CuseFan

Make sure you are checking the correct section(s) of the plan document or AA.

An immediate lump sum to the A/P of a QDRO in such instance is only allowable if (1) the QDRO calls for it and (2) the plan allows for it. DB plan documents can allow for QDRO payouts of any amount at any time (but lump sums would be subject to any 436 or top 25 HCE restrictions), regardless of whether the participant is eligible for a distribution. Our pre-approved plans have that as a checkbox option.

If initial term was 5 years then I think re-amortizing is needed. If it was say 4 years and starting now completes payoff within the max 5 years then that might be OK. Or the employer could make the lump sum catch-up, but I think would have to include such in employee's taxable compensation.

I would just fix them and move on - it's only a reporting error. Unless additional amounts were forfeited applying the vested percentage a second time, which does not seem to have happened, nothing has been taken away from the participant.

On this basis I would argue a 1/1 count of 98 and no audit. Even on an accrual basis you could argue that if the residual contribution true-up was an accrued contribution as of the prior 12/31 that the payment thereof was a distribution payable as of 12/31 - so still not participants at 1/1, IMHO.

I remember a prior discussion thread on this with differing opinions but most opining that they thought it was OK. Someone better at finding prior discussions than me might post that for you.

Plans are either pre-approved or individually designed. Pre-approved plans can (and many/most? do) provide for individual profit sharing allocation groups. There may still be document providers out there that do not include this option for whatever reason, but in the small plan market this is becoming the norm in my opinion.

Yup, audit by checklist, gotta love it (or not)!

sorry, close watch on

Yes. The plan document should specifically say whether this is or is not permitted. If it is, as Effen alluded, there may be restrictions on the survivor percentage due to the minimum incidental death benefit rules of 401(a)(9).

Exactly, although I would expect an IRS agent to recognize that situation on their own.

And whether or not taxes have been filed is irrelevant regarding the make-up of lost earnings as I do not believe such is deductible.

Think about it....if that were the case then EVERY large plan that terminated would be filing an SF for their final year filing. So, terminated plan with 20,000 participants and $1B in assets at BOY, but zero and zero at EOY, sure, go ahead and file an SF and see what happens. Sorry for the sarcasm, but common...I'd be telling client to keep a close watch and that new TPA.

I think it's an overpayment under the terms of the plan and should be repaid. I do not see a reason the plan cannot and should not accept a check for $1,000 + earnings as repayment. Just be sure to document everything and make sure whoever is responsible for 1099 reporting has all facts as well.

Yes, unless you can use full year comp rather than DOP comp for your testing.

That was my very first thought, regardless of all the other issues. A RK that administers a plan to their conveniences/policies in contradiction to plan participant's best interests and IRS/DOL laws and regulations does not deserve this client's business. If they can't properly handle small accounts then they need to limit their clientele to plans w/o such, IMHO.

PSP = 401(a), would also include a DBP.

I am of the opinion that if still a partner in the partnership and still receiving earned income from the partnership, then still employed.

Restatement of terminating plan is not required but plan must be up to date for all laws (including SECURES, CARES et al) - so best way to ensure that would be a cycle 3 restatement. Not sure on timing, if you do before you distribute assets I think you're safe. Do not think stock or asset sale matters.

No and no - but potential coverage and nondiscrimination issues if they do not, depending on size of PR workforce relative to non-PR workforce. If you need a PR provider we have a group within our practice that specializes.

Interesting - those are typically issues addressed in a DOL audit rather than IRS audit. I can see the "communicated to employees" concern, especially if a relatively new plan or recently new participants - but if IRS wants proof plan sponsor handed out SPDs years ago then I think they may be overreaching. An affidavit, as Peter noted, certifying they have distributed SPDs might be the best they can do - how do you prove I handed you some papers a couple of years ago? Unless an employee can locate their SPD and attest to its receipt.

You're good, ignore the software.

only if allocation rates are broadly available, which may be your case

All the time

So each agent is a self-employed contractor. I suspect the group has some control on daily leased employee activity but any one agent most likely does not. Also, that employees are employed by the insurance company and not a PEO/employee leasing company leads me to conclude they are (still) considered employees of the insurance company. The alternative - you have a group of shared employees among a number of different self-employed agents which would be extremely messy. And in first paragraph you say agents want their own plans but then ask if these others should be included in the plan. Each presents a different premise - individual 401(k) plans or a multiple employer plan.