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Assuming there is a provision in the document that allows this person to take an in-service withdrawal it is allowed. The need for the loan to not exceed 50% of the account balance only applies to when the loan is made.

Well you shouldn't ignore the outside window, but I would say that there is a better chance of a blizzard in Florida than the DOL concluding that a months delay due to an oversight is timely because it fit the outside window... My understanding is that the outside window was never meant to determine what was timely, but rather determine what is never timely. Anything outside the outside window is deemed to not be timely, no matter the facts and circumstances.

Let me get this straight, you would take the position that, as the situation has been described, there is a chance in "H E double hockey stick" that the DOL will conclude this is timely? I thought it was very clear that thou shall ignore the outside window in the regulations.

well, I would think it has to apply. so you look at each plan separately under its own terms, or at least that is how I think it operates.

Back in the Balance Forward (Traditional Recordkeeping days), plans contained provisions stating that no in-service distribution was allowed when a loan was outstanding. This was done in order to maintain proper security in the event the participant does not pay (as the loans were funded from pooled accounts and merely earmarked to the participant). Nowadays, it's as straight forward as ESOP Guy states; but you ALWAYS want to verify it with your document. Good Luck!

Thanks for all the info, you all gave me plenty of ammo! I told him no based on BRF & the employee/contractor issue is his to figure out. The plan is huge, audited, blue collar with way too many loans--No way I'm allowing term'd participants to keep paying. The recordkeeper doesn't allow direct bill on loans anyway.

I have been working with them trying to improve the process. Unfortunately, I can't bill them for all the hours I've put in because of our advisory relationship. (Not that it's prohibited, by anyone other than my boss.) The benefits manager has already been informed by the HR director that if she doesn't find and correct all of the errors before this year's audit, she will be fired. I'm glad I don't work for her!

actually that simply popped into the brain, a variation of the old Christmas joke I haven't thought of for years: It was around Christmas time, and as a test who would qualify to play Santa, the store's policy was to give a simple quiz: just to make sure such candidate had something 'upstairs' so they asked the guy How many days of the week start with the letter T? After deliberation he replied "Today and Tomorrow" taken a little bit by surprise, they asked the following: Math quiz: How may seconds are there in a year? (and don't worry about it being a leap year) the man scribbled some calculations on paper and after a bit of time responded "12" of course they were a bit shocked until he continued "The second of January, the second of February...." Finally a bit worried about how all this was going, and the guy seemed like a nice individual they asked "OK, listen carefully How many Ds are there in RuDolph the reD noseD reinDeer? they repeated this again, especially emphasizing the letter D when pronouncing the words the man sat and they could see him counting on his fingers, then he would shake his head and mumble "start over" and after about 5 minutes he finally said "I think 112" Their jaws dropped, and he could see this was probably not the right answer, so he said "Let me try again (to the tune of the song of course) Dee Dee Dee Dee Dee Dee Dee.......

The CE requirements are in Circular 230, 10.6 (e):

Ouch! Were they able to get the prior provider to pay that bill? But I have to wonder how much of this falls back onto the internal HR/payroll employees and their own lack of training. No good HR/payroll person relies fully on the provider to calculate correctly without audits, checking, etc. But I know way too many who just assume its correct or don't have the knowledge/education to do so. Are you in a position to review/audit their current processes and offer process management advice? Back in the day, I did a few audits of 401k plans and other HR processes and it truly sounds like they could use it from someone outside of the IRS/DOL!

I'd create new for many reasons. Agree with Bill that there could be all sorts of created issues.

so that means it includes yesterday, today but not tomorrow?

Get thee to an ERISA attorney. Pronto.