Leaderboard

1 The successor plan rule relates to 401(k) Plans specifically. 2. Don't listen to all rumors you hear.

I understand - and that's what we are doing. What the post I was replying to suggested was that there was a "workaround" to the problem of the lack of rolloverability for a distribution taken in January. When one says "workaround" to a problem that doesn't relate to the issue, it "screams" inappropriateness. We cannot "suggest" fraud as a "workaround." If someone is a qualified individual (and no, I'm not making that determination), then the solution (not "workaround") is to reclassify as a CRD with all bells and whistles of that. But a "workaround?" It's about "ethics." Understand?

I do not believe that a premium reduction would be subject to the MLLR. In such a scenario, there is not monies returned to group. I am unfamiliar with rebates for fully insured groups that are not classified as MLRR. Could these rebates be for level-funded plans? If so, there are some rules around those refund of surplus claim dollars.

The seventh of the rule’s deemed-need situations is: (7) Expenses and losses (including loss of income) incurred by the employee on account of a disaster declared by the Federal Emergency Management Agency (FEMA) under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, Public Law 100-707, provided that the employee’s principal residence or principal place of employment at the time of the disaster was located in an area designated by FEMA for individual assistance with respect to the disaster. https://www.ecfr.gov/cgi-bin/text-idx?SID=763b40b3d060d08c9089fee171f405d7&mc=true&node=se26.6.1_1401_2k_3_61&rgn=div8 It refers to “an area designated by FEMA for individual assistance[.]”

I read that link to state that except in the uncommon case where a plan document states that contributions cease after the first $280,000 (now $285,000) of compensation, then both deferrals and match may continue. Overall match is limited to the dollar amount determined by applying the plan's matching formula to the $285,000 compensation limit.

In this case, the employer should NOT approve it. HOWEVER, he can ask that the participant re-examine his situation, give him a CRD form that shows the conditions (as of now) that is necessary, and then asks the participant to self-certify. The employee was an idiot to disclose this non-eligible situation AT THAT TIME, but he can certainly have a change in his situation that now would qualify him. And again, all he has to do is self-certify. Understand?