The Internal Revenue Manual describes a method for a plan’s administrator to decide a claim for a hardship distribution using only the participant’s written statements, including some that “summarize” an expense incurred.  Under this method, the administrator need not read, nor even immediately collect, a source document that shows the claimed hardship expense. 

https://www.irs.gov/irm/part4/irm_04-072-002#idm140377115475856

How many of your clients use this method and do not ask for any source document?

How many of your clients require a source document?

Do your clients’ methods vary with the plan’s recordkeeper?

Filings for 2016, 17 & 18 did not have the Sponsor's phone number entered.

Client insists she wants it that way.

5500 software validates all the way without it.

Is the phone # somehow optional?

R ally quickly, sole spouse is the beneficiary of a qualified plan. Participant passes, the sole spouse wants to keep the funds in the plan (spoke with Plan Admin and they are okay with solo spouse staying in the plan). We are updating the titling to John Doe deceased FBO Jane Doe (she doesn't want to do an assumption b/c she is under 59.5). Here's the question, if we are re-titling the account as a decedent account, it's still considered a rollover and we have to report it on a 1099-R with a tax code "G" or maybe "G4"? Because she rolled it over to an IRA, 1099-R would be issued.

Husband and wife were divorced ten years ago and a QDRO was issued awarding the wife 50% of husband's account. Wife, as the alternate payee, chose to keep the funds in the plan. Husband had primary custody of children and was due child support payments from the ex-wife. Fast forward ten years and the ex-wife has not made any child support payments. Husband obtained garnishment order from the court going after ex-wife's alternate payee account. The order also mandated that the garnished amounts be rolled over to the husband's account under the plan. The only way I see this being accomplished is if a QDRO was issued for the child support arrearages allowing for a rollover to be accomplished. The plan document is silent on the rights and status of alternate payees. With that being said, can you QDRO an alternate payee's account? Also, this is more of a family law question, but can the husband use this backdue child support for his own retirement purposes? 

Jane starts out 2020 owning 100% of both Company A and Company B.  Both companies make and sell products, they are not service orgs and they do not provide services to each other.  Company A has about 50 ees and a 401(k) plan.  Company B just employs Jane and her husband (B's actual production is outsourced) and B has no retirement plan.

In July 2020, Jane sold 23% of A to a private equity firm, so now she owns 77% of A and 100% of B.   So effective with the transaction they are no longer a CG.

Can they now establish a plan in B for just Jane and husband for 2020?

My first reaction is that if the plan is set up for calendar year 2020 this would not work due to the CG. Coverage testing would be based on the plan year and they have former NHCEs > 500 hours in the testing group.   If they set up a plan in B effective 10/1/20, then the plan never exists while there is a CG, and the testing year would not include any NHCEs so presumably they would not have to consider company A in coverage.   But does this raise a potential 1.401(a)(4)-5 discriminatory timing concern?     Thanks.

If a self-employed individual exceeds the 402(g) limit, is he subject to the refund correction?  He didn't get a W-2 and his tax return hasn't been filed yet so he really hasn't taken the deduction at this time.  Could his accountant change the deferral on his tax return to $25,000 (2019 limit) and then we could apply the excess to another contribution type for 2019 (ie. match true-up or PS)?

has anyone had a situation where the named beneficiary is not a US citizen or resident?  I'm not sure what to use for a taxpayer ID number or whether I should be advising this person that they will have to file a US income tax return, as the funds being paid out are coming from a qualified retirement plan (not individual) where the participant lived/worked in the US and had an SSN.  unfortunately he passed away unexpectedly following retirement and we didn't have a chance to pay him out directly.  now dealing with a family member outside the US who is non-english-speaking and I have no direct contact information other than thru the prior employer.

I retired early due to COVID and am now on COBRA benefits   If I go back to work for the same company I retired from and get health insurance benefits again, when I leave or reduce my hours would I be eligible for COBRA benefits again from the same company?  

Is anyone aware of a good discussion on whether/when an individual employment agreement will be construed as an amendment to an ERISA plan?  For example, assume a retirement plan provides for 3% employer contribution, but the company signs a contract with one employee promising 5%.  Or, alternatively, a retiree health plan provides that benefits can be discontinued at any time, but the company signs a contract with one employee promising to maintain those benefits for life.

I have to imagine that this issue comes up relatively frequently especially at less sophisticated companies, but I have found surprisingly little guidance so far.  Thanks!

We have a small employer health plan that is maintained in conjunction with a trust.  Therefore, it is funded and we file a Form 5500SF.  We have assigned the filing Plan # 501.  When the plan terminates the trust and switches over to a fully insured product we list Code 4R saying the plan will not file a Form 5500SF going forward.  We believe this is better than indicating it is a final filing.  In other words, the plan continues, but the funding method has changed; but the plan is not terminated.  If we marked the filing as final, then we would have to use Plan # 502.  

Does anybody have any thoughts on this?  Clearly we have to use Code 4R or mark it as final; otherwise the government will expect another filing.  Again, we think the better approach is to use Code 4R rather than indicate it is a final filing when the employer simply continue the plan but changes the funding method.  Thanks.   

How would you administer the 1 year/5 year elective postponement rule for an employee who is a specified employee?

Example: Jill is a specified employee with a payment due at separation. She intends to retire in 7 months, but the payment must be delayed for 6 months. Is the 1 year deadline to make the postponement election measured to the date of separation when the payment would have been made, if not for the 6 month delay? If so, it is too late for Jill to postpone? Or is the 1 year election deadline measured to the date it will actually be paid, 13 months from now in this example, which would make this a timely election for Jill? And, just to be consistent, from which date - termination date when it would have been paid or 6 month delay date when it is paid - does the 5 year postponement clock run against?

I'm thinking that the 1 year and the 5 year periods are each measured against the actual payment date, taking the 6 month delay into account as a plan provision. In other words, Jill in this example could make a timely election, even though only 7 months before the date when the payment would have been made were it not for the 6 month delay. The 5 year postponement period would also be measured from that actual payment date. 

Regards!

The 2019 Form 5500-EZ asks for the Total plan assets at the End of the year on line 6a column 2. The 12/31/2019 account statement shows a 12/31/2019 value of $300,000. In February 2020 a $17,000 contribution was added for the 2019 plan year. Should 6a column 2 show $300,000 or $317,000 for the End of year value? 

I know that the IRS won't announce the new 415, etc., limits until at least late October.  However, in past years, @Tom Poje used to project the limits about now.  Given his retirement, is anyone else doing this?

Does anyone know of a recordkeeper will take a plan with no advisor?  I think Employee Fiduciary mught be one?  If so, what have the sponsors done for an investment line up?  I was thinking the sponsor might choose just offer some series of target date funds...

We have a decent number of clients who won't leave brokerage accounts because they don;t want to pay 50bps to an advisor. And some plans are so small no advisor would ever take them.

Hi

Having a discussion with an agent and attorney for a plan of theirs and I am not in agreement with what they are saying.

Current document's ps provisions are:

-          No last day rule

-          No hour requirement

-          Comp-to-comp allocation

The attorney states that, since no ps contributions were made during 2020, the allocation method can be changed now or by end of year so that, each participant can be their own group. The contribution will be made after the plan year.

Can they? Just want to check others' opinions and see if i am missing something here.

Thank you

Are you aware of any private sector defined benefit plans, not including multiemployer plans, that still occasionally provide for an ad hoc cost of living increase of retiree pension payments?  Or do you know any resource for researching this question?  Thanks for any assistance you can provide.

Is a final lump sum payment of vacation pay eligible for 401k an match? We match each paycheck

Our plan excludes pay after termination

We did allow the employee to defer but no match

we discovered an issue in our HRIS system wasn't calculating match for certain employees and are doing an audit of those who deferred but no match 

thanks, alexa

We initiated a large profit sharing deposit into the 401k accounts via our bank like we have in the past. It was in limbo for a couple of days then rejected missing deadline for September 15 - corporate filing deadline. I have looked to see if the IRS allows for such errors but have not found any to put the money into the account after the 9/15 failed attempt. 

Anyone know of a rule or process or ... anything that might allow a deposit after the 9/15 date?

We have a plan that has no assets.  The proceeds were distributed in 2019.   The company dissolved and the prior signer is claiming there is no one to sign the final 5500.  Any thoughts of how this should be handled.  

A safe harbor 401(k) plan has a 30-day wait (with entry first of the month coinciding with or next following) for full-time employees, and one year of service for part-time employees.  For 2019 the plan fails 410(b) ratio test even with disaggregation of statutory excludables.  The employer does not want to bring any part-time employees into the plan who would not otherwise satisfy the one-year eligibility.  They could bring in those full-time employees hired after November 1, 2019 through an 11(g) amendment and make a QNEC to cover the auto enroll deferral percentage of 4% plus the safe harbor match of 4%.

I'm concerned about using these short service employees to satisfy 410(b) because the 8% QNEC will be such a small amount.  I know the IRS issued guidance many years ago restricting the use of short service employees to satisfy 401(a)(4).  Would the same prohibition apply for 410(b) purposes?

BTW, we're also checking out average benefits testing for coverage, but it looks like it will be very expensive.  

Thanks for your input.