BadgerDon

Bri: Yes, yes, and yes to your questions. Whether the napkin-note passes muster with the DOL in anyone's guess. Which raises another question I'm not sure about: does anyone know what the penalty would be for not providing a LII?

Peter: Thanks for your reply. While I concur with your comments, the options owner John is left with seem like a silly result. Certainly not the first time I've had to deal with a silly pension law, and I guess I just need to wash down the bad taste with a cool drink. Thanks again.

A twist to this discussion that I am grappling with, and am wondering what others would do. Sole proprietor John Doe with no employees establishes a one-participant plan on 1/1/2020 and makes contributions to a self-directed brokerage account (SDBA) with Brokerage Company. He later hires a couple of employees that become eligible for the plan on 1/1/2022. The employees aren't keen on the $250 fee for maintaining a SDBA and choose to invest their contributions into mutual funds with Mutual Fund Company. Mutual Fund Company includes the lifetime income illustrations on their quarterly participant statements, but Brokerage Company does not. We serve as the TPA for the plan, and John Doe is asking for our opinion as to whether he is required to generate a lifetime income illustration for his own account. John would rather not be bothered with it, and if it were up to him he wouldn't spend the $X in additional fees that he'll be charged for generating LII statements. Based on my understanding of the LII requirements, John is required to get a LII. That seems crazy under the circumstances, and I'm wondering if I'm missing something that would obviate the need for that to happen. Any thoughts/comments are appreciated.

Thanks for your comments, Bird. I concur with your logic.

Gary Lesser, I've been looking into the rules concerning the discontinuance of SIMPLE IRA contributions as they apply in an acquisition. In the situation I am reviewing, a 401(k) plan sponsor ("KSCO") will acquire another company ("ACQCO") in a stock acquisition effective 12/31/2021. ACQCO will cease to exist, and the former employees of ACQCO will be hired by KSCO effective 1/1/2022. KSCO is intending to cover the former ACQCO employees in its 401(k) plan effective 1/1/2022, and is planning on notifying those employees of that along with the fact that no 2022 contributions will be made to the SIMPLE IRA sponsored by ACQCO. I think this is fine and does not run afoul of SIMPLE IRA or 401(k) plan rules, but reading your Acme Company example gave me pause. Can’t the ACQCO SIMPLE IRA be terminated 12/31/2021 in this situation?

In the example above, say items 6a-6c are done on a cash basis and I show $390k for my end of year assets. That is, I don't include the $3k contribution made after PYE in my end of year assets. Assuming no ER contributions are made during calendar year 2018, do I HAVE TO report $0 on line 7a or can I choose whether to report $0 or $3k on line 7a? I'd like to report $3k on line 7a as the sponsor give us the contributions on an accrual basis, but my sense from the instructions is that I should use the same method of accounting for both item 6 and item 7 and do report $0 for contributions if I'm using cash basis for item 6.