CuseFan

You are missing nothing - this makes absolutely zero sense.

Did the plan really terminate or was it just frozen? It doesn't sound like a plan termination because you are ultimately required to distribute all plan assets/benefits within a reasonable time and a couple of years is not reasonable.

If still PC, then either it's a C or S corp and a C wouldn't be issuing K1's so sounds like an S, and the Bird tweets correctly - not on W-2, not compensation/earned income. Simple rule of thumb question - are you paying FICA/Medicare taxes or SECA self-employed version on the income? If yes, OK for comp/earned income but if not, then SOL.

I would suggest adding loans as directed investment even if pooled investments, especially with the owner looking to borrow the max. That way, issues that may surface if payments are late, loan default, the interest rate/rate of return, etc. have no impact on other participants.

Yes you can do this, I have a couple clients that do. Need to make sure the after-tax contributions and money-type "bucket" are properly recorded and separately record-kept.

Yes and maybe, if you don't have high enough percentage of NHCEs in Plan 1.

No, the terminated participant cannot be prevented from getting a permitted distribution. The other two cannot get distributions until after they terminate employment or the plan terminates.

The IRS position is that the distribution has been paid and is a taxable event to the participant whose failure to negotiate does affect. That would lead me to believe it should now be part of the estate. DOL might opine otherwise, considering uncashed check still a plan asset, which obviously takes you in the other direction. IRS recently issued a Rev Ruling, not sure about DOL guidance but remember reading about their opinion concerning stale checks, but that's not quite your situation. I was my father-in-law's executor 25 years ago when he passed with an uncashed social security check or two and for the life of me I can't remember if I was able to deposit into his account (estate) or had to have reissued in three pieces to his surviving children. I think you have a taxable distribution to the now deceased participant and the funds are part of the estate.

I don't know that world, but I do know that you need to find an advisor you can trust and who demonstrates that (s)he will put the (all of the) plan participants' needs and interests first, will ensure the plan sponsor employer is compliant with the rules thereby also protecting participant benefits, and who knows and regularly practices in that area instead of someone who may only dabble in that field and/or puts their own self interest first.

There is double taxation on the loan interest because it is paid with after-tax dollars and is considered investment earnings and taxable when distributed, but not on the loan principal. Usually the amount of interest is inconsequential, but as Larry said - do the math (including how your assets would do if remaining invested rather than borrowed) to see how you make out.

Don't hold back Larry, tell us how you really feel - LOL! All kidding aside, I agree ROBS plans are almost always a very bad idea. In some instances they are just a bad idea (sans very). Also agree that protection is contingent upon being a qualified plan, so if all the i's aren't dotted and t's crossed, no PT's etc., then that is the basis where a creditor will challenge ERISA protections.

True, you could still be named beneficiary. However, some plans automatically invalid an ex-spouse as named beneficiary upon divorce. Also, many pension plans only pay a survivor pension to the spouse of a deceased participant, which would preclude payment even if you were named as beneficiary. Step 1 - inquire/make a claim for benefits from the plan and that may be all that is needed. If denied, step 2 is the QDRO and I would be fully prepared to continue/complete that process (which is allowed even after participant dies). Qualified retirement plans have specific rules and provisions they must follow, including recognition of beneficiaries, payment of death benefits and complying with QDROs - you just need to work with the Plan's Administrator and go through the process to get your benefits. Good luck.

No. You do need to communicate to participant(s) the plan is terminating including a 15-day advance 204(h) notice unless issued before if plan was previously frozen. A letter works, or you can use the PBGC format Notice of Intent to Terminate just for ease. Then your 30-day (or more) distribution election period. That's basically it. Of course, make sure the plan document is up to date for current law.

Individually designed plans of any kind are no longer on any cycle - previously they were on 5-year cycle. Interim amendments are generally sufficient. Major design changes or a series of substantial amendments would ultimately require restatement, but absent a major law change that probably rarely happens.

Q1 - cannot undo SEP as far as I'm aware. Also remember you cannot have another (qualified) plan if using the IRS model Form 5305A-SEP. Q2 - yes, you could deduct $30K DB in 2019, and then $170K in 2020 if room for such under the rules. Be sure not to physically contribute more than $30K to DB during calendar 2019 and be sure that the 2019 total MRC is deposited by 9/15/2020. The $70K deposited between 1/1-9/15/2020 should be clearly labeled required contribution for 2019 deducted in 2020. Any SEP contribution must not exceed 6% of eligible pay in 2020, and if you're not sure what pay will be it's best just to stop funding the SEP or wait until after year end.

Eligibility computation period begins the date employee first performs an Hour of Service, regardless of the effective date of the Plan, so by 12/31/2015 both Joe and Sue completed a year of eligibility service. Did they lose that service due to break in service rules? Clearly not. Were they employed on their first entry date following completion of eligibility requirements? Yes, both employed on 1/1/2020. Plan provisions should be fairly clear on this as well as vesting.

I had a large client years ago where this happened occasionally. I think you have to stop the payroll withholding and let the loan default. Remember, there is no statutory requirement that loan payments be made via payroll withholding, that just happens to be this plan's (and many plans') program. Some plans - like those using the MyPlanLoan product - have moved loan administration out of the employer's/payroll's hands into a third party direct billing system managed by the TPA/RK. If the employee takes a loan and then fails to make the payments, the loan defaults and gets reported.

Technically, I think you can only increase NRA with respect to future contributions or future participants but cannot uniformly increase for everyone and all balances now even though the actual impact on participants and administration is nil. It would make practical sense that should be able to amend because of that, but would that argument hold up with IRS? Employer may want 65 to present that as an expectation to employees in its written materials, rather than age 60, which is this only possible reason I could think of for wanting to amend. In that case, amending for future contributions could accomplish that message. Unfortunately, as is often the case, I think it's a matter of form over substance - but maybe this Administration's kinder, gentler IRS would accept substance?

Probably so the rules are uniform across plan types, and also not all defined contribution plans are participants directed quarterly statement varieties.

Agree completely. Fiduciaries can obtain personal liability (E&O) coverage for their breaches and mistakes, to cover their personal liability to the plan, but that is different from ERISA plan bond that protects the plan from dishonesty among those who handle assets (but not the identity thieves who dupe them). Cybersecurity is a huge issue and scammers have been attacking retirement plan accounts because the oversight and diligence is typically not up to the level seen at banks and credit cards, and perpetrated frauds can often go undetected for a much longer time because many participants do not regularly look at their accounts. I know RKs, including our firm, are banding together and sharing best practices and other important information on attempted hacks to safeguard our industry and our clients' retirements. Personally, as someone who has been paranoid about security and identity theft for a while, I look at bank accounts, brokerage accounts, IRA, 401(k) almost every single day. My wife thinks it's to keep tabs on her spending - but I assure her it's not (well, maybe just a little).

Circling back to the being a good fiduciary question, if he is personally able to invest in what he is also investing plan assets in - say retail mutual funds for example, if institutional class or collectives are otherwise available - it could be a potential issue. So yes, absent any conflict of interest, what he invests in outside the plan is no issue but he needs to make sure plan investments are prudent and expenses reasonable.

Be aware of potential 415 control group - if person owns more than 50% but less than 80% of multiple companies, there is not a control group for 410(b) or 401(a)(4) purposes, but that person has aggregated 415 limits among all DC and DB plans sponsored by such entities. If X owns 51% of companies A, B & C, and a different unrelated individual owns the other 49% of each then there is no control group but X has one $56,000 DC 415 limit and one $225,000 DB 415 limit combined among any plans sponsored by A, B & C.

Employee is/is not benefiting based on plan terms - if 1000 hours is required for an accrual, then not benefiting. Even with the holdout rule (which you can't 11g in) at 9/1/19 they come in retro to 9/1/18 and you still have a 2018 issue. So this RH is not a statutory exclusion and so your NHCE coverage is 50%. You say there are 4 HCEs with 1 excluded - but is that a statutory exclusion, a plan exclusion or otherwise just not benefiting? Because if statutory exclusion (including term <500 hours not benefiting) then your HCE coverage is 100%, not 75%. If your coverage is 67% then you can see if plan passes coverage using average benefits, possibly aggregate with a DC plan if plausible, or 11g an accrual to the rehire.

So, if one-time irrevocable election - not a salary deferral, but an "employer" contribution so still counts toward 415 limit. This is also the case if such contribution is a condition of employment. I have a client that requires all employees upon becoming eligible must, as a condition of continued employment, contribute 5% of pay to the plan and such amount is not considered a salary deferral for plan purposes (not sure about payroll tax purposes). Otherwise, salary deferral and all the baggage that goes with it.

I would do a missing participant-type search on the spouse first. As noted above, it is a statutory benefit for the spouse, and if spouse later appears looking for a survivor benefit, it is likely the plan gets sued for such not the participant.