Leaderboard

If the plan is not discontinued, why should the administrator or trustee distribute the participant's account? Doesn't the participant have a right to continue until the participant's required beginning date?

NO... No..... no.... no.... no......

Michael: You do not have a SIMPLE plan unless the plan year is the "whole calendar year," so you don't have to worry about the SIMPLE rules for terminating the plan. Even if the plan did use the whole calendar year as the plan year as required by Regulation 1.401(k)-4(g), that regulation specifically states that a SIMPLE plan can be terminated only as of December 31. I suspect the document you are using requires the plan year to be the calendar year. Here is the regulation: "(g) Plan year. The plan year of a SIMPLE 401(k) plan must be the whole calendar year. Thus, in general, a SIMPLE 401(k) plan can be established only on January 1 and can be terminated only on December 31. However, in the case of an employer that did not previously maintain a SIMPLE 401(k) plan, the establishment date can be as late as October 1 (or later in the case of an employer that comes into existence after October 1 and establishes the SIMPLE 401(k) plan as soon as administratively feasible after the employer comes into existence). "

Our VS document has an option that provides for an involuntary distribution to a terminated participant regardless of the value of the participant's account balance, upon attainment of Normal Retirement Age (or age 62, if later). It's an ASC document.

LOL yea I had a pretty good idea based on the description....

Sounds vaguely familiar... ?

Plan provisions can mandate distributions at retirement age. If it does, and the person has reached normal retirement age, and the person is missing, the plan can force out the monies.

FWIW, if I had a client who insisted on this, we would tell him to find a new admin firm. There are a ton of problems, including that he is now responsible for the decisions made by the employees with regard to "bad" things they might buy. And an investment in an LLC is a bad one; how is it going to be valued? Is he willing to spend maybe $10k a year for a professional valuation of EACH of his LLCs that would stand up with IRS and in court? Lots of other problems (like changing capital gains into ordinary income, and more). Just say no.

Well, if you think annualization is ok, then yes, if you DON'T fully vest the PW amount, you are going to have to annualize and that usually is more expensive than just paying the PW in cash to your participants. Your best source for resources is DOL: https://www.dol.gov/agencies/whd/government-contracts/construction/seminars/resources And specifically, the PW Resources Book: https://www.dol.gov/agencies/whd/government-contracts/prevailing-wage-resource-book

Agree; note also that New York does not allow for ignoring annualization at all (even fully vested contributions). If you are looking at a PW plan for a New York contractor, be very careful as they usually just don't work if there is non-PW work as well as PW work.

Are you asking if the PW can be subject to the profit sharing vesting schedule? If that's the question - the answer is no, the PW is 100% (I'm assuming this based on your statement and hopefully your plan document says the same). The fact that portions may or may not be used to offset profit sharing is irrelevant.

As the saying goes, it doesn't matter till it matters. Meaning when you get sued the first and obvious conclusion is that the problem was you wore both hats. In other words if your moral compass doesn't rule it out, your fear of giving your legal adversary low hanging fruit should do the trick.

My last employer was a CPA firm. I worked in the TPA division. We had a handful of plans that we were both the auditor and TPA. The compliance department confirmed that because of independence, this was permitted, as long as we weren't also the recordkeeper. The TPA division was titled "....Benefit Consultants" while the accounting division was "..., CPAs". We were the same company, but were run differently. I questioned it when I first started because they wanted me to work on business development but was told that it had run through our compliance group. They are very big on compliance, independence, security, etc.

Bingo, I am impressed!

Just because Section 2202(a)(3)(A) of the CARES Act doesn't explicitly call out any section 408A sub sections does not mean Roth IRAs are not eligible. In many cases in the IRC, sections are incorporated by reference. In this case by 408A(a) and 408(d)(3)(B) Section 408A(a) General rule Except as provided in this section, a Roth IRA shall be treated for purposes of this title in the same manner as an individual retirement plan. Section 408A(e) Qualified rollover contribution For purposes of this section— In general The term “qualified rollover contribution” means a rollover contribution— (A) to a Roth IRA from another such account (B) from an eligible retirement plan, but only if— (i) in the case of an individual retirement plan, such rollover contribution meets the requirements of section 408(d)(3) (ii) N/A to a Roth IRA to Roth IRA rollover. For purposes of section 408(d)(3)(B), there shall be disregarded any qualified rollover contribution from an individual retirement plan (other than a Roth IRA) to a Roth IRA.

Technically, yes, yes. But should it?

That's a little better; this is what you originally said: Can anyone provide me the IRC section for the 0.5000 safe harbor weighting for contributions? The real question actually has nothing to do with "safe harbor weighting"; it has to do with the method used in a pooled plan for allocating gains and losses. And yes, a standard provision (as used in our pooled plans) is the BOY account balance plus 1/2 of the contributions to be allocated for the year as the ALLOCATION BASE. And that includes employee deferrals, any non-elective or match contribution, and any profit sharing allocation. Now, to answer your implied question: you won't find any IRC section that discusses that, because there isn't any. Your plan document language is what obtains. Is that what your document says?

Is there an echo in here?

I would guess he is talking about a weighting factor often applied to deferral and per pay period matching contributions deposited during the year to a pooled plan. So earnings are then allocated on BOY account balance plus 1/2 of the contributions made during the year. A reasonable approximation if the contributions come in evenly throughout the year. But an IRC "safe harbor"?

This is our understanding of it: Because of the extensions provided by the IRS, the deadline to make loan repayments due on or after April 1 (without running afoul of the deemed distribution rules), is extended to July 15. This applies to all loans, not just loans to Qualified Individuals which can enjoy a longer suspension period under the CARES Act. With maximum use of regulatory cure period provisions, a participant can make up any missed payments by December 31. For example, if a “non-qualified individual” stops making payments any time during the period of 4/1/2020 through 7/15/2020, it’s treated as if the payments stopped during Q3 2020, thus making the end of the cure period 12/31/2020.

I doubt the Labor department would outright suspend an investigation. You might persuade an investigator to allow more delay in producing records. If a requested record is one ERISA commands a plan’s administrator to keep, or that a prudent fiduciary acting with the care ERISA § 404 requires would keep, consider that revealing too much reliance on service providers might lead an investigator to think the administrator is weak. That could result in intensifying the investigation.

There are no RMDs for 2020.

As usual, payroll company is wrong; that clearly is NOT the "default" (one would ask "default? Say's who?"). FFCRA paid income is indistinguishable from any other income. Unless the specific definition of comp in some way excludes sick pay, it should be treated the same as any other compensation for deferral purposes. See this from IRS FAQ: https://www.irs.gov/newsroom/covid-19-related-tax-credits-special-issues-for-employers-faqs#special_issues_third-party 54. Can employees make salary reduction contributions from the amounts paid as qualified leave wages for their employer sponsored health plan, a 401(k) or other retirement plan, or any other benefits? The FFCRA does not distinguish qualified leave wages from other wages an employee may receive from the employee’s standpoint as a taxpayer; thus, the same rules that generally apply to an employee’s regular wages (or compensation, for RRTA purposes) would apply from the employee’s standpoint. To the extent that an employee has a salary reduction agreement in place with the Eligible Employer, the FFCRA does not include any provisions that explicitly prohibit taking salary reduction contributions for any plan from qualified sick leave wages or qualified family leave wages.

I have not read all the above, but I think I am siding with Mojo. You could draft a plan that was basically one with individual investments to say that the employer may also contribute amounts to be held temporarily in a suspense account that shall be invested for the benefit of all participants and that will be allocated to participants with the gain, but not counting the gain for 415(c), but if you are using compensation or other participant facts that are not in existence at the time of the contribution, so that the amount could not be allocated when it is contributed even if you wanted to take the time to do it, it seems like it violates definitely determinable. In other words, if you contributed $100k as discretionary nonelective on June 1, 2020 and said that it would be allocated, when you got around to it, based on January through May 31 comp, then it would seem like even if you didn't actually allocate it until early 2021 administration, then as long as you did allocate it based on January 1 through May 31 comp, and allocated to everyone employed on May 31, that would work, but no one would do it that way and I think not doing it that way does not work.

Feline equivalent of "nose to the grindstone" perhaps.

@Dave Baker Including a notification to Dave for this thread. I don't think it is necessarily inappropriate for a participant to come here to ask questions. Many have simple questions and just don't know who to ask or where to turn for information. I agree that it is inappropriate to try to resolve specific participant issues or lay blame on someone through the message boards. We never have all the information, and we only get one side of the problem. To that end, maybe just have Mods lock a specific thread when it gets combative and insulting, rather than not allowing questions from non-industry folks all together?

If the employer stonewalls your wife, call your Regional Office of the Department of Labor's Employee Benefits Security Administration They will get the employer's attention. They handle these issues frequently.

You're going to get opinions here from the perspective of people who are generally on the employer's side when these kinds of mistakes happen. The idea that the little guy (the employee) should at the very least share the blame, if not shoulder all of it, for what is primarily the employer's (or the employer's service provider, i.e., the people you're talking to here) mistake is deeply ingrained. This notion is even supported somewhat by the IRS's fix for this sort of thing. OTOH, this is a common mistake and assuming your wife made a proper deferral election the fix is that she probably has some money coming to her. She should start by talking to whoever at her job is in charge of the plan. Ultimately, you'll have to decide whether the fix they offer feels satisfying or whether you want to spend some money on independent professional help that answers to you (like a lawyer) to find out for sure if it's fair. A do-it-yourself sort of a guy might be able to get the general idea of what the fix should look like by googling something like "employer didn't withhold 401(k)" and then focusing on authoritative results like the IRS.

I believe it applies to new loans and would write them as usual - payments due as normal as far as setting it up but with the understanding that those payments may be deferred and the whole thing reamortized later.

Not too concerned about ADP/ACP. Worst case some refunds to HCEs, not the end of the world. Far more significant is relief from TH minimum. Many key ees will have deferred in Jan/Feb with no concern about TH minimum due to the SH. Now the company has to stop the SH due to COVID-19, they may or may not be in business by the end of the year, they may be scrambling to stay in business and we are going to hit them with a required 3% TH? Not good.

Right, but you stopped it, why should you be entitled to the benefits?