CuseFan

Larry is dead-on here, just because a d-letter was received does not mean the IRS didn't make a mistake in not catching it, and they can subsequently reverse that oversight and make the plan sponsor correct.

The IC question, I think, depends on who has control over this person's work activity? Even if doing the "same job" as when he was an owner, that by itself wouldn't necessarily mean he is an employee now. As an owner, did he come an go as he pleased, have the freedom to complete various tasks according to his own schedule, and from wherever he wanted (home, office, road, etc.)? If he has autonomy in providing services to the business, I think he is a contractor. Certainly wouldn't hurt to get the opinion of accountant (if qualified) or legal counsel.

I fully agree - but to require someone to liquidate their meager retirement savings seems a bit draconian to me - unless maybe the person was deferring pay into the plan when they should not have been because they were getting SSI payments. I think this just highlights a huge dilemma we face in this country, how do you help people in poverty in a fair manner that enables them to escape poverty rather than ensuring they stay there? If I had the answer I probably wouldn't be ranting on BL would I?

By "matched with a SEP" in your title you mean paired with a SEP, not that matching contributions on 403(b) deferrals are made to the SEP, which would violate the uniform contribution requirement, right? Haven't seen that before, interesting strategy to avoid government filings.

So a person caring for a disabled child who is receiving SSI for such cannot save for retirement and have a meager 401(k) balance? What is wrong with this government? Give them enough to survive with public assistance and ensure that they will always remain on public assistance in retirement and, of course, these poor souls have no choice but to continue to vote those politicians into office or risk their primary means of survival. Those are my thoughts. Suggestions - there should be sufficient medical expenses to substantiate a hardship withdrawal.

It depends - if neither has any involvement in the other's business and there isn't a minor child, then my understanding is there is not a control group. If there is minor child, if I remember correctly (other posters can confirm or correct me), then there is attribution and a control group. Whether or not CG, you can have one DBP covering both - it's a matter of whether it would be a single or multiple employer plan. The bigger concern with a CG is if either of the businesses has non-excludable employees.

Exactly, it's like a DB plan - the normal form of distribution is an annuity - life (single) or joint (married - which must be waived with spousal consent, if applicable, in order to elect a lump sum, which may be rolled or taken as cash as previously noted. Merging, shifts that responsibility to the 401k plan for transferred balances.

yes, absent any specific plan language that would exclude the taxable portion of medical premiums.

Certainly and, as you note, that would make the issue moot. However, not everyone is so diligent about making/updating beneficiary designations, in which case the default death benefit payment to a spouse becomes problematic unless the plan clearly defines, either contrary to or in agreement with Federal law/Windsor decision. And there may be other spousal rights in the plan, likely more than legally necessary for a church plan because of the pre-approved plan language.

My FTW contact said they would update their AA format VSP first then their IDP format, with a 3Q release.

I believe IRS guidance is strictly facts and circumstances, but i also think they are quite clear there must be a true separation from service. In this case that may have happened at the time of retirement but clearly the employment relationship is no longer severed. If the governmental 457 rules will allow, I would suggest amending the plan for post-NRA in-service distributions, then this becomes moot. I see clients and their employees all the time having someone "retire" so they can get their pension but it's really just a disguised reduction in hours, and IRS is clear that is not a severance. If IRS came out with workable phased retirement rules, this wouldn't be an issue. In your case, I think the client's position and the IRS's position are different. Good luck.

Thanks

Let me qualify my answer by saying I do not practice in DC administration, but as a practical matter, I would record those residual amounts as distributions payable as of 12/31 and not include those assets or people in the year-end numbers, and make sure that the residual amounts have been paid out or take action now to do so. This was easy to do in the old manual balance forward days, not so sure in these press a button get a filing environments. JMHO

ACP test fails and we are now past the end of the following plan year - the statutory correction period. Therefore, sponsor is doing the one-for-one method via self correction. Correction method and plan document allow for forfeiture of non-vested match, but vested as of when - the end of the plan year to which the excess was attributable or as of the date of corrective distribution (for those vested)?

https://www.asppa.org/Portals/2/06-11-14 Presentation.pdf see beginning at slide 88. although not formal guidance, these were based on IRS responses at previous ASPPA conference.

Unless the last day (and/or hours) requirement is waived for death, disability and/or retirement, in which case someone could (activity would have to be checked) satisfy entitlement to a contribution very early in the year and effectively kill the ability to amend the formula.

good call!

Agree with Larry that the plan's general last day requirement would not apply here but that the plan could be amended for such an exclusion. A last day requirement is not a statutory exclusion so you have same coverage testing, but potentially fewer employees benefiting. Person is still employed and entitled to top heavy, as noted, if applicable - and this based on all pay, not just non-union pay, which would apply for safe harbor and gateway purposes.

The PA should issue the two checks as noted. The participant can refuse to cash the RMD check but might change his mind if/when he realizes he AND the IRS will get 1099 that shows taxable distribution - and make sure he knows that whether or not he cashes the check doesn't affect its being taxable to him.

Absolutely if someone was working on 12/31 and that was their last day, then they are entitled. Note that 12/31/2017 was a Sunday. If someone was working 12/29, and that was the last business day that the employer was open during the year on which employees could be working, that is your last day - was just reading that yesterday.

First, I think you should have paid the estate a lump sum, either the year after death or within 5 years after death. The rules should be explicit in the document. Payments to an estate cannot be rolled over. This was a simple situation that someone over complicated.

When REA 1984 was passed to provide for spousal protection, defined benefit plans were still very prevalent. Now, with DCPs being the primary source of most people's retirement, it may be appropriate to revisit additional protections. I don't know if QJSA rules for DCPs is the answer, but in this instance - forget about the filed for divorce part - participant could have taken LS and jumped town with his mistress before his wife even knew he and his retirement funds were gone.

Absolutely correct - if you have HCEs in 20+ tier and NHCEs in a lower tier (under 15 gets no more?) then you have an HCE getting a higher rate then an NHCE and violate the SH rules.

Except for mistake of fact rules - but those are different from "we screwed up."

You have continued interest and, if still employed, service credits post NRA. Suspension of benefits notice can get you out of actuarial increases, but only if still employed. Be careful, because low interest credits alone may not be sufficient post-NRA adjustments per IRS.