Leaderboard

What do your loan documents say about repayment? Is it only by payroll or are additional payments allowed? As far as the new service provider (ADP), having done takeover work on Plan's they have administered, I would be hesitant to accept their position as anything other than "That's not the way we do it".

I would look to EPCRS and the overpayment sections

Run like Forrest and find a new provider. Not having quarterly loan payments as an option in a recordkeeping system is inconceivable. And then charging late fee..... no thanks!

It is wrong in so many ways that it is hard to even know where to start. ERISA and the Code do not address whether it is un-American or not. On the IRS side, a plan, in order to be "qualified" must satisfy certain requirements in both form and operation. A plan that violates its provisions, such as required top heavy contributions, is subject to disqualification. I'll guarantee that your plan document does not provide for the return of contributions by Key Employees on the off chance that they discover too late that the plan is top heavy, or that they didn't understand or were unaware of the implications of top heavy status. On the ERISA side, you have various anti-alienation provisions. When people are entitled to a benefit (as with non-key employees who are entitled to a top heavy benefit under the terms of the plan) you can't take that away from them. There is no regulation that provides an override to the top heavy requirements such as you would like. So you are stuck with what the Code and Regulations say that you must do, which in this case, would be to contribute any required top heavy contribution. I really recommend that you seek legal counsel first if you are planning to advise your client to treat this as "administrative error" - and review the terms of your E&O policy. You are really getting into some dangerous territory. All this is just my opinion - others may not feel the same. Good luck.

OVER 120.

You say that you need to make the $40,000 in savings "disappear" for financial aid purposes. I am not in a position to question that. Assuming you are right about that, and further assuming you can't get any satisfaction from your employer and ADP, if I were in your shoes I would go to a bank or credit union and take a personal or home equity loan for $10,000 so I had enough money to pay off the loan in full. You'll just be paying interest to the bank on the $10,000 rather than yourself, but it sounds like it would be worth it for financial aid purposes.

This is a classic example of: what does the document say??? I have never worked with a document that didn't answer this question clearly and if the lawyer who wrote the document was even remotely competent you will comply with the law if you follow the document. Read the document or the base document if a prototype. In fact the guy who taught me this business would throw you out of his office if you came in it with this kind of question without the document in your hand. You better have been able to demonstrate you had looked for the answer. Only then would he take the document and walk you through finding the answer in it.