CuseFan

If a 5558 was not filed by 7/31, your next option is to check if the corporate (or personal) tax return was put on extension, in which case the 5500 can be extended on that basis, but you'll need a copy.

I think the person's 415 limit (100% FAE or max $ actuarially increased) is determined without regard to the prior distribution, then once that is determined the person's applicable 415 limit is offset by the actuarial value of the prior distribution. I'm not an actuary, nor do I play one on TV, and also did not stay at a Holiday Inn Express last night - but I do work with a lot actuaries.

Agreed - cheers!

I was going to suggest as well, but figured it wasn't an option because it is an obvious one that wasn't even mentioned. Regarding non-safe harbor hardship, my thought was applying such criteria to loans, not withdrawals. So if someone has a (subjective) hardship where they can't get a distribution they could still get a loan. This would likely minimize usage and give the employer/plan administrator some discretion - but with that, added responsibility.

Statutorily, could probably amend loans in and out in a vary narrow window, but I'd think about a better way to handle if at all possible. Technically, there would need to be an SMM for each amendment, which might create an HR issue. If you say no SMM is needed because, at the time required, no actual change to SPD language is in effect - I don't know if I'd want to argue that with DOL. I know it's an NHCE and the intentions are good, but doing such an amendment and (most likely) hiding it from everyone but the lone target just doesn't smell right. As gets said in this forum all the time, just because you can do something doesn't mean you should. I'm more concerned with the HR and overall employee relations issues that could come from this as opposed to any plan compliance problems - how come Johnny could get a loan last week/month/year but I can't? I've got a sob story too. Maybe allow loans for broader non safe harbor hardship reasons?

and some have one year hold out with retroactive re-entry, which doesn't really work with 401k plans

So, and I may be oversimplifying but it's Friday afternoon and a cold one is calling my name, the sole prop contributes $50,000 for example and say $1000 is attributable to the life insurance benefit, (s)he can only deduct $49,000 so there is no reporting of the $1000 PS58? Cool, I learned something today! Now about that cold one ... hope everyone has (or had if you're reading Monday) a great weekend.

Employed on annuity starting date = in-service distribution no matter how you slice it.

You're talking DC plans, because DB 415 limit is based on calendar year in which the limitation years begins, correct?

Disagree - by that reasoning the person could be rehired a year but because they had a previous distributable event you would still pay them out? If the person is employed by the plan sponsor (or control group member) when the distribution is paid then you have an in-service distribution subject to those rules. And the timing described sounds like a "oh, I'm getting rehired so I better get my 401k money out while I can" but oops, acted too late. We see people try to play these games in DB world all the time.

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.