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Although few employees take advantage, there is a 15 years of service special catch-up rule that is available in 403(b) that is not available in 401(k).

In my 25+ years in this business I know that the first rule is to check the plan document, so why didn't I? The plan document does address the issue and the selection for allowing "Participants who are no longer employed" the ability to rollover into the plan is not chosen. So I am in a potential gray area. The Plan Administrator of the old plan wants to accept the rollover and not put the rollover check into limbo for the next 3 months. I will get documentation when the rollover process started and get the Plan Administrator to either allow the rollover or amend the plan (which comes at a cost) to allow rollovers from participants who are no longer employed. Thank you.

A company was sold through an asset sale. The retirement plan was not addressed in the agreement. All employees started with the new owner on 12/1. We received a rollover check for a participant with a balance in the old employer's plan. The new owner has not set up a plan and I do not see anything being set-up for 90 days. Do you think I am okay processing the rollover check into the old plan? The rollover was initiated prior to 12/1, however, technically the old plan now has no active employees, so I am questioning if a former employee can make a rollover into the plan. A unique situation for the participant, who was not aware the company was in the process of selling. I would like to process the rollover, but what I like and what is correct may be different in this circumstance. Thank you.

FWIW - As prior posters have stated on this board, there is no such thing as a solo 401k plan. It is simply marketing gimmick created to sell plans. A "solo 401k" is simply a 401k plan with one eligible participant. "Solo 401k" plan documents still have eligibility provisions, allocation formulas, vesting schedules, etc. Why was the plan terminated? The new employee would have simply become eligible to participate under the terms of the current plan. The plan goes from filing a 5500EZ to a 5500SF. I don't understand the thought process with terminating an existing plan and starting a new plan.

I believe that the 3% flexible safe harbor plan design also requires an annual notice.

I used the company credit card to pay for the electronic filing late fee under DFVCP. Nothing went wrong, but in my experience it is just easier to dispute something on a credit card than it is in a checking account. However, I had no issues.

At some point I would guess that the the cost of maintaining multiple plans has to approach the cost of maintaining one plan with an audit. Another possible option is to combine the plans into one large plan and look at a PEP product. PEPs maintain a single 5500 and single audit, the cost is spread among all plan participants. There are pros and cons to be weighed with all three options.

Peter, I'm sorry for not including your excellent resource material.

In addition to Peter's references, now that you are in the 403(b)(9) Church plan business, ask your firm to purchase reference materials for possible future issues. The ERISA Outline Book, ERISApedia, or the NTSA publication "The Source for 403(b) and 457(b) Plans" are all excellent research tools.

Would it be possible to re-register the IRA in the name of the plan, and then begin to track annually as an outside asset? Although this would not solve the 1099R that was issued.

Participant is 35 years old with more than $220,000 profit sharing in her retirement plan. I do not come across that very often, nice. Sorry for the non-reply to the original question.

No, it isn't still alive. Just a copy on my "friends" standalone PC and 20+ years worth of ESOP history (and this old dog doesn't want to learn new tricks).

Yes, that makes the most sense. Thank you.

I wasn't sure where to ask this and after searching the forums I am guessing here. Does anyone still use FDP? I have a friend who is trying to run valuations using FDP for 12/31/20, and the old DOS based system thinks 12/31/20 is earlier than 12/31/19, so nothing will run. My friend is not sure if it is an FDP issue or a DOS issue. I know this is really reaching - for the youngsters, FDP was a recordkeeping / compliance software laid to rest around 2000 / 2001 (?). Thanks - if no one can help, hopefully this post at least made someone chuckle.

The original question was for an active employee, however is the plan permitted to make a distribution under NRA for a terminated employee? I have a plan that that uses age 59 1/2 as the Normal Retirement Age. When a participant terminates: Distributions for termination of employment - paid after a participant incurs two year break in service Distributions for death, disability, retirement - paid as soon as administratively feasible An employee, age 60, terminated employment. Does he have to wait for two breaks in service to receive his distribution or because he terminated after NRA he is eligible for a distribution immediately? The employer is calling it a termination, not a retirement. Thanks.

I have been getting the same calls about stopping the safe harbor match. It is very difficult to tell a client that once the safe harbor match is stopped, the top heavy provisions kick in. It may be less expensive to keep the match in some cases. Business owners want to back out deferrals already contributed in 2020, now they have losses on those deferrals, it is just a snowballing of events. Do you think ARA would consider asking for a waiver or exemption of top heavy minimum requirements for safe harbor match plans that need to stop their match in 2020 and become tested employee deferral only plans?

Thank you. I greatly appreciate the time you take to read and respond.

When processing new loan requests for daily valued plans, I'm curious how others are determining the maximum amount available. Assume a brand new loan, no previous loans. If a participant requests a $5,000 loan with a $10,000 balance, but the account is valued at $9,750 at time of processing, do you process the original $5,000 request or adjust the 50% to the new balance? The delay in processing may be due to receiving paper forms or else waiting for an employer signature or if there is missing information with an online request. Per the ERISA Outline Book; 4.d. Difficulties experienced by daily valued plans. Daily valued plans can experience significant swings in the value of a participant’s vested account balance between the time the loan process commences and the time the loan is disbursed from the plan. As a practical matter, how should the plan apply the 50% loan limit (or any lesser limit under the plan) in this context? IRS Notice 82-22 does not provide any guidance here, primarily because in 1982, when that notice was issued, daily valued plans weren’t on the radar screen. IRS Notice 82-22 does say however that “a valuation of the participant’s interest within the last twelve months may be used, provided it is the last valuation available.” Reasonable administrative procedures should be established to ensure that the most recent daily valuation possible is used. For example, the value in effect when the loan obligation becomes fixed (i.e., necessary signatures and consents are obtained) should be a reasonable approach in the absence of more formal guidance from the IRS. In addition, the employer should consider addressing the issue in the loan policy. An approach used by some employers is to set the plan’s loan limit at less than the statutory maximum (e.g., 40% or 45%). This isn't an issue with our balance forward plans. We use prior valuation plus contributions minus withdrawals, no earnings adjustment.

Thank you !

I have a corporation with two 50% owners. On the census, one owner is listed with $27,000 in compensation and 0 hours worked. When questioned, thinking there was an error in the hours listed, I was told that this is a year-end bonus for the owner, reported on a W-2 issued by the employer, and 0 hours worked is correct. The owner is not terminated and this is not any sort of severance pay. In prior years this owner has worked 1,000 hours and has satisfied the plan's eligibility requirements. The 50% owner with 0 hours deferred $6,000 into the plan from his bonus. I do not know if he can defer on wages with 0 hours worked. The adoption agreement counts "Hours of Service" on the basis of actual hours for which an Employee is paid or entitled to payment. Compensation definition is 3401(a) - W-2 Compensation subject to income tax withholding at the source, with all pre-tax contributions included. There are no exclusions from compensation. I could not find anything similar to this situation in the ERISA Outline book, ERISAPedia, or research on this forum. Thank you.

When a municipal authority does set-up and maintain a 401(a) plan, does their plan document need to be updated for law changes and restated every restatement period just like a qualified plan? I am a tpa in Pennsylvania. We provide services for defined contribution plans to a dozen small municipalities and authorities. These entities maintain their own plans, they are not part of the PA Municipal Retirement System. These plans do not file 5500's, they complete PA Act 205 every other year. We have always maintained their documents and followed the amendment requirements for qualified plans. Recently we have been asked to take over the administration for some PA municipalities. These municipalities did their own administration for 20 years. Due to recent retirement of the people who ran their plans, the new supervisor does not want to do these tasks. I am finding plan documents on vendor prototypes that haven't been updated since 2004. One municipality was running their plan from one sheet of paper listing their plan provisions. I have tried to research online and also in The County Commissioners Association of Pennsylvania and the PA Municipal Pension Handbook. They don't really specify the plan document requirements. I don't know if I can simply update these outdated documents and move forward or if they need to enter some sort of a correction program. I am leaning towards no program, as they aren't even on the DOL or IRS radar as qualified plans. As a side note - I wonder where this will appear, resurrecting a thread from 1998! Thank you.

Forget the accountant, how can you accommodate your client and strengthen your relationship? How old is the owner? Does he have any money sources other than deferrals and safe harbor? If you amend the plan to allow for hardship does he have an allowable reason?

I agree with Bird. As an unrelated note, I would love to read Larry's opinion on this situation. He has been absent from the boards for awhile. Does anyone know if he is okay? Sorry if this is not allowed to be asked and will delete if instructed. Thank you.

And when 410(b)(6)(C) ends at the end of the plan year following the year in which the transaction occurred, then what is the answer...

Thank you very much for all of your insights.