When a plan has automatic cashout provisions, and checks are being issued for under $200, it is my understanding that there is no withholding, and participants do not have to fill out forms. The plan's trust issues the checks and mails them to the last known address. Does the participant have to receive anything besides a check? A notice, letter of explanation, etc.? As a courtesy we will draw up something or other, but I wanted to know if there is a particular requirement or format or something we are supposed to follow.

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When considering controlled group or affiliated service group issues with respect to a U.S. corporation, is it true that one cannot simply disregard a foreign business owned by that U.S. corp? If that foreign entity employed U.S. citizens?

Got a question on "lost" participants and forfeiture of fully-vested benefits under Treas. Reg. 1.411(a)-4(b)(6): "Lost beneficiary; escheat. In the case of a benefit which is payable, merely because the benefit is forfeitable on account of the inability to find the participant or beneficiary to whom payment is due, provided that the plan provides for reinstatement of the benefit if a claim is made by the participant or beneficiary for the forfeited benefit. In addition, a benefit which is lost by reason of escheat under applicable state law is not treated as a forfeiture."

Treas Reg. 1.411(a)-(11) says that "Participant consent is required for any distribution while it is immediately distributable (i.e., prior to the later of the time a participant has attained normal retirement age (as defined in section 411(a)(8) or age 62)." (Exceptions being most plans have cash-out/rollover provisions under $5,000, and of course RMD at 70-1/2, payout at plan termination, etc.)

Treas. Reg. 1.411(a)-(11) says no "distributions" without consent (with those exceptions I mentioned), but is it just inferred that 1.411(a)-(11) also bans forfeitures of fully-vested benefits before then or those force out situations and someone can't be "lost" outside those force out situations? Assume the plan document follows 1.411(a)-(11).

Suppose employee X works 1/1 through 6/30 for employer A and defers the 402(g) limit in employer A's 401(k) plan, then goes to work for employer B and defers the 402(g) limit in employer B's 401(k) from 7/1 through 12/31 of same year. Assume employee X does not take steps to have any portion of the deferrals for the year from either plan distributed to him/her by the April 15 of the following year. If both deferral episodes were pre-tax, then the IRS aggregates the amounts from the W-2 data it gets from employers A and B with respect to employee X, includes the excess in employee X's gross income, and adjusts employee X's 1040. Because the amounts were allocated to employee X's pre-tax account in both employer A's and B's 401(k) plans, when they are later distributed (presumably, with earnings), it's reported as taxable on employee X's 1099-R's, so you have the archetypal double tax that you can only avoid by utilizing the process to have the excess deferrals distributed (notifying the plan(s) by April 15 of following year), which in this example employee X did not do.

But what if employee X had elected Roth elective deferrals for the amounts under both plans? The amounts are already reported in employee X's W-2's as gross income, so there should be no adjustment to his/her 1040. To the extent there is asymmetry in the treatment of pre-tax vs. Roth excess deferrals, seems like what the IRS would need to do is notify the employer that the excess Roth deferrals had been made and that those should be moved by the employer, as plan administrator, with earnings, out of the employee's Roth account and into his/her pre-tax account. But boy, that would be complicated and I have not seen anything explaining the requirement to do this. There is an example on page 19 of the current W-2 instructions that involves an excess Roth deferral under a plan of a single employer, but it doesn't touch the administrative issue that exists where the Roth elective deferrals occurred under plans of different employers.

IRC sec. 402(d)(3) pretty clearly says that employee X is going to be taxable on the amounts attributable to the excess deferrals, but how are the administrators of employer A's and B's plans going to know to report as taxable? Is employee X simply on his/her honor? (Both to do the right thing and to study tax law in the evenings so he/she will even understand this?)

Maybe there is a clear answer to this and I've just been out of the loop on the issue, but I am puzzled about it.

In a rudimentary earnings calculation, you take: [1] Closing balance, minus [2] distributions/loans, minus [3] contributions, minus [4] opening balance, equals earnings. Are fees that are deducted from the account figured into the earnings? Or should I account for them like a distribution? I would think I should try to treat them as a sort of distribution because there were shares actually sold. Others just lump them into the final earnings.

We were asked to run a qualified plan proposal for a company in the farming industry. The business has 3 equal owners, and other than the owners all of the employees are classified as H2A employees. Apparently over the course of the year some of the H2A employees work more than 1000 hours. I was told they return "home" and many come back the following year to work again. Are H2A employees an excludable class of employees for coverage purposes, similar to non-resident aliens?