CuseFan

w/o a doubt

I think restatements must be adopted by 7/31/2022. I'm not sure but I think it's the sponsors of those plans (not adopting employers) that have until 1/31/2023 to make corrections to their documents, but I could be wrong.

Last day of the seventh month, to be exact. So if payout was any time during the month of May, for example, the final EZ filing is due by 12/31 absent filing an extension (which would also be due by 12/31). And a final EZ filing is due even if the plan never exceeded $250,000 and never filed an EZ before.

How much older than 70.5 because RMD age is now 72, remember? Her RBD, not considering re-employment, was 4/1/2021, at which point she was re-employed and did not incur a break-in-service. That re-employment is now part-time I do not think matters. I do not think that a 2020 RMD would have been due either, even if not given a legal holiday. Maybe I'm wrong or overly aggressive - but the person was employed on what MIGHT have been her RBD and is still employed, so no RMDs in my opinion.

Even if he could do it, and it's not treated as a taxable sale, he shouldn't. Say his IBM stock is worth $50,000 with a cost basis of $25,000. By using it buy his policy from the plan, the URG and potential capital gain becomes ordinary income upon future distribution.

If this is an ASG and treated as one plan with one ADP test (or safe harbor exemption) then yes, 3% SH must be made for all eligible employees every year.

Insurers can and do write QJSA contracts for missing participants - terminating DBPs are faced with that a lot - but those are pieces of larger contracts. I think you'd have a very hard time finding an insurer to write one contract, but I don't know that. Yes, I think turning over to PBGC would be the best alternative and, if this were a DBP in the same situation, would likely be the only viable alternative. In the DBP space, the PBGC views an unresponsive participant as a missing participant, but I don't know if they make the same leap for DC plans.

Yeah, I could see that if it was imminent, but I would keep as flexible as possible while owner-only and then amend when needed, as needed, as the situation changes, and then this sort of hassle/inconvenience is avoided, but that's me.

No one is asking the obvious question - WTF would you do a solo owner-only 401(k) with a SHM?

If you are still employed then this was likely an error which you should discuss with both your employer and the plan service provider to have rectified (i.e., repaid to the plan). You didn't mention any 20% tax w/h attributed to your balance, which further makes this look like a mistake. David's comment above only applies if you no longer work for the plan sponsor.

Furthermore, if the new provider REQUIRES it, then that seals the deal IMHO.

Sponsor's discretionary decision and then the acts necessary to execute that decision are separate issues - like deciding to terminate a plan (discretionary action, costs associated therewith not payable from trust) and then doing all the required actions to complete the termination which are payable from the trust. Is adopting a new provider's preapproved plan absolutely NECESSARY? No, but otherwise they have an unsupported IDP w/o a D-letter. So can you very readily argue that it is fiduciary prudency to adopt new document and a necessary action to fulfill fiduciary duty? I think that is clearly the case and see no problem paying such fee from the trust.

Unless the plan includes lump sum as a distribution option, the Plan Administrator is not permitted to pay your benefits in that form. The direct rollover provisions you cite are generic statutory provisions and do not mean that the plan has a lump sum option. The plan section describing optional forms of payment will disclose whether or not lump sum is an option. Sorry for your predicament, but unfortunately the rules (if being followed) cannot be bent to accommodate you.

Partial terminations are facts and circumstances, with the presumption that a 20% reduction in actives constitutes a partial termination. I don't know if the sale of an affiliate would be eligible for the relief because I think you have to come back to prior employment levels within a certain extended period (that is, you're given an extended grace period to call back employees or hire replacements and avoid a partial termination). Also, nowhere do I see that a reduction less than 20% is necessarily NOT a partial termination, and the sale or closing of an affiliate/division/location is an employer-initiated action that results in a significant number of employee terminations.

Also, 401(a)(26) has some prior benefit structure requirements, but if you don't increase benefits (including excess assets) when it's only the owner left then you should be OK.

I don't that is accurate - I think it is based on applicable state bankruptcy laws which I know over the years that many have become more sympathetic to IRAs and rollovers from qualified plans. However, ERISA protections are national/federal so there is no question. If creditor protection is important to an individual they should research their particular state laws before executing a rollover (if remaining in qualified plan is an option).

Had a similar situation in 2008, a company with 2 or 3 owners and 40+/- employees put in a CBP just before the economy crashed in the great recession. They could not afford their first year funding or likely near future years as well and survive in business. It was definitely PBGC-covered, and I think their premium/filing was the only filing with any governmental entity at the time we approached PBGC to explain the situation (no IRS submission of plan and no 5500 filed yet, if I remember). They were allowed to rescind the plan and were refunded their premiums. I do not recall if benefit statements went out to employees in addition to SPDs. If PBGC-covered, then you could try that route. PBGC gets off the hook for under funded plan. Employees - the message is we can afford to keep you employed or we can fund the CBP, we would prefer to do the former and rescind the plan, any problems with that? BUT - if tax returns were filed claiming deductions for contributions that were never made, the first order of business is to file amended returns.

One word - lawyers.

Thanks Luke

Sorry - not all 100% up on EPCRS because I don't make mistakes needing it - LOL - Friday humor! Thanks for pointing out. Apologies to IRS, but until we routinely see timely EPCRS/VCP resolutions on the model corrections I'm not holding out hope for faster closing of custom situations. I'm curious to hear from our community on their VCP timing experience over the last few years, although maybe that's not fair given the COVID variable.

That depends on the wording of the amendment or the document. Some will say that existing participants (entered plan, whether deferring or not) continue participating but those who are not participants are subject to the (new) eligibility requirements. Some documents are silent in that regard, which then leaves it up to Plan Administrator interpretation. I do not recall seeing a document (preapproved version anyway) that specifically said the (restated) eligibility requirements applied to everyone, including those currently in the plan, but without the aforementioned grandfathering, I think that is a reasonable interpretation.

Correct, and it's not up to participant to close the account, upon plan termination it is the Plan Administrator. Tell this person that the account will be closed and distributed in X days and that 20% will automatically be withheld for taxes unless she elects differently pursuant to distribution forms already provided - that should get her at act. If it doesn't, then complete the distribution to complete the plan termination.

In addition to a slim chance for your desired outcome, you're likely waiting 18-24 months to find out.

If the 2020 5500 has been filed I would be very scared that the 2019 late letter would be imminent and suggest biting the bullet to incur the cost and file DFVC ASAP. Otherwise you risk a much larger penalty, which you've already copped to, that no manufactured excuse is likely to abate.

Heck, years ago when I was church treasurer I generated "payroll" for 2-3 employees on a spreadsheet, sent the w/h in quarterly, then generates W-2s and 941 at year-end using Social Security Business on-line. It was very easy, no cost, and did not take a lot of time. Add it to the spouse's job responsibilities and do things the right way.