Is anyone aware of a retirement-services provider using impossibility or a contract’s force majeure clause as a reason not to do something that otherwise would be a service obligation?

Can I file for an extension on a final 5500?    I always thought you could not get an extension on a final 5500 but I can't seem to find that anywhere.   

With the recent change in provisions for Hardship distributions for 2019, I understand that you now don't have to take a loan before taking a hardship. However, my understanding is that you still have to take an in-service distribution (if it's available) before a hardship. Is that correct?

Let's say a plan allows the participant to take an in-service distribution only from the Rollover source. And the hardship is allowed only from the deferral source. Let's say the participant has $10,000 in Rollover source and $50,000 in Deferral source. He would like to take out a hardship distribution for $50,000. Which option do you think would be correct:

1) Process an in-service request for $10,000 and a hardship request for the remaining $40,000 or;

2) Process the hardship request for the entire $50,000

So, if the participant wants to take out more than what's allowed under the in-service conditions, can he just take out the entire amount as a hardship (assuming he has the documentation for a hardship)?

Thanks.

Grateful for Help on this Question: Can a Plan Administrator or TPA refuse to process a rollover request from a plan participant where the participant is a party to a pending divorce and an automatic standing order is in place?

Background:

1. The participant wife is in a pending divorce that has been going on for some time. As is the case for all divorces in this jurisdiction, a standard form “Automatic Domestic Standing Order” went into effect when the divorce was filed. The Standing Order, by its terms, is binding only on the parties to the divorce. The Standing Order is not a QDRO, does not direct the plan fiduciaries to do or refrain from doing any act, and does not specifically mention the Plan. The closest thing that the Standing Order addresses regarding the 401(k) Plan is that it prohibits certain transfers or trading of property located in the county if such transactions are not in the ordinary course of business.

2. Husband and wife were previously employed by the same family business and are participants in 401(k) Plan. Husband is trustee of the Plan and sole owner of the Company that is the Plan administrator. Wife previously rolled over a portion of assets in Plan from prior employer and is 100% vested in her 401(k) account. As wife is no longer employed by Company, she filled out the proper forms with the TPA to initiate a direct rollover of 100% of her account to another 401(k) account set up at another institution. The TPA notified (but did not formally forward the rollover request to) the husband/trustee/administrator who objected.

3. The TPA stated that the distribution request cannot be honored citing the following:

a. If the Plan Administrator is on notice (verbal or written) regarding a pending domestic relations action (e.g., a divorce) and has a reasonable belief that the participant’s account may become subject to a QDRO, the Plan Administrator may suspend processing the participant’s distribution or loan requests pending resolution.
b. The Standing Order puts The Retirement Plan Company (TRPC) on notice that a divorce is pending and prevents both parties from trading any of the assets, which arguably is what would be done in a rollover distribution from the Plan.
c. It appears the retirement assets of both parties are marital assets subject to equitable division by an adjudicating judge in a divorce proceeding.  It is quite possible that either parties’ retirement assets could become subject to a QDRO.  As such, no distributions should be made to either party until there is a modification to the standing order, or other such direction by the relevant court (e.g., a QDRO), which should specifically address allowing distributions and rollovers from the retirement plan accounts.

Is the TPA taking on a fiduciary role in refusing to forward the rollover request to the Plan Administrator?

I hope this is a relatively simple question but have seen some conflicting (or, perhaps more accurate, general) guidance on the first question so am hoping to clarify as I suspect there may be others facing the same situaiton:

1. If a non-safe harbor 401(k) / profit sharing plan document provides for "fixed" or "required" nonelective contributions but has a last day of the plan year requirement in order for a participant to accrue the benefit, can the plan be amended mid-year to either (1) change the "fixed" nonelective contribution provision to a "discretionary" contribution provision or (2) to reduce the fixed contribution rate requirement to a lower rate?  (We assume exceptions may need to be provided for any participants who retired, died, or became disabled prior to the adoption of the amendment if the plan provides for a waiver of the last day requirement in each of those situations.)
2. Assuming the answer to 1 is yes, I assume the same result if the plan had a 1,000 hour requirement rather than a last day requirement provided the amendment was adopted prior to anyone satisfying the 1,000 hour requirement? 
3. Assuming the answer to 1 is yes, I assume the same result would apply to plans with "fixed" matching contributions with a last day or other allocation requirement provided the amendment is adopted prior to a participant satisfying the allocation requirement?  (While we rarely see fixed nonelective contributions in non-safe harbor plans these days, we also rarely see fixed matching contributions with last day or similar requirements so both of these situations seem like fairly rare occurrences.)
4. General question:  why would a plan sponsor elect to include a fixed nonelective contribution if not required to do so in connection with a collective bargaining agreement or similar arrangement?  Again, we don't see these often but it's always puzzled me why someone would do this.  Maybe more as a general participant communication thing?

Thanks in advance for your assistance.

I'm pretty sure of the answer, but my client has already filed the 2019 tax return and wants to know if he can make the contribution by July 15th.

I believe he's out of luck since the return has already been filed.

Hi

I never had to deal with the following situation - takeover case:

One lifer ps plan. Makes over 280k in w-2.

Client makes max PS contribution  for 2018 and deposited 10k extra during 2018 and paid the excise penalty.

Did the same for 2019 (same as 2019) and now trying find a way not to pay the penalty but going to have to, I do not see any way out of it, am I wrong?

Question(s):

10k deposited from 2018, does it apply towards 2019 limit or just becomes an asset of the plan?

10k deposited from 2019, does it apply towards 2020 limit or just becomes an asset of the plan?

There is no mistake of fact here.

Thank you,

Lets say a sponsor half way through a plan year wishes to retroactively amend the plan document back to the first day of the plan year a Safe Harbor Match plan. Specifically, they wish to amend the plan to change the eligibility requirements for safe harbor contributions and deferrals to go from 1 year 1000 hours to immediate entry. If they make this amendment, will they have to make up contributions for employees who did not defer but may have decided to defer had they had the opportunity to do so plus the safe harbor allocation?

I want to say I should look at EPCRS which suggests if I inadvertently didn't allow someone to contribute then I should make an allocation to that individual based on the ADP/ACP group that individual falls in. But also I could just be over thinking it. Thoughts?

Hi

Is the suspension for 2020 RMD applicable only to DC plans and IRA's? I do not see DB/CB plans mentioned.

Be safe

Gang,  

All assets/annuities of a plan are distributed: 

Am i correct in saying that we file a Final 5500 on a non-ERISA "one participant" plan solely because the 5500-EZ instructions tell us to?

Am i correct in saying that we DON'T file a Final 5500 on a non-ERISA 403(b) plan solely because the 5500-SF instructions DON'T tell us to?

Are there better citations?

An employee is sending in some after tax dollars as a rollover to us and I cannot recall a situation like this in my past.   A co-worker researched and determined that this is good to be rolled over to one of our Plans.

That's the details....

What source would you build in Relius to put these funds into?  (I have a call into Relius also.)  Would you put into a rollover source and name it Rollover EE Voluntary?  Not sure if I can track basis with that source.  Would you build an after tax source and name it Rollover EE Voluntary?  I think that opens up the tracking of the basis, but not sure if this source picks up in top heavy calculation and I would think it would be excluded from top heavy calculation.  (of course, it depends on the Plan doc)

Any thoughts on this?

The Secretary of the Treasury has the authority to waive the 60-day participant rollover deadline in the event of a federally declared disaster, such as, the corona virus.

Any word of this being part of any kind of relief bill? 

I'm a TPA & it's been asked if an individual could receive a 401k or IRA distribution at this time & then rollover to an IRA or qualified plan later even if after the 60-day deadline. 

This one is different.  401(k) plan was moved to a new platform.  A part of the agreement for investment advisor fees was to deduct a specified portion from the participant accounts on a quarterly basis.  This was properly disclosed to participants in timely notices.  Investment company failed to set up this fee deduction for six months.  Investment company's position on this:

"our position is to follow IRS correction principles of returning the plan to the state it would have been in if no error had occurred- in essence deducting fees from the participant’s accounts"

The investment advisors would rather forego the payment than deduct fees from participants.  I could not find anything that required a fix for something like this.  Anyone else have a similar situation?

Boy, the ramifications of this Corona Virus just keep cascading. The Dependent Care FSA's only provides reimbursement for approved day care expenses, etc. - so with most of the day cares shuttered, then participants may wish to reconsider having the deductions from their paychecks if they think they won't be able to use it all, right? I would certainly consider this an allowable situation to change an election... any thoughts on all this?

We have an outside asset company process distributions and prepare 1099-Rs. 

A lump sum distribution was processed in 2019. Federal withholding submitted. 1099-R generated. 

February 2020 - Per the participant, a stop payment was placed on the check and the funds were returned to the original plan. Withholding was not returned. 

Should we be correcting the 1099-R? What should be done with the withholding. It's a large asset provider, so I'm not sure that they will correct to return it. 

Thank you!  

Hi all-

Has anyone heard of IRS allowing or planning to allow deferments to plan loan payments or modification to plan loans in the midst of COVID-19?  We have some clients asking that we modify their loans to a lower rate and defer payments but I couldn't find anything that allowed them to do it.  

I've not seen anything regarding extending grace perionds for participant loan to prevent defaulting.  Has anyone seen anything?  I have a financial advisor telling me that defaults will not happen.

We have a new plan where the profit sharing is allocated as follows: .067% of plan compensation times number of years of service (max 15).  There are two HCE's, both with 15+ years of service. There are 103 NHCE with a varying degree of years of service. 

How would we test this? Due to the years of service variance of the nhce's the plan would easily fail gateway (if you were to cross test) but is it even subject to that? Would this be a Benefits, Rights, and Features perhaps?

Can a new collective bargaining agreement reduce benefits that have already been accrued by retired employees?  For instance if a new CBA states that the monthly pension payouts will be reduced offset by the amount of a Social Security check if the participant is drawing social security, can that be done legally if the person is vested with accrued credits and currently drawing a benefit that is not subject to a Social Security offset?  I was under the impression that both were considered earned income after the required years of service.

Can a CBA legally make this type of change to accrued benefits or would they be required to grandfather in the agreed pay at the time the CBA and Plan Document was changed?  If not what CBA/Plan Document would cover the current participant's future pay?  Does it matter if the participant is collecting disability or retirement?.

Hello, if a company is planning laying off employees due to Corona Virus, can they stop 401k contributions and would they restart when the employee resumes work?  Is there a difference between furlough and layed off for 401k deferrals start and stop? Thank you.