Hello,

i have a plan that allows self certification for hardships on line through Voya.

They have a participant that is now requesting his 3rd hardship in 6 months.

Can the plan sponsor set up administrative procedures to request supporting documentation if the participant has requested more than 2 hardships or if they feel it may not be for a hardship reason? 

Appreciate your thoughts.

Is it permissible for a Safe Harbor 401k to exclude a class of employees or is this not allowed? If the Safe Harbor 401k is allowed to exclude employees, would the plan have to pass the coverage test? 

I will be setting up a combo Cash Balance/401k Plan between 2  companies and am not sure whether this will be a CC, ASG or Multi ER plan.  The business structure is as follows: 

Company A owned by Brother and Sister 50/50.  5 years in operation

Company B is owned by Husband and Wife 100%. 20 years in operation.  The owners of Company A are the adult children of Company B.

Company B has 1 non-owner employee

The two owner groups take W-2 pay from each respective owner company.  Beginning in 2024, the parents of Company B will draw W-2 pay from Company A

Company A wants to set up the 2 plans with Company B the adopting employer.

Is this considered a controlled group due to attribution or is it an ASG or multi-ER plan?

The type of business is Property Management and they are affiliated with one another.

Thank you for any guidance you can offer in this situation.

Is it possible to have two separate vesting schedules in one plan? I have a client that is considering removing SH, however they have a union group entitled to a certain match %. Due to permissive aggregation, we believe the union group can continue their same matching formula and vesting at 100%. However, for anyone nonunion moving to a discretionary match, is it possible to have a separate vesting schedule? 

A 401k participant passed away leaving his wife as his 401k account beneficiary.  The account has stayed in the plan and has been re-titled to be in her name at this time.

Are there are restrictions on who she can name as her beneficiary for this account?  She has no kids and does not want to leave it to her brothers.  Can she name a non-profit or other entity?

Thank you

According to my understanding, if a person earns compensation and defers under a NQDC plan in state A, but then retires and moves to state B, state A can't touch the money unless it is paid out over 10 year (since state A is not the domicile -- see code section 114).

What if a participant has deferred compensation

1. from 2022 to be paid out in a lump sum.
2. from 2023 to be paid out over 15 years.

Should 1 be taxed in state A and 2 be taxed in state B?  Or do we look at plan benefits as a whole, and tax it all in state B?

EDIT:  I guess another question is this -- if we look at the plan benefits as a whole, they are paid out over 10 years, but they are no longer substantially similar payments (since half is paid in a lump sum and half over 10 years).  So does that mean NONE of this qualifies as retirement income under Code Section 114?

Participant dies, and has both ROTH and Pre-Tax funds.

Elects to rollover ROTH fund to her ROTH IRA

Elects to rollover Pre-Tax funds to her traditional IRA.

Custodian issues 3 checks.

First check is to the beneficiary's Traditional IRA for the Pre-Tax funds.

Second check is payable to the beneficiary's ROTH IRA for amount of cumulative earnings in the ROTH 401(k) source.

Third check is payable directly to the participant in the amount of the cumulative ROTH basis.

I have a call into to custodian about why they did this but I'm wondering is the path of least resistance is to -

1 deposit the pre-tax funds to the IRA.

2 deposit the ROTH earnings to the ROTH IRA as a death benefit rollover

3 deposit the ROTH basis to the participant to the ROTH IRA as a 60 day rollover.

Note participant was not yet RMD age but beneficiary is over by a couple years, that would not impact direct rollover but would it impact her ability to do 60 day rollover? 

I mean I think the correct way to do this would be stop payment on the basis check and reissue to he ROTH IRA with correct 1099-R code. But since there will be no tax consequence either way, I'm trying to see if the work around is just simpler than dealing with custodian.

Our payroll system allows catchup contributions all year long, as a separate "bucket", distinct from other contributions (401k, Roth, and 401a).  There is no control on whether the employee is on target during the year to qualify for catchup once they designate catchup contributions. 

We noticed an issue with some employees not deferring enough to meet the statutory limit, however the catchup functionality in the payroll system is programmed to stop at $7500, regardless of the amount of the deferral or satisfaction of the underlying statutory limit by the employee. 

In the case where an employee either doesn't qualify for all or part of the catchup because they didn't meet the statutory limit but designated catchup deferrals, the plan "recharacterizes" the catchup at year's end, but doesn't make any adjustment for match on the recharacterized funds, even if the employee wasn't provided their full match for the deferrals that year. 

Example on this is that in 2023, one employee was stopped $10,000 lower than the elected deferral to the "catchup bucket" (deferral was designated at approximately $17,510 into catchup) and didn't meet the statutory limit due to this cap (the employee contributed a total of $9000 to the pre-tax and Roth accounts).  The employee ended the year with ~$16,000 deferred instead of what she believes she designated (~$26,000).

I have two questions based on this situation:

1 - is stopping the contributions to the "catchup bucket" at $7500 generally a problem or an operational error when the employee elects a higher catchup amount than $7500?

2 - is there an issue with not retroactively contributing matching funds to the recharacterized funds if the employee didn't already receive their full match for the year?

We have a client that turned into a co-op, so all 14 employees own an equal percentage of the company (about 7%).  So technically all employees are greater than a 5% owner and therefore an HCE.  Am I correct in saying that there would be no compliance testing?  I just want to make sure.

Thanks!

Pension plan unmarried participant elects life annuity with 10 years certain and names three children as beneficiaries for one-third each. Participant dies before the 10-year guarantee period ends so remaining payments are due to the beneficiaries. However, one of the three beneficiaries also died, shortly after the participant but before receiving any benefits if that matters.

Are remaining benefits now paid to the two surviving beneficiaries at 50% each, or does the deceased beneficiary's portion go to that person's estate?

The plan is silent, as are the SPD and benefit election/beneficiary designation forms. Nothing specifically allows for beneficiaries to also elect their own beneficiaries so I'm inclined to say split remaining guaranteed payments between two remaining children. Thoughts?

Do you think it different if beneficiary had started receiving payments and then died?

Unless there is a specific legal avenue we must pursue (reason for my question) I think we ultimately need to have Plan Administrator interpret and decide upon how proceed.

Thanks

So, employer does binding resolution to terminate plan as of (x) date, no new contributions, etc., etc. Notification to employees is sent, specifying that date as the effective date of the plan termination. However, PLAN was not amended to terminate by that (x) date.

Arguably, the resolution can suffice, at least temporarily, to legitimately establish plan termination date, and plan can subsequently be formally amended to terminate, update for SECURE, etc.? Or is that a hard no? We always do plan amendment by the day before the formal termination date, but I believe that facts and circumstances can allow otherwise if the resolution, notification to employees, etc., are sufficiently detailed.

Thanks.

How can I use a QDRO to receive Alimony arrears, and if my ex-spouse retirement plan does not have a high enough account balance, what are some other immediate ways I can receive payment for my Alimony Arrears?

Also, as I mentioned I have arrears, but based on my court order, Alimony ended June of 2011. I know it is not possible to file for an extension of alimony once the term is over of alimony payments, but my question is: would I eligible to file for an extension of alimony because there are Arrears to be paid, and thus my Alimony term is still considered "Active."

Please note that a Judge issued a new order in October reaffirming my rights for alimony and ordered that "all terms and provisions of Judgement of Absolute Divorce are in Full Force and Effect."

Can anyone explain why IRA custodians request the "first year of Roth" when a Roth 401(k) is rolled over to a Roth IRA?  The 5-year clock starts over when Roth funds are rolled over from a 401(k) to a Roth IRA.  Besides the fact that I also don't understand WHY the clock starts over, why is this data collected?

If a loan is issued with a commercially unreasonable rate of interest. How is this a violation IRC 72(p) that would provide for the authority to deem the loan. If your answer is it results in a violation of substantially level amortization, please provide your reasoning bc I’m personally struggling to reach that conclusion.

Can a church offer a nonqualified deferred compensation plan, subject to Code Section 409A, to all employees or must participation be limited to a top-hat group?

I have been fighting with the benefits group of my former employer for the past 7 weeks. I was laid off, opted for Cobra, company paid 2 months and I started paying in month 3 (October). I sent my check in time for the due date, the company received and deposited my check but never applied it to my account. 

I noticed this a week after the payment was due when I logged into the benefits site to confirm everything was all set. When it showed it wasn't paid, I reached out to check on it and I was told they never received the check so I provided them with a front & back copy of the cancelled check that I had received in my bank statement. Proving that they did in fact receive and deposit the check. 

I also paid month 4 - November payment which they received, cashed and applied to my account and have paid December which has not yet been cashed or applied but not worried since it is well within the grace period and I believe they are holding it and it will eventually come back to me which will become clear why below. 

For the past 7 weeks I have been getting the run around from the company claiming (A) The check was not received (I provided  copy 5 days after they deposited it) (B) They sent the check back to me (they gave no reason why, just that it wasn't applied because they sent it back to me. Reminded them that I uploaded a copy of the front/back of the cashed check so they couldn't have sent it back to me) (C) They sent a refund check to me (I asked for details of when, where & to whom they sent it as well as a copy of front/back of the refund check if it had been cashed - I've gotten no response). (D) They credited my bank account (asked for details including the bank routing #'s and account that they credited and a copy of the receipt for the deposit to my account and the reason for the return of the funds - crickets because it didn't happen).  (E) The check was returned for insufficient funds 6.5 weeks ago (This one was my favorite!!! I asked for a copy of the ISF notice they received - once again, it didn't happen because I got the cancelled check back in my statement showing it was paid to their account ). 

I also received two statements in November, the first just before Thanksgiving, showing the October & November payments and only December due - generated after I called to question the payment and showed proof of payment and the second generated after Thanksgiving and the October payment has been removed again. 

Last week I gave until Friday afternoon to resolve this or I would file a complaint with Department of Labor COBRA division - On Sunday evening, yesterday, my insurance was cancelled without notice. 

I immediately opened a claim with DOL, uploaded all my proof of payment, copies of conversations (including the excuses) and statements of amounts owed. They called me back this morning and got to work contacting the former employers corporate lawyer. I also had surgery scheduled for today and DOL contacted the hospital where I was to have the surgery and made sure they knew the insurance was cancelled in error and the hospital agreed to continue the surgery. GO DOL!!!

My concern is now that they have cancelled my insurance due to their error that they have refused to fix, does anyone know how long it takes to be reinstated, I cannot get an answer from the worlds worst employer and what about my 2025 insurance? I have previously elected COBRA for my 2025 coverage but if they take this past the final signup date, can they screw me on that too? 

I am concerned that they are holding the December check and will return it to me at some point since I no longer have active insurance. I am prepared to send a second check for December if/when the check comes back uncashed or sooner so they have it in hand when the insurance is reinstated and to avoid them saying that my payment was out of the grace period. 

I can't imagine this is legal, cashing my check but not paying my insurance and I understand that mistakes happen but I spoke to no less than 5 different people who all came up with a different, ridiculous excuse for why it was not applied, each excuse instantly proved false by the cancelled check I uploaded to their system weeks ago. 

I've been told for the past 2 weeks that they are escalating this to the leadership team for review and finally today, after DOL got in touch with their corporate benefits lawyer that  "We went through the check images you provided, and are escalating to the bank processor for further review of the October payment."

Can they be fined by DOL? Pay a hopefully hefty penalty? Do I have other recourse or based on experience, should I be comfortable that they will reinstate my insurance and stop playing games? 

I give props to DOL, they reacted quickly and totally took care of me today and I have faith in the DOL rep but no faith in the worlds worst employer who after speaking with 5 different people, getting 5 different excuses and taking 7 weeks with nobody truly looking at this I have two options: Believe these are the most incompetent workers ever hired anywhere or this company is purposely doing this to ex-employees to screw up our insurance. 

Disclaimer: Writing this on pain killers after surgery today, I realize it's lengthy, I hope it makes sense  

I have a client who failed the ADP test.  No NHCEs contributed to the plan (the vendor did not disaggregate the client's two plans; one is for NHCEs and the other consists mostly of HCEs).  At any rate, does anyone know how to determine the highest permissible ADP for the HCE group in this instance?  There are only 4 out of 5 HCEs who were contributing to the plan. TIA

Anyone have any resources / contact information that can be sent to an attorney in Missouri who is not understanding the retirement beneficiary and federal rules for death benefits?

Or alternatively - tell me my understanding is wrong and I'll tell them and the sponsor to listen to the attorney?

Fact Pattern:

Death distributions needed from standard 401(k) and DB (PBGC covered) small employer retirement plans.  Everyone is in Missouri. 

No named beneficiaries, so the default plan document beneficiaries apply. In this case the default beneficiary in the plan document is the estate. Period. 

Decedent did not have a will, based on court filings total value of assets likely is less than $40,000 (including the retirement plans) Estate/Probate was not opened within one year, and in lieu of doing the Small Estate Probate (Which is still allowed after one year), the heirs did file and receive a Decree/Determination of Heirship. Which does happen to have an estate number on it, so the court can track it. 

• Attorney for the heirs wants the plans to pay directly to the heirs. 

• The plans are insisting on a TIN so the death benefits can be paid to an estate. Which I agree with. 

The confluence of federal laws for the plan, the fact that  there IS a beneficiary, so the determination of heirs doesn't really matter for the plans, etc, are confounding for the heirs' attorney.  

Other than just telling the plans to hold firm, any other ideas? information they can send them? Any Missouri estate attorneys want to chime in or want me to send their contact info to the heirs' attorney? 

W have a 01(k) plan which was effective in 2021.

Accountant wants to add  Roth contriubtions and recharacterize all prior contriubtions as Roth.

Need some cites, seems crazy.

I was divorced following 20 years of marriage. My ex was to receive 50% of my 2 retirement plans at time of our divorce. I have 2 pension plans as another company purchased the company is was working for. My ex has suddenly passed away and neither of us had started collecting my benefit. The first company has reverted my ex’s benefit back to me. The company I am currently working for says that my benefit is being forfeited. I do not have copies of my QDROs. Both QDROs were filled out and signed at the same time. This makes no sense to me.