Larry Starr

Bri has it correct; Ken's comment about establishing a pattern that would require a 3 year total allocation period is not correct.

I didn't see one single CORRECT answer. A retirement plan uses a trust to hold the assets. The trust is required to have it's own tax ID. PERIOD. Yes, of course you can ignore it and continue to hope that the IRS will never match income to tax IDs, but that doesn't change the answer. Ray, continue to do it the right way, regardless of what others have said.

NEVER believe anything anyone at Fidelity, Vanguard, Merrill Lynch, or any insurance company platform tells you. They are almost always wrong! If you really want to go with Fidelity, you have to work your way up the representative chain. Start by immediately asking (nicely) to speak to a supervisor and start from there. Eventually, you might get to someone who actually knows something....

Fundamental point: a cash balance plan is NOT a type of plan (ala DB, PS, MP), it is a type of DB formula. Thus, you have a DB plan where you are going to change the formula. It is not a plan termination, just a type of formula change.

Yes, a 5500 is required. Even if a new plan is set up for 2022 in January of 2023 (so no deferrals for 2022; ps only) and the client decides ultimately decides NOT to make a profit sharing contribution for 2022, the DOL has said a 5500 is needed. Second: a deposit to the plan is NOT required for the plan to be in effect; the trust may not have any funding, but it exists as part of the plan and normal filing rules apply. We always have and will use accrued accounting for lots of reasons (I think using cash is just one big problem since nothing ever matches), but if you are using cash you won't have any numbers in the financials, and that's fine. Also, regarding the comments about the extension (5558 form), remember that there is an AUTOMATIC EXTENSION without the 5558 if the employer's tax return is on extension and certain conditions are met. Note, this extension on filling the 5500 does NOT go to 10/15 if the employer's return is due 9/15 (partnerships and S Corps) Read this: If certain requirements are satisfied, your company may be able to rely on its federal income tax return extension to automatically extend the Form 5500 filing deadline. (As a reminder, the Form 5500 filing deadline is the last day of the seventh month after the plan year ends—for a calendar-year plan, the deadline is July 31.) An automatic extension for filing Form 5500 is granted to the extended due date of the sponsoring employer’s federal income tax return if three conditions are satisfied: (1) the plan year and the employer’s tax year are the same; (2) the extended due date for the employer’s federal income tax return extension is later than the regular Form 5500 due date; and (3) a copy of the application for the income tax extension is maintained with the filer’s records (it is not included with the Form 5500 filing).

I can't help but comment: THERE IS NO SUCH THING AS A SOLO 401(K) PLAN! There is just plan documents that are crippled and probably screwing up clients all the time (we know that's true: they often end up on our doorstep and we have to "fix" things). If he never hires a real employee, his existing plan document can do all you need to. If the plan was well drafted, there should be a provision that says HCEs don't need to get the Safe Harbor allocation (but you CAN give them a PS allocation if the client desires). You can amend the plan to eliminate the safe harbor provision, but it likely doesn't matter. Hopefully, as noted by another, there is the standard 1 year/ age 21/ semi-annual entry date provision, which a lot of so called "solo 401(k) plans" have hard wired as immediate entry; that's a problem if, g-d forbid, he hires someone for even one day. They also tend to be hard wired for immediate 100% vesting; also should be avoided just in case they ever hire someone. Again, the "solo 401(k)" document is just a crippled document with bad provisions. Bottom line: if your plan document is a good one, then just modify anything you really don't want and keep it. As far as moving it to a "new vendor", if you are just talking about the investment, a non-participant directed, pooled plan would make the most sense for this situation and those changes can be made to the plan document and you can invest the funds with anyone you want.

Help is exactly what you need, but not the kind offered here. You need to talk to your employer and ask them who you can speak to at Wells Fargo that will explain basic investment issues. It matters TREMENDOUSLY which fund you go into; currently it seems that your funds are going into the Target retirement fund you mentioned, but you most likely have a number of alternative choices with the target fund probably being the default. Find out who at WF is available to provide some employee education, which is what you clearly need.

I see no reason why that wouldn't work; of course, the company has the ability to change the trustee at any point, so the day after the contingent becomes the trustee, he/she can be replaced using the same mechanism of a company resolution.

I'm thinking the answer is yes (actually, I'm sure of it!). And I'm not as concerned as Luke is on the issue of notice. I say you can stop anytime, just like you could eliminate a loan provision completely at any time without prior notice.

Which is exactly why we always recommend at least TWO trustees.

Isn't the only change regarding Roth accounts; if the plan doesn't allow for Roth accounts (only ONE of our plans provides for Roth), do you even need to modify your old form? I have not yet had a chance to research that question, but that was my initial impression.

To add to MoJo, you were both badly represented by your counsel. The judge's order is NOT a QDRO unless and until it is submitted to the plan and the plan certifies it as a QDRO and accepts it. It was a major fault to provide that it was not to be sent to the plan UNTIL one of you retired. Someone may have a malpractice claim against the lawyers involved, but it won't be pleasant.

It's appropriate to amend the plan, but just to make sure the plan doesn't still require a distribution even if there is no RMD distribution. Assuming your plan doesn't require a distribution unless it is an RMD, then for 2020 the LAW eliminated RMDs so you aren't amending for that reason.

You can't just assume it is not qualified. What is your reason for making that assumption (it may be wrong by itself)? You need to tell us WHY you are asking the question about the rollover since the question may not even be applicable. However, theoretically speaking, a transfer to a plan of money that IS eligible to be rolled over but the plan it is transferred to is not qualified would result in a non-qualified rollover, which means it should be 100% taxable at the time of transfer! Your supposition regarding the 6% excess contribution tax is, I believe, simply not applicable. It is a whole other problem! If it was a situation where an amount was subject to the 6% annual excise tax, which is cumulative, after a number of years, 6% will compound to 100% of his account value as an excise tax! Roughly, after 12 years, he would owe slightly more than 100% of the rollover amount!

Assuming you could write language that does the above automatically at his death, it is actually controlled by whoever takes over the contol of the business (the plan sponsor) at this death. That individual has the authority to appoint trustees and can appoint (or keep) the daughter OR replace her with someone else of their liking. We always suggest there be a second trustee just to avoid the problems of what happens if the single trustee dies and then we have to wait for some estate process in order to be able to appoint a new trustee. If it is a corporation and there are other corporate officers, then there is no problem, but a sole prop dies with its owner and the court would have to get involved to appoint someone to wind up the affairs. A second trustee can continue to provide trustee services without having to wait for the court. Separately, if the daughter is the natural beneficiary of his bounty, then he should ALSO make sure she is listed as the beneficiary since that cannot be changed after he dies. So: appoint her as a second trustee now; name her as beneficiary now (especially if the default beneficiary provisions don't already accomplish that).