Luke Bailey

Lou S., I think the IRS would say they are keys for 2019, and plan top-heavy. I'm just saying that the IRS's position might arguably not be dictated by Code, and since not spelled out in regulations, not entitled to deference. I think the issue is who is the "employer" that the individuals have to be 1%, 5%, etc. owners of for purposes of 416(I)(1). Just not clear under Code or regs.

I've never seen a plan or participant loan promissory note that did not permit prepayments.

If the money comes from mom's personal funds and is not deducted, it would likely be a gift, unless there is a compensatory motive, i.e. he has to work extra hours at the company or stay employed by the company for a certain period of time in order for mom to pay it, in which latter case most likely jpod's characterization of constructive contribution to corporation's capital and payment by corporation to son would apply.

ldr and Lou S I don't think the answer is clear under the Code or addressed in the regs. Certainly, your analysis makes some sense, but to get there you, ldr, have to insert "(previous)", and Lou S you are turning "the employer" into "an employer." The application of the top-heavy rules in mergers and acquisitions is not covered directly in the Code or addressed in the regulations.

I think jpod is hung up on the meaningless of an agreement between a sole proprietor and him/herself. With a partner in a partnership, or a shareholder (even 100%) of a corporation, you have a legal person that the individual partner or shareholder employee can enter into an agreement with. You can't really have that between a sole proprietor and his/her sole proprietorship. Such an "election" is more like a New Year's resolution. Having said that, it's clearly the IRS's rule, and they're calling the shots on this. Probably better to think of it as a type of IRS filing or election that simply has a deadline. Sole proprietors do have to comply with deadlines, e.g. making contribution for year by tax return filing deadline.

It becomes pretty slippery and guidance-less, but since a 1099-MISC lawyer/former partner could/maybe he a member of a management services group under 414(m)(5) (if we ever get regs), then maybe not "retired." But much safer to treat as retired, especially if the work is not predictably substantial. If reported on a W-2 and substantial, and no break in work from when was a K-1 partner, probably not retired.

The rollover chart only tells you what can and can't be rolled over. A plan does not have to permit Roth rollovers, just like it does not have to allow Roth deferrals or in-plan Roth rollovers. Question of what the plan's terms say. Check the SPD.

jpod, I think that if a tree falls in a forest, it makes a sound even if there's no one there to hear it.

The same thing it would say for a partner in a partnership who does not know exactly what he or she will make for the year, and therefore how much he or she can or wants to contribute, but is required by his/her managing partner to submit (by hand, email, text, or fax) an irrevocable election by midnight 12/31 of year N: "I hereby elect irrevocably to contribute the greater of $X or Y% of my "earned income" [formulas may vary, but must be objectively determinable in only one way once earned income is known] as "earned income" is explained in the firm's 401(k) plan's Summary Plan Description (the "Plan's SPD") to the Plan for the N plan year." The only difference with a sole proprietor is that he or she would have an easier time faking it.

Don't disagree with any of the above, but would point out that the mutual fund's fees are typically divided into management fees (i.e., investment management, i.e. deciding what shares to buy and sell, and when) and shareholder servicing fees (i.e., dealing with the fund shareholders, which can be legion, i.e. individuals, IRAs, estates, etc.). The theory is that if a 401(k) with many participants is a shareholder, that greatly reduces the shareholder servicing that the mutual fund has to do, because most of it is actually being done by the 401(k) TPA. So it makes sense that the mutual fund would share some of it with the TPA. E.g., a fund's total fees might be 75 basis points, consisting of 50 basis points for investment management and 25 for shareholder servicing. The mutual fund gives 20 of the 25 shareholder servicing fees to the TPA, since it is doing most of the "real" shareholder (i.e., participant) servicing.

jpod, your powers of persuasion are so strong you had me going for a minute, but I re-read the reg. It specifically addresses sole proprietors and puts them under the same rule! What am I missing?

A sole proprietor (i.e., Schedule C business) can sponsor a SIMPLE IRA. Have to meet all other rules, of course.

I will add to Griswold's comment that the rules for determining whether service provider is an IC are objective and set out in regs, e.g number of other clients, not related to service recipient, etc. Need to review in regs; somewhat detailed.

Assuming it was 3% shn, I don't see how you can get it out of plan unless fits within IRS's "mistake of fact" exception, e.g. arithmetical error.

In this circumstance we typically amend the plan to provide for eligibility on closing date. In the absence of an amendment, you may get there through interpretation. Would depend on the acquisition document, maybe. My guess it would be harder both interpretationally and practically to interpret to say they come in 7/1. But would again depend on documents.

So if you take option 1 under the soft guidance that CEW points out, i.e., you suspend prospectively, AND, the plan decides that it will optionally apply the rule removing the 6-month suspension in 2019 vs. waiting until 2020 under the proposed regs, I would argue you're done, i.e., no suspension at all is self-correction under EPCRS. If the plan wants to keep the 6-month suspension for 2019 (why?), then suspend him/her now for 6 months.

Assuming the plan does terminate, or a partial termination occurred so that in either event full vesting is required, the issue turns on whether the participant still had an account. I think ESOP Guy's analysis is correct. If the plan doc says that the forfeiture occurs as soon as the lump sum is paid, then he did not have an account. If, however, the plan document states that forfeiture occurs as of end of plan year, or even worse if the plan document has 5-year suspense account rule, the participant had an account and should be fully vested.

I second Flyboyjohn's analysis.

Operational qualification failure of not following plan document. The correction is to return the excess amount. There are details regarding timing (e.g., EPCRS vs. VCP) and also reporting.

OK. Good luck, ERISAgeek111.

The payment conditions (quit for good reason or involuntary term w/o cause) meet the separation pay exception, but that only covers payments of up to 2x 401(a)(17) amount (so $560,000). The rest (either $40k or $600k, or possibly much more because of bonus) is not within the exception, so treated as a 409A plan. The issue is not exactly potential for manipulation, but whether the payments with respect to each year have fixed payment dates. Also, if public company make sure to comply with 6-month rule for amounts not fitting within separation pay exception.

I don't think the Code or regs or any other IRS guidance has a clear definition of "fringe benefits." Obviously, the concept goes way beyond Section 132. Also, the IRS Pub on Fringe Benefits (15-B) has a lot of stuff that we might not consider a "fringe benefit," and that might or might not be 415 comp, e.g. stock options. Other IRS materials even list "bonuses" as a fringe benefit. If your plan document excludes fringe benefits, I think you need to adopt a consistent policy as to what that does and does not mean and apply that.

Check to see if the 410(b)(6)(C) transition rule applies. I don't see why it would not based on your description.

Probably only if the plan sponsor took what amounts to sufficient corporate (or other, depending on their form of organization) to actually adopt the recommendation, which would typically require resolutions of some sort, with or without a proffered amendment. If not, then they just thought about it and never did it. All will depend on facts and circumstances. If a sole proprietorship, could be in LaLa Land as to whether adopted or not.

I have not followed the link and no little about this issue, frankly, but I would point out that there is a federal law that seeks to protect religious beliefs and would not be preempted by ERISA. There is no similar law regarding ESG, so bear in mind when you follow the link.