Luke Bailey

Depends on whether it's birth or adoption, FormsRstillmylife.

LookingFORhelp, there's no deadline for serving a QDRO. If the money is still in the account, just send it again. If the money's gone, then heaven help you, although even then I would not give up hope if you have sufficient funds for a lawyer and private investigator. Either way, as Mike Preston stated, you need a U.S. lawyer.

austin3515, don't look a gift horse in the mouth, and don't ask or tell. The "no actual knowledge to the contrary, without a duty of inquiry" standard may seem light, but it is just for purposes of protecting the plan from disqualification and helping plan administrators avoid what would otherwise be a very fraught, intrusive inquiry of their employee. If the participant doesn't actually have a qualifying birth or adoption, they are still liable for the 10% tax on their 1040, although how the IRS will know given the plan's good faith reporting on the 1099R is of course somewhat theoretical.

If they actually build the house and live in it, they've "acquired" it within the plain meaning of the term.

As in a disqualifying feature under Treas. Reg. 1.401(k)-1(a)(1), et seq.

PamR, we had a long discussion of this on BenefitsLink a couple of years ago. The IRS publication (Pub 560) suggests that a self-employed person, including a partner, must make an individual calculation, based on his/her individual SE income, in applying the Section 404 deduction limit to his or her individual 1040. See especially Chapter 6 of Pub. 560, beginning on page 24, which unfortunately for the purposes of resolving the argument uses examples that assume a sole proprietor with no employees. This is probably what the CPA is looking at. I think there is a basis for this position under the statute and regulations. There does not seem to be any specific guidance on point from the IRS, or any court case, that would settle the argument. A clear majority of the practitioners on BenefitsLink thought that the Section 404 deduction limikt is applied in the aggregate, i.e., the partnership on its 1065 just has to stay within 25% of the total of the wages paid on forms W-2 to employees, plus all the SE income to partners, mix and match, and then it allocates the aggregate deduction out to individual partners in accordance with the partnership agreement. There is a good argument for that position under the Code as well, I think. This link should take you to the earlier discussion:

I agree with C.B. Zeller. If they had taken the plan and done a merger, then probably no RMD, because the individual would still be employed by the employer sponsoring the plan, but they did not do that.

I agree with Kevin C. Note that 414(v)(6)(A)(i) defines "applicable employer plan" for this purposes as the trust. The MEP has a single trust, even though there are separate "plans" in it for some testing purpoes. Treas. reg. 1.414(v)-1(g)(1) just says a "401(k) plan" without any further gloss, so supports as well, although less pointed than the statute on this issue.

I agree with C.B. Zeller. If you are outside the 404(a)(6) period, then you're just on the cash basis. 2021.

OK, EBECatty. I think we've got 'em outnumbered.

OK, I see what you're saying now, EBECatty. I think the two-year minimum for SRF applies only where the employee is electing to defer current comp or is agreeing to an extension of the SRF, so think there would be (a) 457(f) SRF and (b) a 409A STD, and not 457(f) deferral, in all of the situations you posit, at least under the proposed regs.

I would argue that you can probably unring it under the circumstances, but obviously don't have all the facts. The loan policy is what the plan sponsor makes it, within legal guidelines, so it seems to me a retroactive change would probably work.

DSimandl, I'm surprised that is lawful under your state's employment law, but I've never done a thorough review of that issue.

EBECatty, because under the proposed 457(f) regs arrangements that are short-term deferrals under 409A, but substituing 457(f)' SRF standard, are not deferred comp subject to 457(f), I don't think any of the examples you list would even be subject to 457(f), assuming they pay off within the short-term deferral period.

austin3515, what Ilene is referring to is the new law regarding the ability to roll over an offset if you come up with the cash to put in an IRA by the time your tax return is due, not being able to roll over an offset loan into the acquiror's plan. Based on the facts as stated in your original post, the grace period has not run out. Sounds like they have offset based just on the termination of employment. If the parties to the transaction wanted the employees to be able to roll over their loans to the new plan, and just pick up paying them off in the new plan, on their original schedule, which happens all the time in deals, they should have included that as a covenant in their acquisition. But I still think they might be able to go back and fix it if they have not yet issued the 1099-R, since the whole thing at this point is just an imaginary paper shuffle.

If it's really important you probably (depending on other facts and circumstances) can treat whatever action was taken in the software to offset as an error, undo it, say the loan is still outstanding, and then roll it over. Bottom line, if they wanted to do the rollover, they just shouldn't have pushed the offset button, which presumably at some point generates a notice of offset to the employee and a 1099-R. Otherwise, completely agree with everyone else.

I agree with all the above. I think the legal theory that supports it is agency. The employer is acting merely as plan's agent.

Christine, if I terminate in January, 2021, but do not provide a release until January, 2022 does the plan provide that I (a) forfeit the March, 2021 payment, or I (b) get two payments in 2022? If (a), I think you're ok, if (b), no.

rochelle, not trying to be flip, but with a question that broad, I would Google it. VEBA's are obviously not as common as 401(k), and the IRS's regulations for them are not as complete, up-to-date, or easily accessible. Over the years I have seen several good articles on them from private practitioners. Also, if you google "IRS VEBA," you will find some IRS training materials, but note that the rules have changed over the years, especially as to deductibility, so be careful on the dates of the materials. If you have specific questions about particular rules or provisions, the folks on this board may be able to help you with them.

Belgarath, what was the purpose of the "Appendix?" that could bear somewhat on the issue of which set of provisions would have precedence? I assume you've quoted the Appendix language verbatim. I have never seen such horrible drafting of a default beneficiary provision. And I mean that literally. It is subject to a variety of interpretations. All the individually designed and preapproved plans I've ever reviewed have always had precision at least on this issue, e.g. "if there are no surviving, then," etc., not commas and an "or," which could even be interpreted as giving the plan administrator discretion to choose. And plans always state per stirpes or, rarely perhaps, "equally." It makes a difference because with per stirpes (aka, "by right or representation"), if there were 3 kids and one had died leaving grandkids, then the deceased child's grand kids would share his or her portion, whereas with equally just the 2 surviving kids would take. If this were a big account and you actually had to apply it, there could well be a fight.

Belgarath, thanks. Very good to know (and another tiny strand in the beautiful tapestry of ERISA and the Code).

I think MIke Preston and C.B. Zeller are probably correct, but one could interpret 404(a)(6) as simply allowing you to treat an amount paid in the current year as "for" the prior year (sort of a combination of cash and accrual tax accounting, even for cash basis taxpayers), and not as permitting you to state on your tax return that you had contributed an amount that you had not, yet. In other words, you might want to wait to file the return until you'd made the contribution. In practice, I think a lot of partnerships do this, i.e., wait until the deadline to make the contribution, even though they give their partners K-1's much earlier and the partners file whenever they are ready, which may be before the contribution is made.

Understandable feeling, Belgarath, since the principle by which one employer, as a result of a transaction, can "hand over" sponsorship to another employer, if the two plan sponsors agree, is not really directly stated in ERISA or the Code, but is certainly implied by IRC sec. 414(l) and has been a consistent part of practice since the enactment of ERISA, and probably before. Technically, the employees do have a separation from service, so back when I drafted a lot of individually designed plans I used to include a provision specifically addressing the authority of the employer to transfer plan assets and liabilities in a sale of assets transaction. I think probably most plan documents do address that, both individually designed a pre-approved. Most do not explain to employees in SPD, however, and they probably should, as a qualification to the statement in the SPD that "you can get a distribution following separation from service." Right, but it would be, and would require full vesting and termination, if the two companies did not agree that the acquirer would take the plan over.

I guess it might seem acceptable if you've never experienced a large surprise medical bill from a private-equity owned medical practice.

Reg. 1.402(g)(e)(8) is clear that if the Roth excess contributions are not distributed by the deadline, they are taxed again when they come out. Double taxation of the contributions. Intended. Single taxation of the earnings, plus you get deferral, so maybe some offset to the negativity of double taxation. But practically speaking, how does this actually work? First, as others have pointed out from time to time, does the plan with the excess (and which plan is it?) segregate the excess so that it properly reports it as taxable when distributed? How would it know to do that, and where is the guidance telling them to do that, other than the just-cited reg that says in principle it's double-taxed? Moreover, what is the effect on W-2? If Roth, then the contribution did not reduce Box 1. So it's taxed there. When the IRS eventually sees the two W-2's, from two different employers, and then the Service center sends the notice regarding the excess, does it know that it is a Roth excess, or does it just tell the taxpayer they are making an adjustment to their 1040? Presumably the former, since there is a code, AA, for Roth. So the burden of making the intended scheme work is really on the plan, that may not even know about the problem? Seems like that's the case.