CJ Allen

Not a substantive difference, but EACA must comply with QDIA requirement; however, that wouldn't seem to be a big deal-breaker.

From the brief description, it seems the PEO is filing as a qualifying single plan and each employer is adopting the PEO MEP under the MEP's EIN & PN. If so, the employer plan would begin a new plan effective with the ending of participation in the PEO MEP. Assets transferred therein would be reported as a merger of the PEO MEP assets. The new plan would have the employer's EIN and a PN based on any other plans (001, 002, 003, etc) that may exist or have existed previously under the EIN. That is, as hr for me indicates, you shouldn't reuse a previously used PN for the same EIN. Your plan effective date on the new single employer plan shouldn't be dependent upon when assets transfer -- the effective date may be earlier.

retroactive amendment or payment of lowest balance loan -- leaving 2 loans -- as corrective measure.

Loan is a special asset of the plan as is the cash account for receiving contributions, disbursing participant withdrawals, and processing transfers between plan investments. If you go to the balance transfer/reallocation screen, I doubt "loan" comes up as an investment option of the plan for asset transfer -- just as "cash" is not an investment option. Also, you can't transfer a loan note to another investment as there is no $$$ to transfer. Even if you wanted to pay off the loan, you'd have to take a withdrawal of other investments to repay the loan -- you couldn't just transfer funds from investment to pay the loan. However, since loan systems are usually integrated with the record keeping system, the repayments are deposited as withdrawn. It would seem you'd have to refinance the loan to change the sourcing of the withdrawal and repayments to options available under the plan at the time of refinance.

My concern is the $250 deposit to the plan would have needed an allocation allowance in the plan document for contribution to the tax exempt trust. Absent an allocation methodology, the $250 would be considered an invalid contribution needing to be returned. Documentation regarding the plan expense becoming an employer expense when plan assets went to $0 would be necessary to disclose why the returned contribution is less than the original contribution, plus earnings/losses.

Generally, compensation includes all earnings while eligible in the controlled group. In this instance, 1 W-2 would mean 1 employer and 1 compensation including all divisions. However, if the Plan Administrator interprets the compensation definition to exclude division C, the plan excludes division C compensation for all participants, and the plan allows & passes the compensation ratio test -- you should be OK.

I agree with Luke & JackS. The waiver of a death benefit to go to the children is separate from a distribution election. In a distribution situation, the beneficiary form to identify a Designated Beneficiary upon the employee's death is of no consequence. The distribution election not only involves funds potentially not going to the beneficiaries, it creates a single sum distribution option that could affect the spouse and the named heirs negatively.

That's possible, but not all companies will allow the money back to the plan. However, if the receiving institution understands it's an excess contribution / ineligible rollover to be sending back, there's a very good chance they will distribute as a non-deductible excess contribution with no taxation.

The IRS, generally, considers the distribution from the plan as satisfying the RMD requirement, except the RMD was erroneously rolled over. The distributing plan needs to show the RMD distribution separate from the rollover distribution, and communicate to the participant the necessary information to remove the ineligible rollover from the receiving firm. There may be difficulty if the distributing IRA wants to, additionally, tax the distribution.

If using current year testing method, and plan allows, there could be a QNEC option that gets rid of the distribution excise tax.

It would be fine for prospective employees, but I'd be rather cautious under "Universal Availability," as it doesn't follow the same type of rules as 401k type coverage requirements. In the Notice, there's clarification in ".02 Part-time exclusion" that concerns me from a literal standpoint. Specifically "The effect of the OIAI exclusion condition is that once an employee does not meet the part-time exclusion conditions, whether in the initial year of employment or for any exclusion year, the employee may no longer be excluded from making elective deferrals under the part-time exclusion." I would take a position that for the part-time exclusion to omit an employee under the terms of the Notice and that of Section 1.403(b)-5(b)(4)(iii)(B), the plan would have needed to exclude part-time employees during the times specified as excludable in the Notice and Regs. In this, I agree with the rest of you that this is fraught with risks from any misstep.

That seems to have been the point with the IRS notice, and support for our original claims that once eligible, always eligible for purposes of part-time employees.

The participant would be allowed to request any information regarding his specific account. However, there would be no extension of rights on another participant's (alternate payee or otherwise) balance or information. The only recourse would seem to be the participant requesting the information from the ex-spouse/alternate payee.

New Notice 2018-95 may be applicable here. https://www.irs.gov/pub/irs-drop/n-18-95.pdf

If the employee left for other employment and is being "brought back" after termination, it would seem to be a more supportable argument as opposed to someone being "on call" and having no other employment. Whether this arrangement is truly a separation/severance of service or could be considered a 'sham' [non-paid vacation] to obtain qualified retirement plan funds should carry a heavy consideration due to tax consequences of disqualification or penalties/sanctions. As indicated, all facts & circumstances are to be considered by the Plan Administrator and all risks should be contemplated in terms of how this transaction may be viewed by the IRS. I've been involved with a distribution rejection letter where the Plan Sponsor openly indicated the plan participant's only recourse to obtain plan funds was to terminate and be rehired after the distribution.