Mike Preston

He wasn't rude in the slightest. This is the internet. It is perfectly reasonable to expect a post from someone within the industry to have done at least a little research before posting. I'm a little tired of every time someone points out a glaring insufficiency they are accused of rudeness. Are you paying for his time? When you start doing that you can set whatever standards you want. Strong letter to follow as to why if the above isn't clear enough.

You have an over active imagination.

To us, yeah. But the income producing efforts have definitely stopped.

Yes, the stock purchase has now taken place. A less restrictive view would be to consider the two organizations as not existing at the same time during 2019 so no aggregation for 401(a)(4) or 415.

Bump cubed.

Useless advice is more entertaining.

Bump squared.

It is a horrible descriptor. Clients (and some of their advisors) think of it ("solo") as meaning the plan somehow contains pixie dust which allows a single participant (and spouse) plan to accept deferrals or employer contributions TO THE EXCLUSION of everybody else that a regular ("not solo") plan would otherwise cover. We (the collective choir I'm currently preaching to, of which you are of course a member) understand that solo is meant to be applied AFTER it is confirmed that only said single participant (and spouse) satisfy statutory eligibility after consideration of all aggregation rules. Such is our burden to bear.

1) Sure, as long as it satisfies 410(b), which it would if the entire population consisted of HCE's. 2) Then you would have to aggregate the solo k with another plan that covers enough of the NHCE's and otherwise satisfies all the rules.

Bump.

Hence, laying waste to the only path available under the IRC and ERISA to punish a participant. Anything else smells very much like an ERISA 510(a) violation. I wonder if the sponsor would give up on their own personal idea of what is right or wrong if they were made aware of the potential penalties for an ERISA 510(a) violation? Hardly seems worthwhile when potentially facing jail time.

While I can imagine a few circumstances where you are wrong, in the vast majority of cases I agree with you.

Me, neither. But this plan sponsor wants to punish those who don't want to absolve the investment fiduciaries of their normal fiduciary responsibilities. We surmise that punishments like caning are carrying things a bit too far. But where does the Plan Sponsor draw the line?

Doctor is W-2 employee and partial owner (somewhere between 10% and 15% ownership) for the first few months of 2019. Quits, sells his stock, and starts a sole prop that is still in existence at the end of the year which appears to be throwing off around $300,000 for 2019 but won't be generating much in the future. Accountant thinks it is a perfect fit for a defined benefit plan! Let's assume that one course of action is to adopt a defined benefit plan that generates a deduction of $200,000 for 2019 and a minimum required contribution for 2020 through 2023 of zero [easily accomplished if sole prop throws off minimal income. Come November 15th or so, Doctor is presented with an opportunity to purchase 100% of the stock of a medical practice where he can hang his hat. Very little income from this entity for Doctor for the balance of 2019. Fly in the ointment? Stock is of a long-standing (more than 10 years) practice which employs 15 employees, each of which have been with the practice for a long time. Two scenarios present themselves: a) DB plan signed sealed and delivered before November 15th resulting in reliance on 410(b)(6)(C) for the balance of 2019 and 2020 and generating a permanance busting termination on 12/31/2020 due to changed business circumstances. b) DB plan thought about long and hard but not documented until 12/15/2019 [long after stock purchase] meaning no reliance on 410(b)(6)(C) and qualified status of DB plan dependent on satisfying non-discrimination aggregating the sole prop and the 100% owned medical practice. Too restrictive? Does it get any less restrictive if a SEP-IRA with a contribution of $55,000 is substituted for the DB plan in (b), above? Or does it get more restrictive because the SEP-IRA will no doubt involve a 5305 which requires aggregation? Thanks

Let me try on the devil's advocate hat for a moment. Are we talking about something that is written into the plan document? I assume the answer is yes, per the OP and that some language is necessary in the plan to support this plan sponsor's desires. It appears that there is one section of the regs that somewhat supports a more draconian interpretation. I don't have time to look up the details, but isn't there a section of the 401(k) or 410(b) regs that allows for a one-time election to permanently opt-out of all qualified plans? Is the plan sponsor willing to support this even less favorable course of action as punishment for failure to provide investment direction? That is, to treat a failure to provide investment direction as an affirmative act to permanently step aside from all qualified benefits?

1) Find out from the actuary what information is missing and have the client track it down, even if it means crawling around in the attic opening old boxes. 2) Find a hungrier actuary (not me). 3) In the case of a frozen plan there is usually a very wide margin between minimum required and maximum deductible. Ask the (an?) actuary if they assume the highest benefits for NHCE's and lowest benefits for HCE's [all based on the history the client can find] whether the prior contributions satisfy minimum fundiing and don't violate maxium deductible rules. If so, have the client elect to eliminate all balances and let the actuary go forward. 4) Tell the client that because your actuary didn't publish enough information each year for another actuary to duplicate the work performed and you weren't diligent enough to understand what was necessary your firm will be paying the (a?) new actuary to guide the cleanup. Good luck.

Yes. And yes, there is a lot more to it.

Another keyboard lost.

It matters in that they are completely different as far as protection goes. I would guess that most folks consider downloading to be less vulnerable because browsers have such intense scrutiny with respect to protections. Email programs are much less rigid and can therefore be abused easier. For example, phishing is much more prevalent in email environments, although not unheard of in a browser environment.

Something tells me there is an advisor in the 403b loop that thinks it is a problem because that advisor has no interest in the 401(k). With that said, congratulations on such a well worded and complete first posting. Would that it were for everybody. Welcome.

Probably. I agree with what's been said. With one exception. The plan can't suffer a loss due to this erroneous deposit and subsequent refund. This is possible if there has been a significant period of time between the deposit and the refund. Anything insignificant can be ignored., if there has been a loss that is significant the refund won't make the participant whole. That is the responsibility of the plan sponsor.

Pdf's with PII are less secure than login required websites.

Lawyer time!

Well, if you don't increase W-2 above 75k you are looking at a max, each, of roughly $190k each based solely on your service with the s-corp. If you aggregate service with the LLC then the 190k goes up to about $285k each. You can also get to the $285k by increasing the 75k to about $115k when averaged with prior years. The above are wild ballparks and not to be relied upon as there is significant information needed to calculate the amounts precisely. Further, some of the amounts quoted above rely on the use of the 50% cushion in the first year which, if nothing changes, reduces the second year deduction to about 2/3 of the first year. You need to hire an actuary.

Let me add my voice to the choir and say how sorry I am that you are going through all of this. Were it not for the fact that the calendar is unfavorable to you given that the October 15th deadline for pension filings is fast approaching you might have much more participation in this thread. Also, please recognize that those of us who use our real names might also be restricted not only from discussing when or how something might rise to the level of a crime but also from discussing the matter focusing on merely unethical conduct. With that said, I can't believe you are the first person seeking treatment from your treatment center of choice to face this issue. Have you asked them if they have already developed a completely ethical solution? Just thinking out loud here but maybe they are willing to send you summary billings from an associated doctor who uses a location other than the treatment center itself for his/her address? "Medical treatment" might be all that is necessary to satisfy the 401(k) gatekeepers, be they Fidelity or somebody associated with the plan's Administrative Committee. Here are a couple of links you might find interesting: https://www.employeefiduciary.com/blog/hardship-401k-distributions-frequently-asked-questions and https://www.irs.gov/pub/foia/ig/spder/tege-04-0217-0008.pdf Having both at hand will better arm you in your battle to legally and ethically arrange for your hardship distribution.