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If I had a nickel for every $.05 check I received over the years ...... Have the brokerage close the account, tape a nickel to a letter and send to the participant, like various charities do. They've already spent far more in accounting for this already. As an old acquaintance used to say all the time, "there ought to be a law..." - and in this case that any amounts under $5 left in closed out accounts may be forfeited to the custodian and used to defray expenses.

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.

I'm not sure of the answer, and both arguments make sense to me. But please remember that the latest regulations require that the employee provide to the plan administrator "a representation in writing ... that he or she has insufficient cash or other liquid assets reasonably available to satisfy the need." So, if this person has a ton of money sitting in a bank account, he/she could not qualify for the entire $500,000 without some reason why that money was not available for the purchase. Just something more to think about.

Time to make this plan a Safe Harbor Match plan.

Duck, That was awesome help! I did a search, but this one did not pop up for me. Thanks again.

For top heavy purposes, the plan effectively has a short plan year and a TH minimum would be required (assuming it would otherwise be required!) Prior discussion that may be helpful:

What kind of account are you dealing with? Just tell them to close the account and keep the 5 cents, or asses 5 cents in fees. its a rounding error, no one is going to give you a hard time about 5 cents.

I'm in law school writing a paper on ERISA, and I'm trying to work this out in my head. I'm thinking about the fiduciary duties of a plan administrator and how that coincides with possible discrimination backpay awards that may affect the plan. Possible scenario: hundreds or thousands of employees are discriminated against and part of being made whole again involves backpaying them, not only for their actual wages lost due to the discrimination, but monies lost from a benefit plan that they would of had if they were being paid the correct wage. Of course, this scenario is predicated on a plan that is funded based on the employee's salary. So, now the plan is possibly subject to backpay to make these employees whole again. Another possible scenario: what about a group of employees who've been working for years with a company only to find out they have been discriminated against. Not only have they not received their proper wage but they don't have as much money in their plan as they should because their contribution was based on their salary. Over the course of years, given interest, this adds up. How would a situation like this be handled when trying to make the employee whole again? How are premiums calculated in a retirement plan? Do most plans already account for any possible retroactive relief or harm to the plan? Possible Thesis: Under ERISA, a plan administrator should have a fiduciary duty to mitigate damages to the plan when an employee files an EEOC charge alleging discriminatory practices by the employer that could result in a retroactive relief being awarded to the employee. I'm not sure if I have anything here, or if any of this is plausible or relevant. Any advice/comments are more than welcome to help me narrow this down. Thanks, everyone!

DC plans can use 6-year graded or 3-year cliff (or anything more generous). Traditional DB plans can use 7-year graded or 5-year cliff (or anything more generous). If the plan is top heavy it would have to use 6-year graded or 3-year cliff. Cash balance plans must use 3-year cliff (or more generous).

Pique?

@Dave Baker Im not sure if you have tweaked anything since BGs post, but it looks fine on my laptop. On mobile (for me), the job ads appear after the first page of "latest posts", which is fine too. It made the ads more visible, but not obtrusive. It does not change or lessen my enjoyment of the site

12/31/2021. See Notice 2020-51 Q&A-5

Bill Presson, thank you for the vote of confidence. CuseFan and ESOP Guy, thank you for contributing ideas I can use to help guide the student. Moments after Redcloud’s post, we had a productive conversation about a still-in-development research topic. Redcloud’s first imagination might include some mistaken assumptions, and the hypo or research question might change a few times before Redcloud’s professor approves an outline. Consider also that different pension professionals might work with quite different sizes. An employee-benefits lawyer’s work often focuses on situations that involve tens or hundreds of thousands of participants. Or, as in most of my experience, with systemic processes used for millions of participants.

Yes. Depends how you write the amendment. At this point you could still do a 3% SHNEC for 2021.

I am a CPA not a lawyer. Also, I realize this is for a paper as such it is more hypothetical than anything else. You also don't say what kind of benefit plan. Within those caveats..... If this is a 401(k) plan or a lot of Profit Sharing plans as a practical matter what you are talking about is very likely chump change in my opinion. Let's just say the person discriminated against was due $10k/year more if they had not been discriminated against. A very large number of company's 401(k) plans match is 50% of the first 6% or 3% of pay. That is a whole $300/year. Over 10 years a whole $3000 vs the $100,000 of lost wages. If this was me I would want my lawyer focusing on the lost $100,000 not the $3,000. All you could claim you lost in being able to defer your wages into the 4k plan is tax free earnings which once again doesn't seem big as I am assuming you get back earnings on the back wages. So the benefit lost is the tax free part. Still chump change on the grand scale. Now if it is a DB plan I could see this being bigger as it would effect a life time annuity but they are pretty rare form of plan any more. There are some richer DC plans that this could be real money. I guess over a large group it could add up if the lawyer is getting 20%-30% of total recovery as his fees it become a big deal for the lawyer! Maybe I am being too much a CPA. I get fiduciary duties and understand this is a paper but as a practical matter I don't seeing this being a close to a big deal I am sure on this board someone will tell me I am wrong and why- part of why I like this board! Yes, take up Peter's offer.

But if the assets are at a recordkeeper, doesn't the Schedule R usually reflect the payor ID of the recordkeeper? So, it's not really the ID of the plan, but of the custodian who paid the benefits.

Professor Gulia, I will be in touch very soon. Thank you!

For Temple University’s law school, I teach (now going on 11 years) a specialized course on ERISA Fiduciary Responsibility. I teach it, and my summer-semester course on Professional Conduct in Tax Practice, as writing courses. Beyond my courses, I’ve served as consulting or reviewing faculty on papers for others’ courses or for independent-writing projects. I have experience with help a student choose and refine a topic, and plan how to research it. If doing so doesn’t interfere with anyone in your school’s faculty, I’d be glad to converse with you to help you discern whether your idea would research and write effectively to fulfill your course’s or project’s purpose. Also, I can tell you about (at least) two big cases you likely would want to consider in your research.

There is no requirement in the code or regs that the participant obtain a loan (from the plan or otherwise) before receiving a hardship withdrawal. The plan may impose such a restriction, however. The safe harbor defined in the regs is that "Costs directly related to the purchase of a principal residence for the employee (excluding mortgage payments)" are deemed immediate and heavy. It is almost certainly a terrible financial decision, given the 10% early withdrawal penalty, and the current interest rate environment, however if it is permitted by the plan I do not think you can stop the participant if that is what they really want to do.

One could argue the "immediate" need because it is unlikely that they "need" the full purchase price. More than likely, they could be approved for a loan on 80%+ of the property. If I were the Sponsor I would request proof that the participant attempted to obtain a mortgage and were not approved.

Do I understand that you have 3 corporations A, B and C. Parent A owns 100% of sub B and sub C? They want to have B be the lead sponsor and C be an adopting employer (or the other way around)? If that's the fact pattern I don't see a problem doing a single employer controlled group plan. If I misunderstood the fact pattern, my apologies. If A also has employees you'll need to decide if they are adopting too or not and whether your document pulls in all members of a controlled group. If A has employees and you are excluding them, you'll want to make sure you still pass coverage.

Depends where in NJ. Only certain counties are covered by the relief. If they are in the covered area, and they had a valid extension to October 15 (or any time on or after September 1) then the deadline is extended to January 3. https://www.irs.gov/newsroom/irs-announces-tax-relief-for-new-jersey-victims-of-remnants-of-hurricane-ida

only cuz I have to talk about top heavy at the next Annual Conference, so I have the notes handy. Otherwise I'm not a nice enough guy to look it up. ......................................... DC plan is top heavy and has a plan year ending 12/31. The plan terminates on September 15, 2010. Normally, TH minimums are provided only if the employee is employed on the last day of the plan year. (Assume that there are salary deferrals during the year so that, if a top heavy minimum is required, it needs to be made.) (1) For the 2010 plan year, is 9/15/2010 treated as if it were the last day of the plan year, so that only non-key employees who are employed on that date are entitled to a TH minimum? Of course, if there is no employer contribution, there would not be an obligation to provide top heavy minimum contribution. But, if there were contributions to keys during the year, including elective deferrals, there is a top heavy minimum based on compensation and employment through 9/15/10. Plan must liquidate within a reasonable time under Rev. Rul. 89-87 or else 9/15 date may not be reasonable. There is effectively a short plan year for top heavy purposes. (2) If (1) is Yes, is the 3% minimum calculated for compensation from 1/1/2010-9/15/2010? YES (3) Is the answer to any of the above affected by whether the employer continues in existence through the end of 2010? No change. 2010 ASPPA Conference Q and A #3