Leaderboard

Perhaps we incorrectly assumed they were using the safe harbor definitions of hardship (I haven't ever seen a small business plan that did otherwise). In safe harbor, you don't have to deal with the "other resources" issue, and I would suggest anyone who is trying to use non-safe harbor rules is crazy! All you have to do is have unreimbursed medical expenses (and, if there are loans available, deal with that requirement - another reason why we didn't have loans in our plans historically). Remember, a hardship distribution is DEEMED to be on account of a immediate and heavy financial need if it is for unreimbursed medical expenses for the participant, spouse or dependent of the participant.

"this letter says correct or else." New way to interpret the "V" in VFCP. Maybe is should be rebranded the Mandatory Fiduciary Compliance Program.

this came up before, about a month ago. the preamble to the regs (at least the propsed regs way back when had the following) “Designated Roth Contributions as Excess Deferrals Even though designated Roth contributions are not excluded from income when contributed, they are treated as elective deferrals for purposes of section 402(g). Thus, to the extent total elective deferrals for the year exceed the section 402(g) limit for the year, the excess amount can be distributed by April 15th of the year following the year of the excess without adverse tax consequences. However, if such excess deferrals are not distributed by April 15th of the year following the year of the excess, these proposed regulations would provide that any distribution attributable to an excess deferral that is a designated Roth contribution is includible in gross income (with no exclusion from income for amounts attributable to basis under section 72) and is not eligible for rollover. These regulations would provide that if there are any excess deferrals that are designated Roth contributions that are not corrected prior to April 15th of the year following the excess, the first amounts distributed from the designated Roth account are treated as distributions of excess deferrals and earnings until the full amount of the those excess deferrals (and attributable earnings) are distributed. “ ..... so to prevent you from going insane, it would be wise to segregate such amounts in a separate account so you can keep track of earnings as well. the problem of course, if it involves 2 unrelated employers. neither plan might know about the issue. in addition, neither plan would be in violation for accepting excess deferrals at the plan level, so neither plan is subject to disqualification, so ultimately it boils down to the participant to tell one of the plans to do something. and we know all participants 1. know the regulations sufficiently to know what to do or 2. are honest enough not to intentionally do something like this and inform one of the plans of the problem when they discover the issue.