CuseFan

I thought that was applicable for the year of termination (ability to include or exclude), so in this situation means you would not include for 2020. I think you have to include somewhere - 2020 or 2021 based on the terms of the plan - and can't just ignore. But I'll defer to someone who sees this more often.

Document should lay that all out, especially if pre-approved, but you likely need to consult the basic plan document rather than adoption agreement. That said, I agree with your assessment - recently had similar situations that we resolved in that manner (we use FTW docs).

Peter, here are my thoughts: The employer has no economic stake in deciding whether to have or not have a cash out provision as all expenses are borne by the plan and trying to keep headcount below audit threshold is not a current concern in minimizing employee expense either, so the decision is one solely impacting participants. Reasons not to cash out: from the employee's perspective, smaller balances may be more difficult to invest similarly in institutional (or other favorable) share classes, etc., subject to minimums that may or may be attainable, subject to higher fees as noted, and maybe there are better (creditor) protections in a qualified plan compared to an IRA in their particular state. On the employer's (paternalistic) side, a cash out provision could lead to more retirement funds leakage with many former employees simply taking their cash outs and spending them rather than rolling into other retirement funds. The flip side is maybe the terminating employee wants some investment flexibility to choose specific stocks or funds not available in the plan and/or convert to Roth. Assuming there is a voluntary option for terminated employees to get distributions, those who wants their funds for these reasons can get them, so no need to cash out. All that said, I think the biggest reason to consider cash outs is the missing participant problem as employers and former employees lose track of each other over the years, and the smaller the balance the more likely that happens.

I thought any separation after NRA was considered retirement regardless of the circumstances, but agree that you should consult the plan document (that's almost always the first answer to any question).

Is this just so all terms get the PS or is it also to satisfy nondiscrimination testing? If the latter, those contributions would need to be vested (whether fully or partially has been debated in the this forum before). That is, you can't 11g amend to provide a contribution to pass testing that will just be forfeited after it is made.

My understanding is yes and yes, but I am long removed from administration of these. Probably needs to provide some documentation to IRA custodian as well.

Never hurts to confirm rather than assume. Although cleaner, in-plan Roth conversions aren't absolutely necessary as after-tax withdrawals can be made and rolled into Roth.

If plan document says forfeit non-vested balance at the earlier of distribution of vested balance or 5 consecutive one-year breaks in service (typical), then anyone not fully vested that is paid out before the plan termination date should forfeit their non-vested balance.

Agreed, and w/o delay because this is on the legislative radar, and even though no restrictions were enacted currently that thoughts of such are not likely going away.

exactly

Partners get K1s, independent contractors get 1099s, but that doesn't mean the entity(ies)/employer(s) are going it right. Who is (are) the employer(s), what is the tax structure, who are the owners, do they have earned income or compensation from the employer and who are the employees? If you have multiple employers, what is the relationship between them? Answer those questions and then you can determine the retirement plan options. And if the income reporting does not properly match the corporate tax structure, you inform them thusly and if they have no interest in proper accounting you punt, not worth the headache IMHO.

Agree - do the accounting combining everything as if it was properly calculated and communicate the issue/risks as noted by Peter. Not sure about a conference, but do specifically remember an ASPPA webcast by Darrin Watson (I watched recorded session) where he specifically said partners in a partnership getting a W2 is wrong, outside of the context of Luke's excellent sequential point.

110% rule applies regardless and would apply to beneficiary if this unfortunate situation becomes a death benefit.

Then you are required to include the person in your coverage and nondiscrimination testing. But on the plus side, if no other 401(a) benefit then don't need to give them gateway.

Yes, that is one of the downside risks w/ROR ICR.

old table for 2021 distribution calendar year and new table for 2022 distribution calendar year and beyond.

Exactly, but why not amend PS into a 401k and avoid the added expense of plan termination and new plan implementation? Having an asset base at the start may help 401k pricing as well.

Green - this is the key, it is not usually automatic (read the document) that all members of a CG are covered by a plan, usually each separate affiliated employer must adopt as a participating employer. If not, no employees or owner comp from non-participating companies can be included for contribution determination (but included for coverage and nondiscrimination).

Always the first and best advice - RTFPD! (Would probably significantly reduce the number of questions we see in this forum.)

The partners are still self employed, so the source of their TH contribution doesn't change compared to ordinary profit sharing.

I'm guessing LLC is disregarded entity and Joe is considered owner and so you have an exempt owner/spouse plan, but interested in what others more knowledgeable in these intricacies think.

Exactly - employer contribution and income thereon gets forfeited. Plan document usually tells you what to do if an employee is mistakenly included or excluded.

Facts: married couple, they contractually agreed to waive each other as death benefit beneficiaries and to consent to the other's waiver as required under ERISA. The only concern of each plan is that the proper QPSA or (DC) similar election forms and consents are validly executed. It's up to the blissfully (?) married couple to fulfill their contractual obligations to each other. If one has to go to court to secure compliance from his/her spouse, so be it. One thing I know for sure is that I would not want to be living next to this couple!

IMHO

And can later be re-opened, unless the house is torn down (plan termination). Just a difference of opinion on the semantics.