Belgarath

I'll let Bird speak for himself, but I suspect he may have meant that the insurance company can't just randomly offer any old arrangement they feel like - policies generally have to be approved by the State Banking and Insurance Departments, which requires policy language, assumptions, filings, etc., etc. - All right, I see he already did!

Guess what we just found out? They DID, in fact, have it distributed and deposited to personal checking account, then directly transferred it from the checking account to the plan. They just told us incorrectly what they actually did. Anyway, the discussion has been informative for me, so I thank you all.

What Austin said - same for us. Doing a VFCP for a situation where there is 9 dollars of lost interest seems like overkill... But, your way is certainly safe - can't get into trouble that way.

I think it is 30 days.

Right - the opposable thumb may have helped lift us out of the primeval jungles, but too many of them makes typing a challenge.

Agreed. Even after all these years, I have a terrible tendency to sometimes use the terms interchangeably. I know what I mean, but it can sure cause problems for someone else reading it!

IMHO - it will not blow your top heavy exemption. Top heavy minimums are required only for NHC. If you exclude the HC, the plan still consists only of deferrals and SH contributions, so your top heavy exemption remains intact.

Sole prop, but has employees who participate. Apparently had no other readily available funds to make contribution, so did the IRA thing. It was apparently a liquidity issue, and tax "efficiency" wasn't an issue that concerned him. I'm deducing this from snippets of information - the "why" isn't ultimately really my business. I'm more concerned with whether it creates a more serious issue. He's over 59-1/2, so no premature distribution issues.

This was sent directly - not through the checking account. But it was sent at the instruction of the IRA account holder. Never in the possession of the individual, but the IRA institution processed it as a fully taxable distribution. So a 1099 will be issued showing a distribution, and it'll be declared as income on the tax return. 'Twould be nicer if they had done it jpod's way, but it does seem like a no harm no foul situation. But perhaps an auditor would disagree. P.S. as you might expect, as usual, we were informed after the fact...

Say a self employed wants to make a profit sharing contribution. I don't see a problem with transferring the contribution from his personal IRA, AS LONG AS it is treated/reported as a taxable distribution to him, and not a non-taxable transfer/rollover. Any other opinions? I'm sure this has been discussed before, but I couldn't find anything using the search function.

Generally considered terminated for a sole prop if all assets have been distributed, right? No contributions were due, no other employees, never were.

Like you, I've seen plans where 100% vesting was required, but I've never seen them take the 1.401-1(b)(2) requirement to this extreme. Seems like a remarkably foolish thing - I'd bump it up to a supervisor. Don't know if anyone else has had this come up!

Thanks Bird.

Say a sole prop dies - has a small 401(k) plan - all assets distributed to beneficiary. Assume plan doc is up to date, and final 5500 form properly filed, and 1099 to beneficiary issued. Does the executor of the estate itself have any specific duties with regard to filing anything further with regards to this plan/distribution - forms, paperwork, etc.?

Yeah, as I recall, the only general difference between 3401 and W-2 is that excess group term life insurance is excluded under 3401, and there's possibly something funky on the W-2 exclusion regarding certain stock options - I'd have to look that one up, as I don't recall off the top of my head.

Looks like it changed for 2009. Pre-2009 still had the controlled group restriction, 2009 didn't.

...Based on our most recent analysis, we decided to increase the VCP user fees for small plans to more accurately reflect the average time spent on these cases and to reduce the fees for larger plans to reflect the average time it takes to do these cases. To attempt to be objective, it may well be true. I have no data on the average time spent on relatively small cases vs. large cases. I'm giving them a partial "benefit of the doubt" until someone publishes/uncovers some real data/statistics. Which will probably never happen.

Mike, I know that used to be true, but is it still? I seem to recall that it was changed. Copy of current instructions attached - at a quick glance, I don't see that item you mention. https://www.irs.gov/pub/irs-pdf/i5500ez.pdf

18" of new snow as of 4:00 AM, and still snowing...sheesh.

Tom, I've always understood that restriction to apply to vesting only. In other words, yes, it is treated as a "terminated" plan for purposes of 100% vesting, but you don't have to "terminate" the plan and distribute the assets. Agree/disagree?

I don't think so. You could have 1-1/2 year eligibility, as long as you 100% vest immediately.

No, this isn't permissible. I believe you may be thinking about a plan that uses age 20-1/2 with a 6 month eligibility and a single entry date. That would be ok. But in the situation you have, a person might not enter until after the statutory entry date requirement.

Is the fix for the deferral piece really 50%? Aren't you eligible for the reduced 25% QNEC under Appendix A, .05((9)(b)? Agree that the match is 2%. Hmmm - as I think about this, it seems debatable. There appears to be an odd technicality in this - whether intentional or oversight I don't know. So under .05(9)(b), it allows the 25% QNEC in lieu of the higher QNEC required under .05(2)(b) or .05(5)(a). Under .05(2)(b), that section is specifically NOT for plans using a safe harbor, where a participant was not provided the OPPORTUNITY to defer. This might lead you to believe that for a safe harbor plan where no OPPORTUNITY to defer was given, that .05(2)(d)(i) controls, which is the 50% QNEC, and .05(2)(d)(i) isn't referenced under the .05(9)(b) correction. .05(5)(a) is for situations where someone made an election where it wasn't implemented properly. So under a very literal reading of .05(9)(b), it appears that that you could use the reduced QNEC correction for situations where an election wasn't properly implemented, but not for a situation where someone wasn't given the option to defer. This makes no sense to me, since you must give the full match anyway, even under the reduced QNEC correction in .05(9)(b). Anyone have any thoughts on this? I almost think this may have been discussed/debated a while back, but I can't remember.

I absolutely defer to the attorneys or those who are more knowledgeable in this arena, but the plan probably has a "standard" default if there is no named beneficiary. In ours, for example, the progression is surviving spouse; issue, per stirpes; surviving parents in equal shares; estate. Jpod, I'm sure you can enlighten me. I'm under the impression that "per stirpes" can sometimes mean different things in different states, depending upon state law? But if there are grandchildren as per the OP, does that mean, in this case, that the grandchildren are considered direct beneficiaries of the plan, and therefore it wouldn't go to the estate? So let's say the only daughter predeceases the decedent - and the daughter had three children, all of whom are alive. Does it get paid in equal shares to those grandchildren? Thanks for any information you care to pass along.

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