Had an exchange with an employee today - a client's CPA referred to a client's "Keogh" plan.   Our administrator didn't know what that term meant.  

I have a client who requested a distribution due to severance from employment. She received paperwork earlier this year stating she is entitled to $X as a distribution. She turned her paperwork in in early March. The Plan administrator is now telling her they are going to do an interim valuation on 3/31 to value her account and she will get whatever she is entitled to after that date.

The Plan includes the following language:

It is contemplated that the Trust Fund will be valued by the Trustee and
allocations made only on a Valuation Date. At any time that the Plan's valuations are not performed on a
daily basis, should it be necessary to make distributions under the provisions hereof and the Plan
Administrator in good faith determines that, because of (a) an extraordinary change in general economic
conditions, (b) the occurrence of some casualty materially affecting the value of the Trust Fund or a
substantial part thereof, or (c) a significant fluctuation in the value of the Trust Fund has occurred since the
immediately preceding Valuation Date, the Plan Administrator may, in his sole discretion, exercised in a
nondiscriminatory manner, prevent the payee from receiving a substantially greater or lesser amount than
what he would be entitled to, based on current values, and cause a re-valuation of the Trust Fund to be
made and a reallocation of the interests therein as of the date the payee's right of distribution becomes
fixed. The Plan Administrator's determination to make such special valuation and the valuation of the Trust
Fund as determined by the Trustee shall be conclusive and binding on all persons ever interested
hereunder. Such interim valuation shall not discriminate in favor of Highly Compensated Employees.

Is anyone aware of any case law or statute/regulation that interprets the language in bold? I am trying to determine when my client's right to a distribution became fixed. 

With the tax filing extension from 4.15 to 7.15, does anyone know if IRS has extended Form 5498 delivery date from 5.31 to something else?

With this date of constant market fluctuation, what is considered 50% of the balance to take a loan?  Is it the date the loan was requested, approved, or processed?  Below is what is says in code section 72(p).  I have a participant who requested a max loan on 3/9 and we are processing it today.  Of course, the balance is way less today, so his loan availability is much less today.  Would it be appropriate to process it today for the balance requested on 3/9 because it was 50% on the date he requested it?

Someone is out sick and eligible for pay under one of these paid leave rules.  I have essentially no knowledge or expertise in what paid leaves are all about but now my client wants to know if they pay it, is it eligible compensation?  They DO exclude taxable fringe benefits.  Would this be considered a taxable fringe benefit?

I'm inclined to say it is because it seems to go beyond the normal "I get 3 sick days a year" type of policy where if someone stays home sick, its just part of their normal pay.

But I'm in the dark here...

The 2020 SHNE Notice was given out prior to the effective date of the SECURE ACT.  The Notice stated the SHNE contribution will be made, if the client decides that due to economic reasons, the contribution will not be made, doesn't some notice need to be given out taking back the prior notice??

If not, the participants will not be receiving the 3% contribution and they may be expecting it.

But then again, you'd be giving out a notice even though there is no notice required?

I'm sure this has happened before.  I'm just not sure how to resolve it.

1) Husband gets divorced and changes 401K beneficiary to his son.

2) Ten years later husband gets remarried, but fails/forgets/decides not to change the 401K beneficiary to his new wife.

3) Husband dies unexpectedly.

4) Son claims benefits, and Fidelity pays him.

Since it appears Federal law allows for the wife to be the beneficiary unless she has signed a waiver allowing for someone else to be the beneficiary, it appears the wife should be able to claim the deceased husband's benefits.  Fidelity claims they can't do anything about it and pushed the issue back to the employer. 

Is anyone able to give any advise on how I should approach unwinding this situation?  Is there any precedent?

Has anyone yet come up with a creative solution to the problem of obtaining spousal consent for a distribution when a) our offices are shut down for the foreseeable future and b) participants and spouses are reluctant to leave their homes to see a Notary?  Zoom-witnessed signatures with identification, for example?

We have a number of clients that are considering suspending their safe harbor match due to COVID-19. There are a couple that, after doing their 2019 year-end review, would be Top Heavy for 2020. If they suspend their 2020 SH Match, will they have to owe the Top Heavy contribution for 2020? 

Hope everyone is practicing safe social distancing.

We have a participant who makes contributions to 2 plans. We administer one of the plans.

He is an HCE and receives an ADP refund in the plan that we administer.

Later he provides proof of combined excess deferrals between both plans.

My question is whether the 402g excess deferral refund is a refund in addition to the ADP refund, or can the 402g excess be included as part of the ADP refund?

Will anyone please share information on which recordkeepers and directed trustees are willing to serve as an abandoned plan’s qualified termination administrator, and which are unwilling?

We have a client who sold his business in October last year (asset sale).  The sponsor had paid ongoing SH match, and when we look at the data from 2019, we found 1 person was overpaid $24 and 4 of the 5 who deferred were underpaid, ranging from $32 to $244.  $ is in John Hancock, and all but 2 have already been paid out.  We figure he can forget ever getting the overpayment back.

Plan is currently SH with all NHCEs in one group.  Only HCEs were owner and son, and neither deferred.

Were this a New Comp with one class per participant and no SH, and we were to count the SH paid as Profit Sharing, this plan would pass ADP and 401(a)(4) testing since Owners/HCEs got nothing.

Is there any way to justify a retroactive amendment to 01/01/19?  Any ideas?

Does anyone have access to legislative language on the final stimulus package? If you do, could you please send a link to it?

Thank you.

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,