CuseFan

You forgot the State of Denial, not to be confused with the one in the Egypt, the State of De Nile.

I know in the DB world that you cannot eliminate early retirement benefits with respect to benefits that already accrued. The parallel is that you could not remove the accelerated vesting for account balances as of the effective date of the amendment (or adoption date if later). The allocation entitlement provision can be eliminated prospectively for everyone, effective 1/1/2024 assuming any 2023 amendment might result in a cutback. You could change an entire plan that had no allocation conditions in 2023 to 1000 hours and last day provisions in 2024 for everyone provided it was amended timely.

Yes W2 and I think tax withholding is required based on the rules for withholding from compensation paid in whatever frequency the distributions are paid. This is something that should have been arranged from the get go - would you set up a 401(k) plan w/o the mechanism for distributions? If the custodian is not able to handle, then transferring funds to the employer to pay and record through its payroll function might be a viable option. If the document uses W2 compensation but does not exclude NQDC distributions then it should be included in the person's plan compensation UNLESS it is paid on account of termination from employment, which should never be included.

It is defined in the plan language and not open to employer discretion, so it should be ok. Is it compensation or the 20% credit that is limited to $50,000? You might want to see if the document has other options that would accommodate the objective rather than using an "other" selection.

I think the ONLY way it can revert is if it cannot be allocated to anyone because of 415 limits and cannot otherwise be used to pay eligible expenses.

Agreed, I think Roth conversion changes the current and future taxability features of the converted amounts but does not change the money type and characteristics.

I don't think "may" gives the plan sponsor the discretion to pick and choose from who to accept rollovers.

https://www.law.cornell.edu/cfr/text/26/54.4980F-1 There is an M&A special timing, but still 15 days advance. If only affecting an early retirement subsidy, then you have 30 days after, but that's not your situation. Maybe 204(h) wasn't needed and everyone is just terminated, but I want counsel to opine on that as Lou recommended.

Agree with CBZ and that you have a multiple employer 401(k) plan issue you need to resolve - not just filing(s) but making sure each company's component plans satisfy coverage and nondiscrimination separately.

Otherwise the original plan termination is not a distributable event.

You don't say how big (assets/participants) the plan is - at nearly $3M for just the RE component, maybe this is owner only or owner and spouse only, or maybe this is a smaller portion of a larger plan? If any non-owner participants then you have fiduciary prudent investment concerns. If owner-only, then likely very near 415 max and I'd be concerned about over funding. Agree with this wholeheartedly.

To reclassify, some deferrals must exceed some plan or compliance limit. If the allocation of a plan matching or profit sharing causes a 415 excess then there is your basis for reclassification, right?

Agreed - ACP test the VAT alone or ACP test the match/VAT together.

I believe he means the Plan Administrator or it's designee authorized to evaluate and administer benefit claims for the plan.

The first and most important question is whether the person is considered self-employed or is an employee of the agency. I agree with Dare that RE agents are almost always self-employed contractors which means they should be paid their commissions via 1099s. From there, it's a matter of how the person is set up for their corporate tax structure - the legal entity. That is important for determining how compensation is reported, and what counts as compensation. Note that if it's an S-corporation (or entity that can treat itself as an S-corp) that only W2 compensation paid to the owner-employee is considered compensation for retirement plan purposes and dividend distributions reported as K1 income does not count as compensation.

Doesn't matter (b) or (f), still likely needs to be a "top-hat" employee to remain eligible. However, a reduction in hours resulting in a reduction in pay does not necessarily mean the person is no longer "top-hat" - that is, select management or highly compensated (not IRS definition). If a CFO, for example, goes from full time to half-time and pay goes from $200k to $100k, does that mean (s)he is no longer select management? I'd say no. It it's a higher paid middle manager in the same situation, the answer may be different. There is also the argument that these plans must be primarily, but not exclusively, for benefit of top-hat employees. If the plan covers 10 or 20 and it's just one person in question, continuing to include probably still satisfies that requirement. If it's 1 out of 4 or 5 (or less) then that's a tougher argument. A good plan document would provide clear direction here but absent that, as Peter said, it should be the employer's interpretation (not yours) and may best be done in consultation with its ERISA counsel if the liability risk warrants.

Read the plan. You likely need to commence at a minimum the 50% J&S annuity (make sure there is a new annuity starting date for the plan termination distributions and the J&S is not locked in). If the plan has in-service distribution provision then person could elect lump sum, so part RMD and part RO-eligible using account balance method. BUT, if this not done as part of plan termination distributions (i.e., paid earlier) then you may have to satisfy the restricted employee 110% funding threshold requirements. The plan termination wrinkle really isn't the complicating factor, you can continue normal administration, it just potentially accelerates a final distribution. So I suggest you ignore the plan termination for now, administer this as you would an ongoing plan and then do whatever final RMD and RO split you need to do when the termination distributions happen.

Here is my take, assuming the husband and wife companies A & B are a control group: 1) Yes, it's plan assets from all plans of the employer/control group. 2) Plan covers only owners and spouses, so yes, EZ still appropriate for now. In 2024, under new rules they may no longer be a control group and I do not think you can file an EZ for a multiple employer plan, which you would then have. 3) No other schedules or attachments. 4) Filing and extension should not trigger anything because the extension would be the first filing of any kind for the plan, so neither IRS nor DOL would have any knowledge of the plan's prior existence or when its assets exceeded $250,000. So I would file the extension, then get 2021 filed under EZ delinquent filing program and then filed 2022 extended return. Note, if the companies are not a control group - not in community property state, no minor children, no involvement in the other's business - then you have a multiple employer plan and all bets are off and you likely have many more delinquent returns (SFs) to address. Come 12/31/2023, you may want to spin off B into its own separate plan if/when the control group goes away. That way each has their own $250,000 threshold and EZ filing requirement. Assuming you can show less than $250,000 as an ending balance for A at 12/31/2023 and 12/31/2024 it shouldn't trigger a letter for a delinquent 2024 filing.

Does the asset sale also involve the employees that were covered under the multiemployer plan? Might the transaction be structured such that participation in the plan is transferred to the buyer and it is now the buyer who incurs the withdrawal liability which in turn affords it the tax deduction for satisfaction thereof?

Agree with Peter. The example from ESOP guy seemed to indicate the employer was charging a fee to terms to encourage plan exit, which I agree would be a no-no. However, if an account fee of $x or Xbp was charged on all accounts but the employer chose to pay this on only for terminated folks then I see no problem with that assuming such fees are reasonable.

I don't think it's an issue. I think Peter's 1/4 note merits some thought, but in that vein I could argue that any request (before tax gross-up) would only need to be limited to 1/4 of the purchase price. Say the property was selling for $400,000, you could argue that his residence is $100,000 of that and substantiate a hardship for that amount plus taxes. I don't see any reason he couldn't pay cash for 100% of his dwelling (or whatever he can obtain through hardship) while financing 100% of the other units. What about someone who purchases a condo or townhouse that has common areas or pools of which they purchasing a portion (are they not?) so technically not all of their cost is attributable to their "residence".

only on 2/2 I imagine

If what Lou said is true then isn't the TH exemption lost forever regardless of what you do with that policy and related contributions prospectively?

You cannot categorically exclude part-time/seasonal in your document unless it is with the caveat that if they complete 1,000 in an eligibility computation period then they enter the plan. I would think the 500 hour LTPT rules now supplement this such that you still cannot categorically exclude solely on the PT/S classification.

Agree with Corey. Maybe if the plan had a 401(a)(26) failsafe provision, but not for an amendment that hasn't happened.