A participant meets all the requirements for a hardship withdrawal and the plan allows hardship withdrawals in the amount of the participants elective deferral account. However, there is an outstanding loan on the participants account and the hardship withdrawal will wipe out the amount in the account securing half of the loan. The plan does not have a provision prohibiting hardship withdrawals given outstanding loans but my conclusion  is to deny the hardship withdrawal given loan security issues unless the participant can prove the loan is secured by other than plan assets. Any comments. 

Wishing you all a safe, happy, relaxing and enjoyable Labor Day holiday weekend, however you choose to celebrate! 

So this is a new situation for me.  We have a client who terminated a long-time employee in '22 for embezzling money from the company.  Technically the participant is eligible for a contribution in '21.

My understanding is that, regardless of the reason for termination the participant is still required to make a contribution for them.  I just wanted to confirm that's accurate?

Also, is there anything that the employer can do in terms of withholding the Profit Sharing account to recoup the money that was stolen?  I know that's more of a legal question, but I wasn't sure if anyone knew.

Thanks everyone!

2 questions, unrelated to each other, but related to use of Automatic Extension:

1. I understand the plan year has to match employer's tax year.  How about just the plan year end? ie a short plan year was declared from 7/1-12/31 and the ER's tax year is 12/31.
2. Plan sponsor insists they never use Form 5558 but always rely on their own Automatic Extension of their business tax returns. Do other TPA's have plans that rely on this?  We have always taken the approach to file 5558 no matter what, if it needs to be extended.

Participant indicates spouse is primary beneficiary and the contingent beneficiary is his nephew.

participant then gets divorced so spouse is no longer primary beneficiary.  Does the nephew now become the primary beneficiary until he (the participant) remarries?

The bene form says the spouse is primary and if not living at the time of participants death, the the named contingent benes will get the benefit.

But the ex-spouse is still living...

Does the whole thing get blown up due to divorce, and new paperwork would need to be filled out or the plan's hierarchy will take over?

I have a plan that is well into Top-heavy territory now, and because of the family/HCEs that will not be changing. They have a match now, but if they change to a SHM, this should fix the top-heavy issue, I believe. 

My questions are:

because they're now 29 days to pye, they cannot amend and fix the issue for 21-22, correct? I don't think they're interested in a non-elective SH plan 

They have a non-elective profit sharing source now, if they use SHM to avoid adp/acp and top-heavy, will they need to not contribute to that source again to remain exempt?

Thanks for your help.

Amendment just came in. The adopting resolution language says it was "duly adopted" on August 25th. However, it was SIGNED on August 31. Is it still valid, or do those dates need to match? Does it depend on state law? 

P.S. I'm talking about the corporate resolution. The amendment itself, while being signed on August 31, isn't effective until November 1, so no worries there.

A BenefitsLink discussion yesterday remarked on a service provider’s request for a nonelectronic signature, despite an IRS procedure that permits an electronic signature.

There is no one comprehensive rule that answers questions about the acts or circumstances that require a manual, rather than an electronic, signature.

For some of us, it’s not easy to recall which acts (of those that call for a plan sponsor’s or plan administrator’s signature) permit an electronic, or require a “manual”, signature. So, let’s crowdsource our list.

The focus is on what the three U.S. government agencies—the Treasury department’s Internal Revenue Service (IRS), the Labor department’s Employee Benefits Security Administration (EBSA), and the Pension Benefit Guaranty Corporation (PBGC)—say is permitted or required. If you quickly remember it, next to each description put the abbreviation for the agency that stated a rule or guidance.

I’ll start by putting one entry in each category.

Manual signature required

A plan’s administrator authorizing its service provider to submit the administrator’s Form 5500 report — EBSA — source ???

. . . .

. . . .

. . . .

Electronic signature permitted

A user’s signature to adopt an IRS-preapproved plan document — IRS — Rev. Proc. 2017–41 § 5.10, 2017-29 I.R.B. 92, 99 (July 17, 2017), https://www.irs.gov/pub/irs-irbs/irb17-29.pdf

. . . .

. . . .

. . . .

We invite your BenefitsLink neighbors’ praise if you help us complete this list.

Has anyone seen language from FIS Relius?  (Yes, I posted on that board as well.)  Or any other source?  I believe FTWilliam has a SECURE Amendment for its NQ plans but have not seen it; am also wondering if there is other amendment language available out there.  The amendment is due to be adopted by year end.  

Has anyone received from FIS Relius a SECURE amendment for required minimum distributions for use with their 457(b) plan document?  The amendment is due to be adopted by 12/31/2022.  Thanks.

Hello all,

Have a sole proprietor with a profit sharing plan, would like to terminate and roll funds to an IRA. In looking through paperwork it appears there may have been 2 Plan ID's used.....checked both and do not see record of any 5500 filings. Plan was established in 2005 and, until recently, had more than $250K in assets each year. Only activity are yearly RMD's. Looking for advice on how to proceed.....

Thank you!

Brian

We have a potential new client where:

Grandma owns 47%
Mom owns 47%
Third party owns the remaining 16%

If they were to hire one of the grandkids, technically they wouldn't be considered an HCE based on attribution correct?

My understanding was that ownership transfer from grandkid to grandparent, but not the other way.  And since mom only owns 47% there isn't an issue.

I just wanted to confirm I was correct.  Thanks!

For anyone who watched it (good webcast if you didn't) - at one point my attention got diverted for a couple of minutes by an e-mail popping up. When I dragged my attention back to the webcast, I THOUGHT I heard them say that for a tax-exempt 457(b), a SECURE amendment was due by 12/31/2022. Did they say that?

I recall seeing some debate on this in the distant past, but I don't recall any consensus. Say an employer does a corporate resolution to make a discretionary match, or PS, then doesn't make it. Are they now legally required to make it? If not, shouldn't be a plan qualification issue, just revising valuation(s). (And let's assume there's no employment contract that dictates an employer contribution.)

Many employers never end up doing a resolution. If they never did the resolution, then I presume the "failure" to make the contribution isn't a problem anyway?

There may be a potential bankruptcy looming...

How should withholding be reported on a Roth conversion if under 59 1/2? We have 2 opinions.

1. If a conversion occurs for someone under 59.5 and there is withholding then report on 2 1099-Rs. One showing the distribution as code 2 and another saying the withholding was distributed to the client as code 1.

2. The conversion both the cash and withholding would fall under the exception to excise tax withholding so both legs should be reported under a distribution code 2. 

Which is right?

Is anyone else getting push back from any record keeper regarding e-signed plan documents? Nationwide is telling us that they have to wet signatures and are not accepting our e-signed versions. I know that other RKs send their documents out using e-signing so this has to just be Nationwide. Thanks for any feedback

Seeing as how 401(a)(31) is a statutory provision, does a Plan need a separate document provision electing to be able to use an automatic rollover, or is it available to any Plan the claims qualification under 401(a)?  The DC LRM from 10/2017 includes a required provisional statement about automatic rollovers, that references the mandatory distribution section, but no adoption agreement provisions are noted as needing to be included.  Also, the mandatory distribution section the LRM notes that should be included, is not addressed anywhere in the LRM.

Hi,

Yesterday, two separate DB Plan ez CALENDAR filers for 2020, that were extended due to IDA to Jan 3rd and then further extended to  Feb 15th received late filer penalty notices of $16, 500 and $17,000 respectively. They both filed in mid December 2021, well before the Jan 3rd extended due date. In addition, on top of each form it was written in Bold..."New York- Hurricane IDA - FEMA IDR 4615." Has anyone else heard about this? Thank you. 

We offer top hat medical plan.  Can we set up ICHRA?

Sole Prop established a Solo 401k a few years ago.  All was well as he had no employees

In February of last year (2021) a FT employee was hired  Unfortunately, the Plan had both immediate eligibility & vesting  for PS contributions.

May 2021 - owner amended the Plan to a SH 401k and added a vesting scheduled for PS contributions - an effective date of 1/1/2021

The sole FT employee has since severed employment 

Question?

How is vesting calculated? 

Is the former employee 100% vested (since there was no vesting scheduled when he became eligible) or does he follow the schedule (since the amendment was effective 1/1/21) prior to his DOH?  

All help is appreciated. 

Thank you