Leaderboard

Most of your questions need to be answered by the plan. The most likely answers are: 1) unlikely... my guess is the best way to do this is put it in an IRA which would allow you to control how much comes out of the IRA. 2) Since #1 is most likely no this is n/a 3) If you terminate it is unlikely they will allow you to take a loan. If you have a loan and terminate that will trigger the loan to become a distribution. Your company ought to be able to get you more information on that. But what I describe is how 99% of all plans work. You need to talk to your company to get the correct answers as they can be plan specific. The above are the most likely answers except for #3 which is pretty much how all 401(k) plans work. You will need to do a good amount of research on taxes, the withholding rules and these kinds of distributions. The withholding rules are complex. This will be US income if you take a distribution. So you will have to keep filing US tax returns if you take the money out of the 401k or IRA over a number of years. If you really have $100k you need to stop looking for free advice and spend some money on a good tax accountant. Free advice is worth what you pay for it. In this case spending some money on a good tax accountant will almost certainly pay for itself by saving you time, trouble and maybe taxes. I would look for someone who really understands taxes for people living outside the US and retirement plans.

Anybody see this from Paychex? A Plan Transfer Fee of $1,500 will be applied to any client who transfers its plan recordkeeping to a new service provider and who is not currently/does not continue to process payroll with Paychex. Select the Plan Transfer Fee payment method from the options below. Note: If you do not select an option, Paychex will collect the fee from the Plan's assets. I'd think that ceasing payroll services and tying that to taking fees from plan assets is problematic.

Client tells Paychex they are staying with payroll, just moving the Plan. Paychex releases assets, client fires Paychex. Seems fair to me based on the service typically received from them .

Yes, that is the potential issue. I do not think there is definitive guidance/prohibition and I do recall getting a D-letter years back for such a design, but before all the hybrid regs were finalized. I would just suggest treading carefully and researching thoroughly before going that route. But if 0% for all, or a subset that satisfies coverage/BRFs, then not an issue. Or, consider using actual ROR as the ICR.

Bill, just texted you.

If you are talking about using a different interest crediting rate for different groups of employees, first make sure that your plan document will allow it. I vaguely recall hearing about an issue with using a lower interest crediting rate for HCEs, that it was discriminatory because it was equivalent to a larger early retirement subsidy or something like that. I am probably messing up the details. I think it was in an ASPPA presentation. If I can find it, I'll let you know. I don't see any 411(b) issues with a 0% interest crediting rate. The accrual each year would just be equal to (pay credit) / (APR at NRA). In other words, a flat benefit formula.

Not having actually been involved with one in practice, the main ones that seem problematic to me are: Properly calculating, communicating, and administering the required employer contributions for each cafeteria plan benefit component; and Making sure your health FSA employer contributions don't cause it to lose excepted benefit status under the "maximum benefit" rule. https://www.theabdteam.com/blog/aca-and-hipaa-excepted-benefits/ Common Excepted Benefit #3: Health FSA Health FSAs must qualify as an excepted benefit to avoid violating the ACA market reform provisions. The general requirements for a health FSA to be considered an excepted benefit are: The Footprint Rule: All employees eligible for the health FSA must also be eligible for the major medical plan; and The $500 Rule: Employer nonelective contributions to the health FSA cannot exceed $500. Under the footprint rule, all employees eligible for the health FSA must also be eligible for (regardless of enrollment in) the major medical plan. In other words, the health FSA eligibility “footprint” cannot be broader than the major medical plan’s eligibility “footprint.” For more details, see our prior post: The Health FSA Eligibility Footprint Rule. The $500 rule typically is not an issue because most employers do not make employer contributions to the health FSA. Those employers that do contribute to the health FSA generally will have to limit that employer health FSA contribution to no more than $500 to preserve the plan’s excepted benefit status. Employers wishing to contribute in excess of $500 to the health FSA can generally do so only if the structure the employer contribution as a matching contribution. This is because the health FSA “maximum benefit” rule technically prohibits employers from contributing any amount that exceeds two times the employee’s salary reduction election (or, if greater, $500 plus the employee’s salary reduction election).

You have a legally protected right to a copy of the plan document. The Plan Administrator must provide it upon written request. Send the Plan Administrator a written (paper) request for a copy of your benefit calculation worksheet, the Summary Plan Description, and the Plan Document, including all amendments and attachments. They may charge you a reasonable copying fee. The only way to know if they did the calculation correctly is to see the plan document.

If the questioning physician wants advice, he might consult Asrar Ahmed, the author of ERISA and Sharia Law and Can Sharia and ERISA Coexist?. He is an EBSA Senior Investigator and presumably would not provide advice on a question of U.S. law that could come before the Labor department. But perhaps he might on his own time provide his advice on a question of religious law, which the Labor department would not consider. One can find him on LinkedIn.

The hypothetical interest credits in a cash balance plan are just that - hypothetical. They are a fiction designed to account for the difference between the accrued benefit payable at retirement, and the present value of that accrued benefit (aka, the hypothetical account balance). There is no difference between a plan that says "I'm giving you $100,000 now, with 4% hypothetical interest per year, and you have 10 years until your normal retirement date" versus a plan that just says "I'm giving you a benefit such that the lump sum payable at your normal retirement date is $148,024." As long as they don't have a problem with promising to pay somebody some amount of money at some point in the future - since that's essentially what a DB plan is - a cash balance formula versus any other type of formula shouldn't matter. Of course, I'm no theological scholar. There is no reason you couldn't do a cash balance plan with an interest crediting rate of 0%, if that would help them feel better about it.

Are you being given the opportunity to pay back the lump sum?

The 415 limit is cumulative for all plans sponsored by the same employer (or controlled group). If you terminate and distribute, that distribution will permanently reduce the 415 limit in the new plan.

There are several alternative methods for handling rehired participant who previously received a distribution. As Hojo said, the actuary appears to be following one of those methods. In order to know if that method is appropriate, you should request a copy of the plan document. The plan is only permitted to offset for prior distributions if it is explicitly stated in the document. If the plan document does not explicitly state the benefit should be offset for prior distributions, then they should give you the additional accruals without the offset. Make sure to request a copy of the document that was in effect in 2016, and any subsequent plan amendments. Also as Hojo said, this will be a legal document, full of a legal phrases, but there is usually a section specifically related to Late Retirement or Postponed Retirement or Rehired Participants that will contain the language you will need to review. Also, request a copy of the Summary Plan Description. This will be written in plain English, but it might not be specific enough for what you are looking for.

Your actuary is likely following the rules stated in the plan document to the letter. This is my personal opinion and I could be wrong, but I would follow the actuary's advice and take the benefit now since it will continue to decrease. You can ask the plan sponsor (your employer) for a copy of the plan document but know that this is literally their specialty. Again, they could be wrong and actuaries have and do make mistakes on this stuff, but I doubt that they are in this case.