CuseFan

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

I would be shocked if they didn't.

I'm not a lawyer nor an accountant, but here is my layman's take. Paraphrasing the facts as I understand them: an IRA purchased a home/real estate as an investment, the IRA owner did not use such property (either rented or maybe planned to flip), but the now engaged IRA owner plans to live in the property at some future point (after marriage) and so the IRA needs to divest/sell this property. The contemplated buyer is not currently related to the IRA owner, so I see no issue with the transaction provided any other rules for such are satisfied. If this was a friend, a cousin, a stranger, would there be any issue? I don't think so. An engagement for marriage is not a legal status as far as I know - it does not guarantee that a marriage actually occurs, and some engagements last years while others dissolve. What if he/she was just a boy/girlfriend, they did the transaction and then decided to live together without getting married. Something of this magnitude should be steered to a qualified tax attorney, but this was my not legal opinion.

agreed

It's kind of a "waterbed" issue - pushing down the interest rate increases the testing leverage of the DCP (where NHCEs get majority of their contributions) versus the CBP (where HCEs get majority of their contributions), but makes it more difficult to satisfy 401a26 and may require higher NHCE contribution credits - or the converse, where higher ICR helps 401a26 but makes NDT more challenging. That highlights the case for a knowledgeable actuary and/or consultant developing/analyzing the proper design given all the above mentioned variables in conjunction with the (prospective) client's objectives. (The fun part of the job IMHO.)

Agree as well - for brand new plans I thought the notice could be any time before effective date. Also, remember that the notice for 3% SH design is no longer required, it is optional. But I think the plan needs to be ready to start deferrals effective 10/1 as well. I don't think you could make it effective 10/1 but then not start taking deferrals until November because the admin wasn't set up - at least that's my understanding/opinion.

sorry, "while lower..."

Exactly, we have plans with fixed rates anywhere from 0% (yes 0% and have D-letters on that) to 6%. The best ICR choice depends on a lot of different variables and there are advantages and disadvantages to relatively higher or lower rates. Is it owner(s) only or are there employees covered, age(s) and risk tolerance of the owner(s), will it facilitate passing nondiscrimination testing, will it facilitate meaningful benefits for minimum participation, what are the investment advisor's recommendations? Some of these variables may be of little to no concern while others very important. Depending on the circumstances, we usually recommend 3% to 5%. However, lower while rates can support higher contributions/deductions, be careful of over funding relative to the maximum lump sum.

Interesting, thanks for the correction Doc! I can see the position where an employer says we'll pick up the RK expense for our current employees as an employee benefit that is part of their total rewards/compensation package but not for former employees who no longer get compensation from us, and see that as defensible assuming the required conditions are satisfied.

I agree with your assessment. I think the only way to change the distribution form on 2022 contributions is to delay that distribution timing to 5 years after separation.

My understanding is that you cannot charge fees only to terminated participant accounts as that would be a detriment to a valid voluntary election to take a distribution. That is, you cannot through adverse plan provisions coerce a participant to take a distribution, such as making only those accounts pay fees or (if otherwise participant directed) transferring accounts into a money market fund. Maybe that has changed as I'm long removed from DC administration, but I would tread carefully. Admin fees can be charged against everyone's account on some reasonable and nondiscriminatory basis, but as Bri said, these would have to be actual fees physically paid from plan assets. Big picture - why are they even maintaining such a PSP, average participant balance of $200, and paying admin fees for $17,000 in assets? That's crazy.

Match doesn't get out those small PS balances but does reward the new savers with a targeted allocation to cover RK expenses.

That could get some people out. When was that PS made and are these people vested? If it has been a few years and that has been the only PS contribution, they may HAVE to be made fully vested upon the complete discontinuance of PS contributions. Not knowing how RK expenses are determined, these people would still be participants just without balances, so included in testing, 5500 counts, etc. Assuming there is already a match, maybe an additional year-end discretionary match for these (assume NHCEs) employees equal to the annual RK account charge? Plan document would need to allow - would be easy if RK account fee was fixed dollar per participant.

Agree with Luke, need to review plan document language carefully, especially references to the annuity starting date. However, annuity starting date has a legal definition and it is different for benefits payable as an annuity versus a lump sum. For a lump sum the ASD is the date that all required conditions necessary to pay the lump sum have been satisfied - essentially, the participant is eligible for the distribution and a valid election has been made with the proper forms executed and submitted to the plan administrator, including spousal consent if required. It is not just the check-cutting date. For example, if all forms were submitted on 9/15 and participant was eligible to get paid then, dies on 9/25 before scheduled check date of 10/1, I think you can make argument that 9/15 was the ASD for lump, he was alive on the ASD and therefore pay the lump sum to his surviving spouse. I have seen a few plans that specifically address the issue of election then death before ASD, but they are few and far between (like large, complex, individually designed plans). Whatever the Plan Administrator decides/interprets (with your consultation) should be documented, including specific facts and reasoning, in the event of IRS examination and/or a similar future occurrence.

I don't care about pollution I'm an air-conditioned gypsy, that's my solution, watch the police and the tax man miss me - I'm mobile!

For DBPs, when we file a 5310 we typically suggest the plan sponsor wait to distribute until after the IRS D-letter is received. I don't know if there are any "iffy issues" on which you may want to wait for a D-letter or if the sponsor believes their plan is squeaky clean and no need to wait. This should be the plan sponsor's call with input from their legal counsel and maybe service providers.

If this is a new separate plan that started for the employer after leaving the PEO and are truly/technically over 100 participants at start of the year (check and verify under terms of the plan and 5500 instructions) then I think the 80-120 rule doesn't apply. That rule is for existing plans that flip flop over and under 100 participants.

And a filing was due for each plan the FIRST year that COMBINED assets exceeded $250,000, so make sure there aren't any delinquent filings requiring correction.

Every bonus I've ever received paid late Feb or early March has shown up on my W2 for the year in which it was paid. The employer may be able to deduct it on an accrued basis (I don't know, not my job) but that treatment does not apply to the employees.

Always defer to the accountant, but if companies are in a controlled group and such companies file a consolidated tax return, then I think the source of subsidiary funding doesn't matter. So if A&B are CG and AB files consolidated return (if not pass-thru) or H&W file joint return, it likely doesn't matter where the cash comes from. However, when it comes to determining an owner's compensation I expect you would have to allocate the expense to the appropriate business. I wouldn't think you could, for example, have wife's company pick up expenses of husband's company to facilitate increased compensation for husband (or vice versa). I don't know this for sure but that is what makes sense to me and I fully invoke CBZ's above disclaimer.

I can't speak to those providers, but our DB beneficiary forms simply say that the total for the primary beneficary(ies) must equal 100% and the same for any contingent beneficiary(ies) without any further stipulation. I read that case and, although it appears on the surface that the plan administrator's rejection of the non-compliant beneficiary form was harsh, if I remember, the non-compliance was communicated and participant had every opportunity to correct but failed to do so.

You have my permission to take the rest of the day off.

Maybe if this was limited to acquisitions and the buy/sell agreement specified (subject to notice provided to employees) this could be accommodated (though I'm not convinced), but as a general rule, how could you? I work for Ford, quit and go to work for GM - on what basis could/should my Ford 401(k) election apply to the GM plan? What if I'm not yet eligible? I don't see the difference here. Yes, employer B was acquired by employer A, but B had no plan at the time, and I don't see how a future event (acquisition) can reach back and effectuate elections from a plan that no longer exists. What if the acquisition initially fell through and so then was delayed another 6-12 months? Maybe this works if they had a DeLorean with a flux capacitor, but I don't think so.

Our wonderful Participant Success Manager informed us all that tomorrow, the Friday after Labor Day, is known in the industry as "401(k) Day" - does that make today 401(k) Eve? Just wondering.

agreed