Belgarath

Thanks, Peter, for the citation. I fully support the "spouse as automatic beneficiary unless spouse waives" law/concept, but when you see the actual statutory language and the whole QJSA/QPSA stuff, with numerous amendments, one may be tempted to agree with Mr. Bumble, "The law is a ass..." As a layman, seems like it could have been made more sensible and streamlined. For example, it never made any sense to me why a profit sharing plan should be treated differently, for these purposes, than a pension plan. On the other hand, if ERISA, the IRC, and all associated regulations/guidance were as simple as they ought to be, we'd all be out selling matchsticks or something, so I should keep my yap shut and not gripe!

Participant is at Blinky's house?

I don't see how 20% withholding could apply - maybe this is an error? It isn't an eligible rollover distribution. Consequences of a late distribution Under IRC Section 401(a)(30), if the excess deferrals aren't withdrawn by April 15, each affected plan of the employer is subject to disqualification and would need to go through EPCRS. Under EPCRS, these excess deferrals are still subject to double taxation; that is, they're taxed both in the year contributed to and in the year distributed from the plan. For any distributions, attributable to elective deferrals designated as Roth Contributions, all distributions will be reported as taxable in the year distributed. Designated Roth contributions will have already been included in income in the year of deferral. These late distributions could also be subject to the 10% early distribution tax, 20% withholding and spousal consent requirements.

If you have access to the EOB, the 2017 version on pages 7.302 and 7.303 addresses this question. Generally subject to 10% withholding rules if taxable in the year of distribution.

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.