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.

Does anyone know if any of the ARA bodies have advocated to the IRS or if the IRS is considering filing deadline extensions due to the pandemic?

DB plans in particular have a 4/30 PPA restatement adoption due date and, if required, determination letter application filing due date.

Just curious, as an unexpected prolonged sickness hitting service providers or their client plan sponsors could derail the timing necessary to complete the process.

Facts:

- 401(k) PS plan

- company is a S Corp

- The plans definition of comp is W-2 (wages, tips and other compensation on form w-2)

- CEO of the company receives 1099 comp and is treated as an outside consultant.

- The above referenced CEO does not participate in the plan.

Question: With the above stated facts, I would think that the CEO does not need to be included in the testing since he did not receive W-2 comp from the company, but I don't feel comfortable making that assumption.

I have a participant who is still employed and at NRA in a Profit Sharing Plan. She would like to take a distribution but the plan document  does not allow for in-service distributions. I have looked in the Pension Answer Book and the 401(k) Answer Book to see if this is allowed because I am being told that the is an "unwritten rule" (LOL) that allows participants at NRA to take their money out of the plan. Can someone point me to the answer? Thank you.

Short question, hopefully the answer is as well.

Can a 401(k) now be merged into a Simple IRA Plan? I know you can rollover a 401(k) to a SIMPLE IRA, however, I cannot find topics on plan mergers.

Thank you

Background: Currently stock market is going through an upheaval

QDRO is defined as a cash value at a certain date, to be adjusted through current for g/l

Distributable amount as of most recent year end was sent to payee, forms signed and returned and waiting for distribution

Plan allows for in-kind distributions

Participant has asked if dollar amount as defined in QDRO can be converted to equivalent shares for distribution

Last year of March I believe,  I took a loan out from my 401k and set it up as a payroll deduction to pay off the loan. A couple months before the end of last year, I received a letter from my 401k c okk money stating that there was a default with one of my loan. So the firs thing I did is call my payroll department and asked them what happen. The lady o spoke to said that it wasn't their fault and that it was the 401k company. So I called  them again and they said that they even send an email to my employer to fox the problem but they never did. Considering that I'm a single mom with 5 kids, I could afford to pay off the amount of $1268 estimating amount of the default payment. So for the next following year, which  is this year, I received a 1099 for the whole entire loan that they reported to the IRS. I already filed my taxes before I even received it coz I didnt get it until last week. So now I have to worry about having penalties and late fees from them. But this wast the issue,  my issue was whe I got my tax from last year 2 weeks ago, I called the 401k company to see if I pay off one of the loans I  have if I can reloan again. I spoke to at least 4 different representatives and I've asked them all the same questions if me having a default will affect me getting another loan. And they all said no. That it shouldn't matter coz my company allows us to get 2 loans out. The reason why I need this loan is to use for my daughter's medical condition. My daughter have crohn's disease that needs an expensive Infusion every month. I havent reach my deductible so I know I have to pay out of pocket. But because my tax wasnt enough,  I called my 401k and asked them about this information. With the information they told me, I went ahead and paid off the smallest loan I have with my income tax so I can reloan for a higher amount. The representative that helped me with my payment told me to wait 7 calendar days and for me to call back on the 8th day so I can process a new loan. With all this issue going on, i spoke to my benefits manager a week ago  to help me out with the setting the payment and to make sure that the payroll department isnt screwing me up again. They called me back on the day before I was gonna call to get another loan and  she said because of the default that the 401k cant give me another loan. I was like,  that's not what they told me. Now shes saying that because of the default with one of the loans,    I cant even reinstate my account. I asked what if they take out the default amount from the new loan I'm getting g to get me caught up, would that work. She said no!!! I m sorry to say this a d use this language but they both F...ed twice! Now.my daughter is about to have her infusion by the end of this month and I dont even have the money to pay for it. Is there a way around this to protect me? I also spoke to the manager of the 401k company and they apologize to whats going on and that she'll file like a case to let me get another loan since I didn't put the stop on the loan but my employer did. So I called today a d the lady I spoke to said they cnt do anything about it. It all depends with my employer. I've been with this com pl any for 19 years and never once encountered anything  like this! Please  tell me if theres a way around all this and how I can reinstate my 401k to get a new loan. I also wanna see if theres a way my employer can fix the report to the IRS that its their mistake not mine. 

Is there a 10% penalty for a late refund of a year-end 401k match funded after March 15 that fails ACP ?

Hi. I have a 2030x 403b plan with my previous employer that I will soon rollover into my new job. Of course like everybody else I am losing money very fast. What should I do at this point? Should I withdraw funds or should I keep my funds in there? 

Secondly, what happens when your stock hits rock bottom and there is nothing left? Do you lose the stock or just the value of the stock? 

Thanks in advance. 

A company was acquired and their 401k plan was amended for plan termination. The notice went out to participants and all assets have been distributed to participants except for the owner. The owner of the company is working on buying back the practice and wants to stop the plan termination and keep the plan.  

I saw that this topic has already been discussed and that if there were no distributions, the replies were that the plan could adopt a resolution to revoke the plan termination.  However, in this case, the participants received a distribution of their accounts. 

In my opinion, this plan would need to continue the plan termination process and consider a new plan 12 months from now.  Would that be accurate?

Has anyone had an audit where the owner was at the 100% of comp limit and took more than one distribution?

Owner took an in-service distribution at NRA 62. He rolled over the LS to an IRA.

He continued working and his avg comp increased and he accrued additional benefits.

At age 65 he elected 12 monthly payments of his  accrued benefit with a retroactive annuity starting date to the beginning of the year to be paid from the trust.

He subsequently took the commuted value of the annuity payment in a lump sum. Plan was terminated and excess assets were allocated to him.

The method we used to account for the MASDs in illustrating that his 415 limit had not been exceeded was from a presentation by Michael Preston and Kurt Piper at the ACOPA Advanced Actuarial Conference in June, 2014.  We consider this a good faith effort to comply with 415 when MASDs are concerned.

The IRS actuary is challenging the calculation siting Reg 1.415-(b)-1(b)(iii) that requires the plan to actuarially adjust past and future distributions when determining the annual benefit as of a particular annuity starting date.  The audit is ongoing.  

Since the participant is at the comp limit, we don't think an actuarial adjustment is necessary.

So, we were wondering if anyone had been through an IRS audit where someone was at the comp limit and there were MASDs.  

Any comments or guidance would be appreciated. 

Compensation currently defined as full year compensation.  Plan sponsor wants to amend Safe Harbor plan to use compensation from date of plan entry, effective immediately.  Calendar year plan with semi-annual entry dates. 

Since it is March, the amendment would affect only employees who are not yet eligible for the plan.  I would generally apply the same principal of the IRS approved example of changing entry dates...if it applies to future participants only, it would be permissible.  Do you agree?  Or do you think the fact that the definition of compensation applies to all participants causes us an issue?