Larry Starr

Forget about "seasoned money" at all. Unless he wants a taxable distribution (which is what a seasoned money use would be), you need to comply with the incidental insurance rules (the so called 25% or 50% rules - depending on the type of insurance purchased). And if you tried to use the seasoned money concept, you do have to comply with the other distribution restrictions (like the 59 1/2 rule).

It's really pretty simple: there are NO RMDs in 2020. Any distribution is something else. It's not optional. If the employer wants to provide for the now allowable distribution, they can, but it's not an RMD in any case.

Wouldn't surprise me if that's another thing not explained in the original posting. PLEASE PEOPLE: tell us all the details when you have a question!!!! If that is what he was thinking of, it would be an "issue" but the answer is the same. He is NOT an employee of someone else; can someone who is NOT an employee participate in another employer's plan? We all know the answer to that now don't we?

Yup.

Simple: no they are not. And if someone took their 2019 distribution in 2020 but less than 60 days ago, they can use the 60 day rule to put it back if they would prefer not to have it as taxable income this year.

Not enough info. Of course, we start with "what does the acquirer want to do?" Since you say it was a stock sale, in fact the company was not "acquired", there was just a change in who owns the stock. Therefore, the same issues that would always apply if your client called you today and said I want to terminate the plan apply. Nothing special because it is still the same employer with no change.

A perfect example of why our loans (the very few we have) always require salary deduction repayment. How was this set up that allows the employee to skip his payments? Sounds like he is a real PIA!

A 3508 direct seller (it would have been nice if the OP explained this) is a real estate sales agent. This is a plain vanilla situation; nothing special or complicated. They are independent contractors and can set up their own retirement plans. I have a bunch of them. The plan you set up has to have language dealing with a self-employed person compensation calculation, and deferrals are certainly normal for a sole prop. Assuming the agent files as a sole prop (he could also have his own corp, in which case he would have to pay himself a W-2 and everything would be normal), he has a Schedule C and all the normal rules apply. Nothing special here.

Bird is correct; the plan can extend the term of the loan for up to one year.

*I* determined that we meet the financial operations of the MA advisory list, so that's all we need. If accounting firms are specifically listed, I don't see how we could not fit the same bill.

We don't qualify; we have 8 plus a second remote actuary.

Less than five WHAT?

No withholding on IRA conversion to Roth IRA. Reported as taxable income by the IRA custodian via 1099R. Taxes paid as normal (with the timely filed return). IRA owner may need to make estimated payments to avoid penalties on both Federal and state income taxes, but the standard rules for having to make estimated tax payments apply.

You got it!

Well, I did read it even though it was still TL ?. But I'mm not sure that added anything to this thread that hadn't already been said earlier. We pretty much all recommended that the OP needed more facts; that our varied analyses were based on the assumptions we had to make and listed; and that she might have to hire her own lawyer to perfect his rights. Nothing has changed.

There certainly can be some "third state". Here are the THREE categories (historically): terminated (and will be paid AFTER the year is over and the valuation is done); employed with ongoing compensation for loan repayments and therefore eligible for loans; "employed' but on leave of absence/furlough and NOT eligible for loan because not currently being paid. The question is whether we should change our procedure with this new one year loan repayment option. Until our plans are amended to incorporate an allowance for a loan for someone who would qualify for the one year deferral at the time of the loan, we just won't be using that interpretation. But your mileage may differ!

No, I would not. I said "almost all of our plans..." but not 100%. I don't like Roths either, but have written articles talking about when they do work well. The truth is we have very few plans like that. First, one would question whether it made sense for the spouses to take $100k each instead of one of them taking just $27,000 and maximizing his deferral at the max and the rest of the income going to the other spouse. That avoids about 15% in SS taxes on a significant amount of money. Then, we are normally maximizing at least one of the HCEs at the 415 maximum. And, the 3% safe harbor is very often paid for in the first year of the plan by NOT giving the employees raises for one year (especially if the raises were in the 3% range). And if we are maximizing an owner or two, the extra 2% (gateway), if truly paid by the employer, is only $6k out of their pocket. With $500k of compensation, they will be able to afford $6k. Even though it might look like the employees are only paying for their 3% for one year, in reality they are paying for it FOREVER, even as to annual increases in future years. So it costs the employer NO additional income for the TH/Non-elective SH, which we also get to use for cross testing, and the employees start accumulating some real money in the retirement plan, the employer is a MUCH BETTER EMPLOYER than all those others because these employees are going to get the employer contribution EVEN if they don't defer a penny, so we are not discriminating among our employees based on their own economic situations. I have even more examples for the client about why the 3% non-elective is much better for the owners and how we can make it work for them. Have been doing this for many years (I was part of that small group of ASPPA top guns that actually devised the safe harbor concept for Portman/Cardin oh so many years ago); it's also why almost all of our 401(k) plans are 3% safe harbor. The 3% nonelective with a payroll of $300k would only be $9k a year, and if taken out of salary increases, isn't really costing the employer additional dollars.

Valuation Date, as a defined term, is almost definitely the last day of the plan year. But it doesn't matter because the language included above clearly provides for additional valuations that would supercede the defined Val Date.

I would suggest the language is somewhat confusing, but reading it in context with everything that goes before it about not overpaying or underpaying lead to no other conclusion. My plan language is basically the same, but without that stupid clause which will only raise issues. Again, remember, this would have to go to court and the courts give all the leeway in the world to the plan administrator's interpretation and is loathe to step in and apply its own interpretation unless the PA interpretation is so far out of reality that they can safely do so. Lots of ERISA cases to this effect. And I would simply say (again) that the payee's right of distribution is only a RIGHT when the PA determines that the value is correct via an interim val, if so determined.

I agree that the Kennedy case is not on point and the theory doesn't apply to this set of facts as presented to us.

Just to drag it out a little more.... ? We also don't have a problem; almost all of our 401(k) plans use the 3% nonelective SH provision, because we ASSUME it will be top heavy, if not immediately, then very soon into the life of the plan. I often tell clients: "Top Heavy isn't bad, it's good. It means you are getting most of the money in the plan, which is what you told me you want. If the plan is not top heavy, you should probably fire us because we have done a crappy job for you." Most of the plans that you describe usually end up being a SEP or even a payroll deduction IRA program, in which the employer can pick and choose who is going to get extra money in their paycheck which they can contribute into their deductible IRA. That almost always provides enough benefits to meet what they are trying to do, and they don't have to pay us for anything. I agree that the vast majority of our clients WANT to get more money to the owners and don't care all that much about what the employees defer, and they are willing to buy in to the 3% (or 5% if general tested; gateway test).

Peter, I have pointed out elsewhere that the 100% option was an error in legislative thinking, but we got it anyway. I have also suggested that anyone deciding to take advantage of the $100k limitation might still not go to 100% of the account. As to whether its a violation, I guarantee they will deal with that issue and not incur the wrath of congress by playing that "gotcha" card!!!

Absolutely; we are preparing many of the same for our clients. I will assume that the plan as written provides all the necessary language to allow (no, probably, require) it as an appropriate fiduciary response to the situation.

We use Logmein https://www.logmein.com/ and it works fine with our Relius. However, we switched a number of years ago to ASP and it just makes much more sense than maintaining our own server and having to update. You should assume that they are going to eventually eliminate the in-house version. I give it no more than 2 more years. But I agree their response is abysmal.

"What" was going to happen? Someone not having all the complexity of our business definitions in their head? Sure, that happens in many of the posts. ?