Mike Preston

Thanks, Tom.

Have you read the IRS Memorandum TE/GE-04-1017-0033 dealing with "Missing Participants and Beneficiaries and Required Minimum Distributions"? Does it help you?

I must have been on a sugar high. Yes, the second loan would be limited to $20,000. Did you run it through the spreadsheet?

No.

Yes.

I don't know who this mkaufman person is, but he/she has some serious juice with the IRS!

I think it may be possible that the OP is confusing the fact that the Plan Administrator can control some aspects of HOW the plan document is provided to the participant with the fact that the participant has the right to request the plan documents (not only the Adoption Agreement, but the basic plan document, too, as well as all of the items enumerated in the above post). For example, I frequently see SPD's that state a participant may view, without charge, the plan documents at the office of the Plan Administrator, during business hours. I've also known some plan administrators to require a payment of up to 25 cents/page, in advance, before they will provide a hard copy through the mail. Some will provide electronic access without charge, some won't allow electronic access. Most bend over backwards to make the documents available at a reasonable cost so that no judge has the ability to wrap their knuckles over the issue.

Why all the gyrations? Wouldn't just amending the plan to exclude the ex-owner do the trick?

I don't completely understand how Fidelity uses their form, but it sounds like it has the potential of satisfying the IRS and that is about all you can ask at this point. Just remember that you have to file a final 5500-EZ for the Vanguard 001 plan showing that it is the final return.

Of course, but read the first message where it was disclosed that the good folks at the second investment house suggested opening a new plan. The OP is just lucky to have expanded his intake beyond those who work for investment firms before doing anything contrary to the rules. I currently have, I think, three cases in review by the IRS for those who blindly followed the advice of those on the front lines at an investment firm. It has cost those plan sponsors thousands of dollars in fees and IRS filing fees which all could have been avoided easily. Shame.

I suggest that people just ignore anything posted by sklappy584.

NP

Confirm that the LLC is taxed as a corporation. If that can't be confirmed then the status as to CG or ASG means very little.

Ilene, you could NEVER be a pain, in the rear or otherwise. I think we sometimes get swept up in a conversation because we rely on the general disclaimer applicable to this bulletin board that everything posted is assumed to be directed at a pension professional who knows when to call in the cavalry. [I hear your whole office raising their bugels as I type this.]

I see very little difference between this and setting up a DB plan late in the year where a SIMPLE is in place. The IRS has routinely approved the filings. Admittedly the filings are not done until the year after the DB is established.

You have it correct. The first form is completely inapplicable to your circumstance because it merely authorizes an intra-plan transfer (the owner of both accounts must be identical and in your case Plan 1 "owns" the first account and Plan 2 "owns" the second account. The second form seems to fit the bill but it can only be used if you were going the other direction. As Bird has alluded to, you are kind of gaming the system. Most of the folks posting in this thread make their living guiding clients through the retirement plan rules morass. When a well-meaning plan sponsor, such as yourself, tries to understand everything (which, I must admit, you are doing an admirable job), you end up whittling down the help you need to such a degree that it is no longer cost-effective for anybody to even take you on as a client. Specifically, our liability for helping you becomes disproportionate to the potential revenue. I'll tell you something everybody on this bulletin board knows. If you were to ask your accountant to refer you to someone in our field, most of us would end up helping you, even if the immediate liability/revenue *IS* out of whack. We very much like to strut our stuff to those who can refer us business in the long run; and helping out one of their clients is always a good thing to do. Good luck.

In case anybody is interested in the regulation section which forbids distribution from a terminated plan in this circumstance look to 1.401(k)-1(d)(4). But BIrd is much more right than not. The OP indeed needs a distributable event in order to rollover the funds. The above regulation section merely says that the termination of a plan doesn't constitute a distributable event if there is another plan of the employer. Thankfully, this thread is all about EITHER merging one plan into another (which automagically terminates the first plan, so it accomplishes what is desired) OR a two-step transaction where the first step is to transfer the assets from one plan to another followed by the formal termination of the first plan (which also accomplishes the goal). In the case of 1-person plans the IRS is quite lax as to what constitutes formal employer action. Somethiing as simple as a 1 paragraph document that says something to the effect of "I, acting on behalf of the Plan Sponsor of the ABC 401(k) Plan, hereby merge said plan into the DEF 401(k) Plan as of (specific date)." Many variations on that statement would also suffice. I'm sure the financial institutions have all the necessary documentation to do it properly. Unfortunately, they also have documentation to do it improperly. The important thing is to understand that the documentation regarding moving the funds should be an employer action and not a participant decision. Where it might get a little sticky is that even if the plans are merged or the assets are transferred the participant likely retains the right to select investments WITHIN the surviving plan. Any such investment discretion remains the purview of the participant and does not in any way cause a problem. The key is to ensure that the appropriate hat is being worn at each step.

The IRS considers sole proprietorships to go on and on and on and on..... until death. Your client should check with an accountant who will set him/her straight on the fact that his/her "business" was doing one thing at the beginning of the year and something else at the end of the year, but as far as the IRS is concerned it is the same business. Anything borne of the fruit that there are distinct businesses is poisonous. Act accordingly.

I agree that the filing issue doesn't apply to you if the first time your combined assets exceeded $250,000 was 1/1/2017 or later. I just wanted you to double-check because it seemed like you were not aware of the requirement to consider the two plans together before this discussion. One of the "advantages" of low cost services is the ability (or lack thereof) to rely solely on those providing those services. So, check with them as to how you can accomplish your goals without negative tax consequences. If you see anything with the word "rollover" in it, *RUN*.

Two issues. First, since you have been blissfully ignorant of the requirement to aggregate plans for the $250,000 threshold, please go back and make sure there hasn't been a requirement to file for a past year that you have missed. You can easily correct it (or hire somebody to do it for you) without too much expense, but if you let the IRS find you there is a potential penalty of $15,000 for each year not filed. Yes, it is unlikely that the IRS would come down so hard on a late solo filer, but why take the chance? Second, and this is most unusual, stick to your guns in the face of some potentially inaccurate advice given above (which could have disastrous consequences for you). You have it right: you should be transferring the assets of 001 into plan 002 in conjunction with a formal termination of plan 001 or merger of plan 001 into plan 002. This is an "employer" action, not a participant directed action. DO NOT FILL OUT PARTICIPANT DISTRIBUTION PAPERWORK FROM PLAN 001 as that would imply a rollover of funds from 001 to 002. While it may be permissable for you to do that (if you are over age 59 and 1/2 and the plan allows you the right to take a participant distribution at will), again, why take the chance when the course of action you have embarked upon (transferring) is bullet proof?

soa site doesn't do segment rates so is of little value. JB, do you really have a need for q0 or q1?

The IRS has stated over and over that they will abide the Rev. Proc.

I remain unconvinced.

I would be interested in an analysis that compares the net effect of a NQ plan to a traditional combo plan. More specifically, I'd be interested in what statistical gyrations are used to get the analysis even close. I assume you have told them (or they have seen) the traditional design these days of a cash balance combined with a flat percentage (typically 7.5%) DC plan. The sooner they accept the traditional design the sooner they can incorporate the DC plan contribution into the overall compensation package and hence not consider it merely a cost to maintain the DB plan. Good luck.

shERPA, my understanding is the same as yours.