RatherBeGolfing

I'm not sure what would make the AA an "optional" document to provide... Does it somehow not relate to the establishment or operation of the plan? ERISA §104(b)(4)

For a CG it would be Section 1563 attribution which would be limited to/from an adult child.

Well if it is a successor plan you really want it to be a transfer not a distribution. I know the end result is that the assets end up in the same place but it should be transferred not rolled over. As for potential issues, if it is transferred over as a successor plan, the assets (should) retain their source characteristics like withdrawal restrictions on deferrals, right? But a rolled over amount has already been "distributed" from its original plan and are now rollover assets that do not carry the same restrictions. If assets that "roll over" incorrectly are then distributed before age 59 1/2, you have a problem. At least that is how I am looking at it.

I assume you are talking about the $250,000 limit? If so, that is the combined value so it would mean you have to file for both if the combined assets exceed $250,000. From the 5500-EZ instructions (my emphasis) Talk to Vanguard, they will have required paperwork to terminate the plan. You also need to file a final Form 5500-EZ and Forms 1096/1099/945 depending on how you distribute the assets (Make sure to ask Vanguard if they will do this for you) Just as an FYI, Vanguard also has a brokerage option that may work for you, I have some clients who love them. I'm not sure if they can be used as part of their one participant plans though. I hope that helps.

Unfortunately, this is almost entirely cost related. Mega companies like ADP and others offer "low cost" plans staffed by people with zero experience and education in qualified plans. What you are facing is not an uncommon result. When you race to the bottom on fees, you end up at the bottom for quality.

Ok. Since it is 401(k) only, your ADP test will probably limit the amount of deferrals your owner can make. If the owners deferrals are going to be restricted anyways, how about restricting the owners deferrals in the document to something like $100? Tthis would trigger catch-up at $101. The owner could defer the full $6100, with only $100 subject to ADP testing. This also works in your favor for top heavy because catch-up contributions are not included when you determine highest contribution rate for the top heavy minimum (but it is included when calculating 60% for TH determination). So even if you had to make a TH contribution, it would be really small because it is determined only using the $100.

I very rarely suggest calling the DOL because it is almost always avoidable , but this may be one of those instances where it is appropriate. The way they are operating the plan effectively restricts catch-up contributions to highly compensated participants who can hit the $18,000 limit while still restricted to 15% of pay per payroll. That is just wrong and needs to be fixed. If you are getting nowhere with them, call the DOL. When they get a participant complaint, they have to look into it. When the DOL comes knocking, things like this will get fixed real quick.

But if they do allow catch-up deferrals, catch-up should kick in at the 15% maximum as well as the $18,000 limit.

Don't forget "encouraging" plan sponsors to make house calls in order to locate missing participants, that is one of my new favorites

There are no special rules for a solo 401(k), it is just a marketing term for a one participant plan. The reporting is a little different but the "rules" are the same. With this kind of setup, I would assume that ADP testing would be an issue as well, not just possible TH issues? Is the owner/principal catch-up eligible?

Your document most likely covers it (either by telling you how you must do it or by giving the admin discretion), but it may not be where you think it should be. In my document, the ordering rule is not in the RMD section, it is in a section that deals with timing and form of distributions.

Since the participants have an option of an SDBA or a pooled managed account, could the pooled account option itself be considered a DIA? I would be tempted to play it safe and treat it like a DIA and issue quarterly statements to the participants in the pooled account. The value wouldn't change until after the annual valuation of the pooled assets, so it would be pretty simple to take care of.

EZ is for owner/spouse or partners only. Is the son a partner? If the son is not a partner, the plan cannot file an EZ or use the filing exemption.

I don't see any other way around it, especially with the DOL scrutinizing attempts (or lack thereof) to locate missing participants.

We did a normal conversion, which means we converted the data needed (2014 in our case) in order to do complete admin in in our first post conversion year (2015). For us, this meant converting balances, years of service, hire/fire/rehire dates, relevant data for any lookback periods, etc. We also have detailed electronic files on our clients (present and past) that can be used if we need to access historical data that is not in FTW. With plans going back several decades, it just isn't reasonable to "rebuild" past years in a software when you can look it up fairly easily. The conversion is not that complicated, but it is time consuming. It really helps if you know your way around macros in excel as this will significantly reduce the time spent on manipulating the data for conversion.

100% agree. Recreating all past plan years for all plans is just not realistic. What you CAN do is is add certain historical data like compensation, contributions, distributions, etc on a year by year basis. You can upload that data separately from your conversion data using simple csv worksheets. The trick is going to be whether you can export the data in a user friendly format from your current provider

@Belgarath @ETA Consulting LLC @actuarysmith @Bill Presson I submitted this question for this years ASPPA Annual "ask the experts" panel discussion. Sal Tripodi maintained his position that it should be tested as separate controlled groups for the reasons outlined above. Another panelist pointed out Derrin's position and that there is no real consensus on this issue and that there is no direct guidance. It was also mentioned that when discussing the issue with the IRS for a prior year IRS Q&A, the IRS answer was that either approach "would not be an unreasonable interpretation".

Depends on what you mean by bringing over. Are you looking at converting all years on a year by year basis?

Yes.

Are there other "great opportunities"? Kidding aside, I have seen some crazy investments with amazing returns, but like I tell my clients, that doesn't mean that they are appropriate investments for a plan...

This is by no means limited to a geographical area. It happens wherever a client has an adviser with a "great opportunity for investment" .

That is what I would do. Just make sure it is invoiced AND paid in the year when the forfeitures must be used.

Why would you have plan procedures that you approve something that you can't legally do and then ignore part of the order you just approved? It is just a non-starter in my opinion.

Same here. EDIT: Not always a copy from the audit report. Most platforms have an import option that eliminates most of the work though...

The more I think about it, the more I gravitate towards @Kevin C's conclusion. Here's is where I get a little stuck though. Without some kind of action on the part of the plan, is the clause in the employment agreement even enforceable? From a plan perspective, they are still allowed to participate. So is is an unenforceable restriction still a restriction?