was just assuming you were talking about the "regular" cash out distributions. I shouldn't assume...

Right.

Well, the plan could set the cash out limit at $1,000, thereby eliminating the mandatory rollover problem. However, if the plan DOES have a cash out limit in excess of $1,000, then the amounts in excess of $1,000 are subject to the mandatory IRA rollover rules. So to answer your question, no. (if the amount is less than $1,000, then yes, it could be distributed in cash)

Is there an election of some sort? For what?

We are going to have a similar situation soon. Employer was an S-corp - just recently changed to an LLC taxed as an S-corp. Same business, employees, etc., but a new employer name and EIN. Anyone heard anything more about this issue?

Would this possibly be considered an "experience gain" under 1.125-5(o)(1)? If so, it seems to provide that the employer can retain the money. However, I'd be a little surprised if the plan would be drafted this way (for participant contributions) even if it is permissible. Seems like it would more likely be returned to the participants on a "reasonable and uniform basis" as also provided for in that same section.

Ah, great point! And I don't know the answer. But that makes sense. I hadn't really considered that angle. This is, at this point anyway, a truly hypothetical situation, but because we are looking at a client with a lot of family relationships and ownership transfers (the details of which are almost completely unknown at this point) I wanted to be prepared for possible option attribution. Hopefully there will be no options and this will all be moot. Or as Tom would say (for those of you who have been following the humor column) MOOOOOOOOOOT. Thanks for your input.

The following true story is only marginally related, but your bovine stories here brought it to mind. Many years ago, we had a neighbor up the road who stopped by one day. (I should preface all this by saying that at one time, there was a theory that it was the "wrinkles" on the brain that were responsible for intelligence). This neighbor, who has since passed away, was what might be called a character. VERY bright man, but he talked like a true backwoods type who had never been off the mountain. Somehow, the subject of cows came up. He said, "There ain't NUTHIN as stupid as a cow. Brain as big as a washtub, and not a Gawd D*** wrinkle on it!" It occurs to me that if this theory were true, there are a whole lot of bowling balls running for election this year. What am I going to be thankful for this Thanksgiving? That the blasted elections are over!!!

I noticed that there is now LRM language for prototype SIMPLE-IRA's. I was under the impression (perhaps mistakenly) that prototype SIMPLE IRA's were not available previously. So is this entirely new, or were they available and I just didn't know it? https://www.irs.gov/pub/irs-tege/sira_lrm0916.pdf Actually, as I look at this, I think perhaps this is just language for the IRA's themselves - not for the actual SIMPLE Plan document?

Small plan (15-20 participants) with modest assets.

You have cowed me into submission.

Talk about being fed a line of bull!

All excellent points, and the input is much appreciated. I will say that in situations where the employees are not losing their jobs, in general if there's a good broker, I haven't seen too much run-off of assets - they just roll it over.