CuseFan

That has to be the word of the day! Thanks Peter.

If the plan does not specify a hierarchy I would think prorated/weighted split is most reasonable. So $500 would be $333.33 pre-tax and $166.67 Roth, +/- a penny on either side depending on how you round.

Yes, unless the plan also has a true-up provision or otherwise allows calculation on annual basis.

Those penalties were magnified so additional revenue could be manufactured, real or imagined, to offset the cost of SECURE (or maybe CARES). I wonder if the government tracks the actual revenue raised from these changes during the 10-year budget period versus their projections used to get the law passed. Like pension contribution relief, which was supposed to reduce pension contributions and deductions to increase tax revenue. Who is most likely to cut back on their pension contributions? Companies losing money (so paying little or no taxes) that don't need deductions and tax-exempt NFPs that don't pay taxes - so all that did was further weaken already under funded plans which further stressed the PBGC and likely raised very little of the projected additional revenue. Sorry, didn't mean to go off on a rant, talk about tangents, or as my wife and I say to each other in such instance - squirrel!

and then you can all chant "here comes the Judge!"

If normal plan administration calls for paying out this person now you can pay and forfeit, including an involuntary cash out if permitted. However, given that today is 10/21 and this person will need to get the NOIT (due by 11/2), unless a cash out can be done, I would not expect this person to elect a distribution knowingly that would result in 40% forfeiture.

If not, the ex-spouse should put the plan on notice and get one in the works asap.

There is not a deadline/due date. If an IDP has never received a D-letter then it is eligible to apply for one at any time. However, submitting within a certain time after a new plan is adopted can afford the sponsor a remedial amendment period to correct any deficiencies without penalty. If a plan waits 3, 4, or 5 years, for example, and then submits and there is a deficiency beyond the applicable provision's RAP (or whatever the current terminology), then I think you're looking at audit CAP.

Yes, you need more info, as in who owns how much of each company. There is an optional transition period for coverage and nondiscrimination that may be applied after a transaction that creates or eliminates a control group, provided certain conditions are met. The transition period includes the year of transaction and the subsequent plan year.

Good point, did not even think about that.

That should be the first check. Concerning operational failure or not, it may be that the plan was followed but the CBA was not - although I think a union rep would have been all over that. If plan contribution language is flexible then maybe the only issue is vesting and maybe no one has been directly impacted yet, hence so material conflict between operation and CBA. The 2018 thread Lois provided has a lot of positions/arguments/disagreements but no true consensus, although I think most thought the plan document must govern. If you have nothing else to do this afternoon you can read it but otherwise let's cut to the chase - if the plan does not currently have language that incorporates for CBA then get it amended ASAP to comply with CBA.

The addition of the design-based safe harbors (3% NE or SH match) for the most part, in my opinion, rendered the QNEC and QMAC obsolete. There are many advantages to the SHNE or SHM compared to their "ancestors" and as Bird chirped, we're just scratching the difference.

But they'll be hired primarily to audit and harass all the low income service industry workers, if you can believe certain political commercials, so retirement plans should be in the clear!

The IRS position is that the tax treatment of distributions received in a prior tax year does not change because the retiree received and had use of the funds. Any repayments of prior distributions in the current year can and should offset any otherwise taxable distributions paid in the same tax year. Any additional amounts repaid above and beyond current year distributions (or if it was a lump sum that was paid in a prior year and no future payments are being made) may be deducted under IRC Section 165(a) as a miscellaneous expense to the extent such amount exceeds 2% of AGI. See IRS Revenue Ruling 2002-84. This is not tax advice, the parties-in-interest should consult their own respective qualified tax advisors. However, they should confirm that current year distributions will be offset by current year repayments on current year 1099Rs.

As David linked this had a recent discussion, but basically you need to see what the plan document says. Some have automatic rescinding upon divorce others do not. If the document does not automatically then the participant would need to change his/her beneficiary designation - and should do so ASAP. I would suggest the participant update beneficiaries after divorce in any event, regardless of what the plan says.

Agree with you that EZ instructions do not seem to support prior TPA's position. Being a C-corp with multiple owners seems to kick it out. Instructions say an S-corp 2%+ shareholder is considered a partner in a partnership. If that applied to C-corp as well then the instructions would have stated such.

Which even if 1, 2 and/or 3 apply and it is a CG, I believe pension legislation under consideration could change that in the future (probably only for 2 and 3 is my guess). So this could go from CG to not CG w/o anything (other than law) changing, just be aware. Also, if using a vendor's branded "solo k" product, make sure it allows for other participating employers.

Interesting, I guess it shouldn't be surprising that Internal Revenue Code, website and publication are not consistent among each other - maybe some of those new 87,000 agents can rectify that!

Forgetting about all the reporting concerns, isn't anyone bothered by the "rollover" into the same/source plan? I did not think that was permissible, at least directly. You could go plan to IRA back to plan, but this, into the same plan? I would say no, unless it was a permissible CARES repayment. I googled the question on got this IRS website: https://www.irs.gov/taxtopics/tc413 Applicable excerpts: A rollover occurs when you withdraw cash or other assets from one eligible retirement plan and contribute all or part of it, within 60 days, to another eligible retirement plan. If a plan pays you an eligible rollover distribution, you have 60 days from the date you receive it to roll it over to another eligible retirement plan. You can choose instead a direct rollover, in which you have the payer transfer a distribution directly to another eligible retirement plan (including an IRA). "Another" eligible plan is NOT the source plan. If this said "an" eligible plan then maybe I would concede, but it does not - and Publication 575 which is referenced on this site (and as more formal guidance maybe carries more weight) has similar language.

First, you have a control group, so if the employee of company 2 is non-excludable then you have a coverage (and nondiscrimination) failure in company 1 plan. 1099 person is a contractor, not an employee, and cannot participate unless (s)he adopts the plan as a participating employer - which creates a multiple employer plan. I do not think a SIMPLE works, I'm not entirely sure because I do not work with them but would be surprised if the rule prohibiting any other plans did not apply to the control group. If they want dirt cheap admin for employee then maybe a SEP, but that would also be a control group plan that applied to owners and keeping 401k just for them does not work. They can't give the owners a Cadillac and provide a Yugo to their employee. They can skimp on admin cost across the board and get simplistic same level benefits across the board, or they can adopt a program that skews as much to the owners as legally possible for a reasonable employee and administrative cost.

https://www.aon.com/getmedia/f57621bb-9f2c-44f9-a088-7bb29a38da20/Schwallie-Defined-Benefit-Plan-Termination-Exorcising-the-Excise-Tax-on-Reversion-JPPC-Summer-2020.aspx Here is a detailed article. It looks like the excise tax is 20%.

Does the plan define "active participant?" If not, and depending on usage elsewhere in the document, I think the PA could interpret as strictly or liberally as desired provided such interpretation is reasonable. For example, "active participant" could be deemed to mean any participant currently employed by the plan sponsor. Just a thought, if allowing the RO is desired.

Thanks Luke, good to know. Yes, those are some weird rules. It's not like participants only earned vesting service for years in which profit sharing contributions were made.

Agree with Bird - what you end up having is a "complete discontinuance of contributions" which should be referenced in the plan document and is somewhat like a partial termination but with respect to current active participants who must be made fully vested. It is likely in the plan termination or partial termination area. I'm not sure if any terminated participants without full vesting who have not yet forfeited non-vested balances need to be fully vested, but I expect at least one of our very knowledgeable colleagues on this forum knows that answer.

Yeah, I saw that as well, and chuckled at the Section 89 reference, that's how old this was.