Anyone have information on the consequences of a plan sponsor failing to get the 403(b) plan restated by March 31?

Thanks!

PNJ

Good afternoon -- I'm looking for confirmation on whether COVID-19 falls within the new disaster category of Safe Harbor hardships under the hardship final Regs. While this pandemic is listed on the FEMA website for each state, it was declared an "emergency" rather than a "disaster". In researching, it appears the Robert T. Stafford Disaster Relief and Emergency Assistance Act classifies both an emergency and a major disaster as types of disasters, so it appears to be eligible for hardship distribution (if allowed under the plan terms). However, I found conflicting information on a law firm's website that states it's an emergency but not classified as a disaster for safe harbor hardship purposes. Thoughts?

The company I work for purchased a different business and I started working for this new business but all benefits and 401k plans continued to be through the main parent company.  In January of 2019 during the transition they used incorrect information (address and social #) when sending my 401k contributions to the company that manages it so it looks like they created a new account and all of my money and employer matches have been going to this other account.  This week I checked my account (my main account that I've had for years and thought my money was going into) and noticed my allocations were all set at zero even though my payroll account showed a percentage being taken off every pay period.  After looking into it I discovered this other account and informed my employer and they said they contacted the company and the 2 accounts would be combined.

My question is, is this the correct way to handle this?  Technically my contributions have not been going into my account for over a year.  I don't believe my employer has my best interest in mind and I don't have any experience with this, so any help or guidance would be appreciated.

I'm having a brain cramp

Sole Prop.  Over 50

Gross Sched  C. : 19,114

Net after SECA, etc:   17,764

Deferrals:  17,764

415:  100%

Can he put in another 6,000 as c/u?

Could he put in PS and have some of the 17,764 classified as c/u?  I know the PS will lower the plan comp.

I'm having a hard time reconciling these numbers with 415 and the comp on Sched C

I know this is way early for this discussion, but here goes anyway...

Just had a dentist call to say that he is following the ADA recommendation and basically shutting down for the next three weeks.  Since his employees don't want to use their vacation days and prefer to collect unemployment, he is going to give them what they want and fire them (NY is waiving the usual one-week waiting period for unemployment benefits).  He intends to rehire them all in about a month, but was concerned about what effect it might have on the plan.

Obviously, they can't defer while they're not paid, and they don't have plan compensation during this period so their end-of-year safe harbor and profit sharing will end up being lower.  For those normally working just over 1,000 hours per year (and if that's a requirement for a profit sharing allocation), they might fall below the threshold and it could cause a problem with 410(b) testing.  And... what if he doesn't hire them all back?  I know partial plan termination is partially facts & circumstances, so maybe this could be argued, but I'm thinking this might come into play if he lets go 7 and rehires 4 because business is slow to restart.

According to this dentist, this is going to be a common situation for many small dental practices, so I figured I'd toss it out here so we can start discussing it.

Just curious ---- for old school plans that have all accounts in a pooled trust, no participants can make elections, they get one annual statement.  As we send these out, I'm curious if others are sending out statements as related to the current (and quite large) decrease in market value.  As it is we intend to communicate to clients that we recommend a 3-31-20 special allocation for new distributions, and we will need to communicate something to participants.

Looking for input regarding the calculation of the amount an employee is required to repay under Rev. Proc. 2019-19, Section 6.06(4)(a).  The Overpayment amount is $100,000.00.  Under Section 6.06(4), the repayment amount would be $100,000 adjusted for Earnings at the plan's earnings rate.  

In the current investment environment, the Plan has suffered significant losses.  Is the demanded repayment amount $100,000 minus the losses at the plan's earnings rate up to the date of repayment (e.g, $96,500)?  Or is the repayment amount merely $100,000 not adjusted for a loss (because there are simply no earnings)?

Thank you in advance for your input.

is there any chance this deadline is going to get pushed back in light of the coronavirus?

I have a client that has failed the ADP test and will need to take a refund.  However, last April he took a hardship distribution which wiped out most of his deferral account and he now does not have enough money to process his refund.  What course of action would we need to take?  Technically the deferrals are no longer in his account and he did not roll it over so basically we have the same result except for the distribution code and early withdrawal penalty.  He was not 59.5 when he took his hardship.  Any help is much appreciated.

Surviving spouse is receiving a small QJSA benefit from a defined benefit plan. She is elderly and needs to go into a nursing home, but the  pension pushes her past an income limitation-- making the cost of the nursing home very expensive. She would like to disclaim the retirement benefits, but we don't see an avenue to allow for this to occur.

Disclaimer- Her husband died longer than 9 months ago and she has been receiving monthly benefits since his death.

Assignment of Interest- She could assign her interest under 1.401(a)-13(e) but the monthly benefit would still be considered taxable income.

Cash-Out- Plan does not allow for any type of lump-sum unless present value is less than $1,000.  Current funding status would prohibit large lump-sum benefit payments anyway.

Any other ideas would be appreciated.

Hi All - Looking forward to your expert opinion on my situation.

Situation

- I started working in May 2019. First job. Huge multinational firm. I elected to contribute 20% of my pre-tax income into my 401k to hit the ~19k max employee contribution limit. My employer matches upto 6% for the first 100k of my salary. 

- In Nov 2019, I noticed that 401k deductions hadn't happened properly at all in any payroll - meaning 20% was not taken from my paycheck (bi-weekly) and hence no deposit to 401k and I was paid my full base salary excl medical premium and HSA deductions. I escalated to HR, and they took 3 months to investigate and got back to me in Feb 2020 after constant follow up. Meanwhile 2019 tax year was over and I got my W2 with no 401k deductions.

Solution from HR

HR told me in Feb 2020 that

- The underlying root cause was identified. The mistake was not on my side

- They will provide the full 6% match into my 401k as if deductions had happened properly

- However they cannot deduct any 2019 employee contributions for me retrospectively. Instead they would pay me a penalty of 2% of my base pay as compensation (into my normal paycheck and not 401k) in 2020 which they said is "the standard IRS guidance" to fix the issue

- My 2020 deductions would happen as normal

My problem

I dont want the 2% fee to be paid to me (which will also be taxed). Instead I want them to fix the issue by deducting from my paycheck and depositing into my 401k what should have been done properly in 2019. I am willing to cover that from my 2020 salary (for both 2019 and 2020 deductions) or willing to transfer the amount back to the employer (I had given HR these options as well). Meanwhile I have filed a tax filing extension till Oct 2020 to get some runway to deal with this problem 

Advice needed

- Is my HR statement on the 2% penalty the standard IRS guidance? Or is there a way to get them to put in the proper amount into my 401k for 2019 contributions.

- If there are rules to get HR to do the right thing, any idea of the impact on my tax filing will be welcome. The company provides for me a tax attorny for the first year of filing and I will be discussing this with them anyway but any insight will be appreciated.

Hello all,

I recently quit my job of 24 years.  It took them a two weeks to change my 'Employee Status' which for a whole two weeks after the day I clocked out for the last time said Employee Status: Active.  They finally changed it or maybe it finally went through, but now it says 'Employee Status: Terminated - awaiting payment.'  What does 'awaiting payment' mean?  I don't have a loan balance and they did deduct my medical payments as usual from my final check.  What does it mean, 'Terminated - Awaiting Payment'?

Have a calendar year plan. An employee after age 21 started working 01/01/2018; worked 1,000 hours; and, terminated service 11/01/2018.

The employee was rehired 08/01/2019; worked 501 hours during 2019; and, remains employed on 12/31/2019.

I think the earliest possible date this employee will be eligible to participate is 01/01/2021, which will be based on their 2020 employment and hours of service. Am I thinking correctly?

The plan has the following language:

"You will become eligible to make Salary Deferral Contributions on the a) first day of the first month of the Plan Year or b) first day of the seventh month of the Plan Year, coincident with or next following the date you attain age 21 and you complete one (1) Year of Eligibility Service, provided that you are an Eligible Employee on that date.

Computing Service

With respect to eligibility to make Salary Deferral  Contributions, "Year of Eligibility Service" means an Eligibility Computation Period during which you complete at least 1,000 hours of service.

"Eligibility Computation Period" means a 12-consecutive month period beginning with your first day of employment. Any succeeding Eligibility Computation Period will then switch to the Plan Year, beginning with the Plan Year that includes your first anniversary of employment. You will generally earn an hour of service for each hour you are paid for the performance of duties for the Employer (however, numerous exceptions and special rules apply).

All eligibility service with the Employer is taken into account."

Employer's payroll period ended 12/28/19 but payment not made until 1/5/20 in accordance with regular payroll procedures.  Employee hits 1,000 hours during payroll period ending 12/28/19.  Does the employer have to credit the time in 2019 or, because it was not paid until 2020, can employer treat the hours for pay period ending on 12/28 as performed in 2020 based on the payment date.  Reg. 2530.200b-2(c)(4) and Example 5 do not technically apply since the payroll period does not straddle the tax years; instead it is the gap between end of the payroll period and payment date that straddles the tax years.  Is there any basis for extending the concept to the situation described?  Thank you.

I know that there isn't much guidance, but some help from you all would be greatly appreciated.  If an employer wants to implement a setup similar to Abbott Labs (2% loan repayment, 5% "match" to 401(k) plan) and the plan has individual rate groups for a profit sharing allocation, is there a need to amend the plan to allow for this setup?  Or is the contract for the "match" for student loan repayments outside of the 401(k) plan and the "match" is really just a discretionary contribution to the PS plan by the employer?

I am trying to get a handle on whether to use the DOL EFAST2 web-based filing system in its native format or use one of the many integrations available on their website.

I would like to hear from any BenAdmin familiar users to see which products they prefer. Our staff is very knowledgeable in the employee benefit and ERISA arena but I would like them to have access to a tool that could facilitate and guide their work. Any comments are appreciated.

Can a safe harbor plan change their formula during the plan year, specifically the basic matching formula to the 3% non elective?

In a DC Plan subject to J&S requirements, a participant with a large balance is eligible for a distribution.  His spouse is incarcerated.  He sent the distribution paperwork to his spouse to get her consent to a lump sum distribution and her waiver of the J&S benefit notarized.  She signed both places, but the prison turned down the request to have the paperwork notarized.  Instead, they provided a notice that includes the language for an unsworn declaration under penalty of perjury under USC 1746 (and an identical state law), which she completed, that they told her means she doesn't need to have the paperwork notarized.

Has anyone come across this before? I couldn't find anything even mentioning an unsworn declaration in the context of a qualified plan.   I'm not seeing this as overriding the requirement that the spouse's signature be witnessed by either a plan representative or a notary.  But, I wanted to ask here before responding to the participant.

Quote

 

28 U.S. Code § 1746. Unsworn declarations under penalty of per­jury

Wherever, under any law of the United States or under any rule, regulation, order, or requirement made pursuant to law, any matter is required or permitted to be supported, evidenced, established, or proved by the sworn declaration, verification, certificate, statement, oath, or affidavit, in writing of the person making the same (other than a deposition, or an oath of office, or an oath required to be taken before a specified official other than a notary public), such matter may, with like force and effect, be supported, evidenced, established, or proved by the unsworn declaration, certificate, verification, or statement, in writing of such person which is subscribed by him, as true under penalty of perjury, and dated, in substantially the following form:

(1)

If executed without the United States: “I declare (or certify, verify, or state) under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on (date).

(Signature).

...

 

Say you had $100 of interest to spread out over like 250 people for a late deferral in 2017.  Many of the allocations are under a buck, and in some cases like $0.07.

What would you do for the people who terminated and took their money?  There are quite a number of these folks.

To me, it's pointless to allocate 50 cents (or even 3 bucks) to someone who left so long ago.  The funds would probably just get liquidated as fees anyway.