Hello All,

I find myself in a difficult position with requesting a hardship withdrawal from the 401k account I have through my employer. The reason for the withdrawal is medical, but I'm reluctant to provide documentation due to the sensitive nature of the expenses.

I am a cancer survivor, and part of my treatment involved the use of strong opiates to deal with pain. While the cancer seems to be defeated (at least for now), the opiate addiction isn't. While these are legally prescribed opiates, they are clearly having a negative impact on my personal and professional life, but I find myself unable to quit on my own.

My doctor has recommended that I check in to an in-patient rehabilitation clinic for opiate addiction. Such a facility, however, is very expensive, and is not fully covered by my medical insurance (my responsibility could be anywhere from 10k to 50k, depending on a variety of factors - my retirement funds can comfortably cover even the largest estimate, so I can "afford" it in that regard). Due to various other medical and personal expenses, I have already leveraged my loans and non-hardship withdrawal - this is my only remaining option.

For obvious reasons, I do not want to inform my employer that I am attending an in-patient rehabilitation clinic for drug addiction. My plan seems to require that I submit documentation detailing the costs, but I feel that doing so would jeopardize my continued employment or impact my career negatively in other aspects (regardless of whether or not it is legal or proper for them to do so, I find it likely that this will occur due to the nature of my industry).

What can I do to provide the requested data without revealing that it is related to drug addiction? Is it a crime to falsify this data by altering the bills to make it look as though it's for a different medical expense? What other recourse do I have? I'm desperate to get clean before it ruins my career, marriage, and life, but revealing this information may well do that anyway. I feel hopeless and trapped - is there anything I can do?

Thank you in advance for any information or advice you can provide.

Deleted.

I am reviewing a 2017 Form 5500 prepared by a large record keeper. The record keeper name is listed on Schedule C Part 1, 2(a). Under (d) their direct compensation is listed as a negative number. Does anyone know how a record keeper receives a negative direct compensation number? Does it have to do with revenue sharing and the way it is credited back? 

Thank you

Taxpayer purchased 2018 health insurance policy from ACA Marketplace costing $1,000/month but qualified for advance payment of Premium Tax Credits of $600/month which reduced his actual net premium to only $400/month.

Insurance company failed to meet Medical Loss Ratio and sent Taxpayer an MLR rebate of $1,800 (15% of total gross premiums of $12,000).

Doesn't seem right that the Taxpayer received 100% of the MLR rebate while he only paid 40% of the premiums.

Anybody have an opinion on how this will shake out from a tax/PTC perspective?

Can you offer in-service withdrawals at age 50 of Profit Sharing money?  Does it HAVE to have a seasoning component?  I seem to remember a 2-year rule.  Or is it if you have a seasoning rule, it cannot be less than 2?

My brother passed away in January of this year. He worked for PWC and had 3 different retirement accounts there, as well as a life insurance policy. One of these, which was called a “wealth builder” plan, had no designated beneficiary. He had made me the beneficiary of the other 2 retirement accounts and the life insurance policy. In 2015, he had sent my father and me an email with a PDF file entitled “Sissy’s benefits.” This was a breakdown of his 401k, an RBAP account, and the wealth builder.  In the body of the letter he simply put “This is it plus the $20k in life insurance.” We had also talked to him on the phone and he said that he had taken care of everything. After he passed away, we found out that the beneficiary designation on the wealth builder had been omitted. We did find out much later that he had made the designations on the other accounts within a day of the email he had sent us in 2015. We also found out that there was never any beneficiary named for that account. We can’t begin to speculate as to what happened. PWC said the money will have to go into the estate. My father is the Administrator  of the estate and there was no will. So basically,  once everything goes through probate, the money that’s left will go to him. My father would like for me to receive the money as he believes that my brother intended for me to have it. I have no other siblings and he was never married so there is no conflict. Right now, my dad is consulting with different people at PWC. Most have been sympathetic, but nobody has been able to really help. Does anyone have any thoughts on this? Thank you in advance for any assistance or ideas you might have to offer!

Unclear on significance of SOBN requirements for a small plan covering only the business owner where future benefit accruals can still occur. Consider a unit benefit 10% x service formula, now has 7 yrs of service, now age 70.  The AE of his prior benefit exceeds 70% comp limit, so can't accrue in current year. Forfeiture goes away in following year. Does the owner really have to give himself a notice?

Hi all

Sponsor wants to terminate the services of the vendor (or provider/platform) and wants to move another one.

By mistake, tells them to terminate the plan i/o telling them that their services are terminated and assets to be transferred to another vendor (not well informed nor was contacted by anyone - you get you pay for).

Vendor terminated the plan in April 2019 but assets still not distributed - I believe the sponsor signed a resolution for the plan termination rather than contract termination. Can the sponsor still undo the termination with no issues as to the continuance of the plan? It is a 1 year old plan. any other corrective measures that will be required? No idea about what happened to the deferrals, just finding out the facts.

Vendor also tells the client, even if they move the assets to another vendor/platform, they will get a 1099R?? How is this possible there is no distribution?

Your comments are appreciated as well as any insights.

Thank you

Four entities are in same controlled group/affiliated services group.

• 3 of the entities participate in one fully insured wrap welfare benefit plan (medical,dental, premium only plan). All insurance contracts for that plan are signed by the plan sponsor (i.e., one of the 3 entities). Since this plan had 140 participants at start of plan year, my understanding is that we will need to file Form 5500 for it.
   
• The remaining entity has its own separate fully insured wrap welfare benefit plan (medical, dental, premium only plan ). This entity is the plan sponsor and all insurance contracts are signed by it. There are only 22 participants at start of plan year. Does a 5500 have to be filed for this plan too, or is a 5500 not required for this plan until the plan reaches 100 participant threshold at start of another plan year?

Related question: For annual discrimination testing, do you have to aggregate all the participants from both plans together or can you test separately? Thank you for any input .

Plan is a Safe Harbor Non-Elective plan.  Plan has compensation exclusions (ie non safe harbor exclusions-OT, commissions, bonus etc).  The plan does not pass 414s.  Can the plan satisfy the 414s requirement by using General testing?  Or must the amend their definition of compensation to satisfy 414s?

Under the Code and ERISA, spousal consent is not required if the spouse cannot be located. For a participant who is looking to utilize this exception, is the plan required to have the participant submit an affidavit of when s/he last saw their spouse and state in detail what efforts have been made in an attempt to locate the spouse? Or is it simply enough if a participant checks a box on the benefit election form under spousal consent which says. "I do not know where my spouse is currently located."?

I am reviewing a Form 5500 for a Defined Benefit Pension Plan that had a change in actuaries (not the actuarial firm). The actuary was provided notice with the explanation "Reassignment of responsibilities within NAME OF FIRM.

Schedule C is required, if I read the instructions correctly. Question is for the EIN on Schedule C, do you put in the Firm EIN or the actuary enrollment number?

Normal Retirement is currently 65.

Participant did not make the special 3 year catch up election in time.

Can the employer amend the plan and increase NRA to 70.5?If so,  would the increased NRA apply to all participants ( including existing participants)?

This will allow the employee to make the special catch up.

We file 1099-R's electronically through the IRS FIRE system.  As far as we know, there is no actual Form 1096 for this process.

In the last couple of days, 2 separate clients received the same letter from the IRS stating that they can't process any of the information returns because they're incomplete or not in the required format (lists 1096, 1098, 1099,, 5498, and "certain other information returns").

Then the letter goes on to say that there was not a 1096 included in the submission.

Strange thing is that the letter starts off by saying "Thank you for the inquiry dated Feb. 11, 2019".  But we filed electronically on Mar 20, 2019. No one knows who made an inquiry to the IRS on Feb 11.

Anyone else get these?

Thanks...

I know there is a large thread about getting rejected or bad 5500 extensions.  I just got a letter saying a client's 2017 5500 wasn't filed when I can prove it was.  

Not a problem just wondering if anyone else has gotten and if there is an emerging pattern here also?

We are a not-for-profit that is  the plan sponsor of a 401k plan that has a 6 month elapsed time eligibility period .  

A temp employee has had the following service :

worked 3/11/19-5/31/19 or 2.67 months, break in service was 2.56 months, and then worked 8/19/19-9/6/19 or .59 months. (no 1 year break in service)

The next break in service will be around 1-1.5 months if she is rehired in the next week or so. 

If service is 6 months from original hire since her breaks were so small, she is pretty much immediately eligible.  If not, she would need to earn 2.75 more months of time to be eligible.  It makes a difference for costs for funding/grants/etc.  I hate counting pennies, but we must! And honestly I'd like to get it right going in rather than a correction at year end!

Our plan document has a section that states "Rehired Eligible Employee who had not satisfied eligibility : If any Eligible Employee who had not satisfied the Plan's eligibility requirements is rehired after severance from employment, then such Eligible Employee shall become a Participant in the Plan in accordance with the eligibility requirements set forth in the AA and the Plan.  However, in applying any shift in an eligibility computation period, the Eligible Employee is not treated as a new hire unless prior service is disregarded in accordance with" (rule of parity, 5  one year breaks or one year old out rule)."

My TPA contact is out of the office through Monday.  And their backup told me they couldn't give me an answer and were unwilling to look it up or research it for me (yes, another reason to find a new TPA!)

Anyone want to offer their advice/opinion?

As usual, just want to make sure I'm not missing something. I've just seen a couple of plans that did perform the Key employee concentration test and the DCAP testing. However, they did none of the eligibility or benefits testing.

It so happens that even on a cursory glance, they obviously pass eligibility testing, so maybe they just looked at it informally and, reasonably enough, said "it passes." Ditto for the "Availability Standard" test. However, for the Utilization Standard test, the HCP ratio is app. 10%,and the non-HCP ratio is about 5%. And it looks like this has been going on for about a million years, give or take a year or three...

So, - am I missing something with regards to the Utilization test? Is there some special way around this that I don't know about?

And for the past failures, I'm not aware of any "correction" procedure - if audited, they are screwed, right? All they can do is correct this going forward?

Any thoughts appreciated!

Two things in life are ubiquitous.  First, yellow taxis in Manhattan.  Second, the use of the time rule formula for allocating an ERISA qualified defined benefit plan for an employee who is still working, using a "shared" formula, a/k/a "Bangs/Pleasant" formula in Maryland, a/k/a "Brown Formula" in California, a/k/a pro-rata formula re: FERS and CSRS - 5 CFR § 838.621. 

Thus, your standard shared interest allocation for a defined benefit plan:

"The Alternate Payee is hereby awarded 50% of the "marital share" of the Participant's retirement annuity benefit if, as and when paid to the Participant.  The "marital share" is determined by a fraction, the numerator of which is the number of  months during the marriage that the Participant accrued creditable service in the plan, and the denominator is the number of months that the Participant accrued creditable service in the plan at the time of his commencement of benefits."

Now we have Fidelity on it's website, setting forth 10 Northrop Grumman defined benefit plans with respect to which they offer only two allocation options: See page 40, line 3 of the attached. 

" ______% (insert percentage) of each of the Participant’s monthly benefit payments from the Plan.
$_____ (insert dollar amount) of each of the Participant’s monthly benefit payments from the Plan."

Note the absence of a time rule option for defining the amount to be paid to the Alternate Payee.  

I now have another attorney telling me that I cannot change the model QDRO to insert a time rule option AND must wait until the Participant actually retires to prepare and submit the QDRO - likely about 20 years in the future. Say what? 

26 IRC Section 414(p)(2) sets forth everything needed for a valid DRO:

"(2)Order must clearly specify certain facts:  A domestic relations order meets the requirements of this paragraph only if such order clearly specifies—

 BUT, hold on, if the Participant remarries and  then retires,  his new wife becomes irrevocably vested in the survivor annuity and the intended Alternate Payee can never get it....PERIOD.    

See the 1997 decision of the US Court of Appeals, 4th Circuit,  in  Hopkins v. AT&T Global Information Solutions at
http://scholar.google.com/scholar_case?case=9954117838131396049&q=hopkins+at%26T+global&hl=en&as_sdt=2,9

followed by the 5th Circuit in 1999  Rivers v. Central and South West Corporation at   http://scholar.google.com/scholar_case?case=2296953953561556363&q=rivers+central+and+south+west&hl=en&as_sdt=2,9:

“This Circuit agrees with the Fourth Circuit's decision in Hopkins and adopts its rationale. Rivers failed to protect her rights in Franklin's pension plan by neglecting to obtain a QDRO prior to Franklin's retirement date. Consequently, Franklin's pension benefits irrevocably vested in Mrs. Franklin on the date of his retirement and Rivers is forever barred from acquiring an interest in Franklin's pension plan.”

To the same effect see Dahl v. Aerospace Employees’ Retirement Plan, a 2015 case from the U.S. District Court for the Eastern District of Virginia (and cases cited therein) -
https://scholar.google.com/scholar_case?case=3487596170773082469&q=dahl+v.+aerospace&hl=en&lr=lang_en&as_sdt=20000003&as_vis=1

Other cases following Hopkins are collected at:
https://scholar.google.com/scholar?start=0&q="Hopkins+v.+AT%26T"&hl=en&as_sdt=20000006
 
I have changed Fidelity forms like this many times and inserted a time rule formula and it was accepted by the Plan.  

Can anybody cite an IRC/ERISA code provision, or a case decision, or any treatise, that would be contrary to my universal experience that time-rule formulas are acceptable as a method if defining the amount of the Alternate Payee's defined benefit annuity, and that a Plan Administrator/TPA cannot limit the options available?   

Thanks for your insight.   

David 

N-G Shared QDRO Package 42 pages 2019.pdf

Last week I recently became a 2% owner of an S Corp of which I am an employee.

I am participating in Dependent Day Care and FSA to the max amounts.  Also, I participate in an AFLAC type policy.

I understand there will be tax implications but I'm trying to figure out what exactly they are.  Do all of these pre-tax items get treated the same way for this tax year?

When calculating an RIA's fees, can/should the value of accrued interest on bonds be included in the portfolio value?  Is there guidance written anywhere on how to value an account for charging fees?