Employer pays distributions

[imchipbrown]

Employer paid two employees their Profit-Sharing distributions from company account.  Any fix?

[K2retire]

Deposit it to the plan and try to get it back from the employees.

[RatherBeGolfing]

Pooled plan?  Treat the distribution as distributed to the participant and a contribution to the plan.

[Mike Preston]

Pooled plan or individually directed.  Might require a bit more administrative gymnastics if the latter, but still doable.

[BG5150]

I'm not sure what went on here:

Did the company pay for distributions from the plan out of their own pocket first? Like, termination or in-service distributions?

Or did the company give the participants their profit sharing contributions right to them instead of putting them into the plan?

Some companies call their profit sharing contributions to a plan a profit sharing distribution (because they are distributing company money among the employees/participants).

 

[imchipbrown]

Pooled account plan.  No other contributions for the year (2017).  I prepared distribution paperwork and employer wrote checks from a company account.  Now he wants the plan to reimburse the company (no WAY)!

If I treat as contribution/distribution, I think I need to allocate the contribution to all eligibles.(?)

[imchipbrown]

These were accounts from long-time participants.

 

[BG5150]

Does the ER trust these people enough that if plan disbursed money to the participants, the participants would pay the company back?

[imchipbrown]

Good question BG and one I'll ask right now.

I'll get back to the board with the events.

[imchipbrown]

The terminees will take Plan checks and endorse them to the company if asked.  They are long time "good-guy" employees.