Should a recordkeeper or TPA try to get an employer to pay a past-due participant contribution?

A recent BenefitsLink forum topic shows how the duty to collect a contribution often is set with someone who decided not to pay the contribution (or his or her subordinate). http://benefitslink.com/boards/index.php/topic/57803-special-trustee-responsible-for-contribution-deposits/

Imagine that you’re such a plan’s recordkeeper or third-party administrator (and you’ve designed your business to be non-fiduciary at every turn).

What do you do if a participant contribution is long past due and has not been paid to any trustee, custodian, or insurer?

Is it okay to make no effort to get the employer to pay the past-due contribution?

Or should you “do something” to try to get the employer to pay?

If so, what is the “something” you do?

Instead of the typical 1,000 hours of service condition on receiving the company matching contribution the employer wants to require 2,000 hours.

I'm confident it can't be done (even if the match can pass coverage) but can't put my finger on a cite, anybody know where to look?

Would like to know how others handle enrollment/election forms for rehires. My understanding is that when a participant terminates employment their deferral election becomes void. Upon rehire, they should receive new forms and make a new election. Am I correct?

Is anyone familiar with the general fee structure for TPA work at MassMutual? We have a prospective client with about 25 employees who says MassMutual is charging them $287.50 per year to administer their safe harbor 401(k). It's hard to move the case when this is what the client thinks he is paying. There have to be some additional fees built in, but we can't figure out where.

is there any relief for a plan that started late in 2014 and didn't realize they would be required to get an audit due to large plan status until after year end? they do have over 120 eligible participants and have not engaged an auditor as of today for their 2014 pye.

Plan started in September with calendar year end.

Our Plan is owed lost earnings due to a series of delayed contributions from a number of years prior. We are not doing VFCP. What is the best way to deposit lost earnings into the Plan? Should it be deposited into a forfeiture account, or directly into the accounts of individual participants?

For former employees who no longer participate in the Plan, should the payments be issued to their last known address?

If a plan with a safe harbor match and 100% vesting and no other sources, merges into a plan with a discretionary non-elective and tiered non-safe harbor match which both have a 3 year cliff vesting schedule, can the 3 year cliff apply to participants in the safe harbor plan that merges? Or does their 100% vesting have to carry into the merged plan? I think that the new non-safe harbor sources do not have to be 100% vested. Any thoughts?

Does anyone know if under Rev. Proc. 2015-28 a correction can be made if the failure comes from a failure to auto-enroll when implementing a new auto-enrollment feature versus failing to enroll a participant in an existing auto-enroll plan?

If I implement the feature and miss participants, are the reduced correction fees available?

Large Plan

The Investment Manager is paid by the Employer NOT the Plan. The Investment Manager was paid over $5,000. This is an RIA so NO revenue sharing is taken by the investment manager.

the auditors say the Investment Manager must be shown on the Schedule C. I say no way. They do not receive any direct or indirect comp from the plan and are not required to be reported on the schedule C.

Thoughts??

Thanks

This is a calendar year 401k plan that has a last day provision in order to receive the profit share contribution. Participant wants to know if they terminate on 12/31, do they get the contribution? Do they have to terminate on 1/1 in order to be employed on the last day?

How do you calculate the Average Benefit if you are testing the plan on both allocations and accruals. I know if you test on accural, you use the ABT for accuals, and if you test on allocation, you use the ABT for allocations, but what happens if you are passing the rate group testing by testing some on alloactions and some on accurals - what average benefit test do/can you use?

Do you have to take the ABT for the employees tested on allocations and do a seperate ABT for those testing on accurals?

Thanks for your input

401(k) Plan received a divorce decree and separation agreement in March 2014, directing the parties to split the participant's account in the Plan (say $12,000). Participant was to retain responsibility for a loan on the account (say $4,000), so that Alternate Payee should have received $6,000, and Participant $2,000 plus what he repays on his loan.

Plan sponsor didn't request a separate QDRO, nor did the parties provide one, and sponsor acted on the general instructions in the settlement agreement. Arguably the settlement agreement wouldn't have qualified as a QDRO, but they didn't realize that and administered it as if it was. However, they then erroneously segregated the account. Instead of paying the AE $6,000, they paid her $4,000 because they thought the parties were sharing responsibility for the loan (i.e., they divided the $8,000 balance after the loan was deducted).

AE has now realized she was underpaid, and wants the Plan to pay her the remaining $2,000. Participant's account has enough to cover this amount. Any thoughts on how to correct? Would her amount need to be adjusted for interest? The settlement agreement was silent on interest, and no separate QDRO policy exists.

That dreaded day has arrived. SH MAtch Plan with $5,000 of forfeitures and just $2,000 of expenses (for my services). That's $3,000 down the drain.

No choice but to allocate as additional match... Fabulous. My client will be thrilled.

Any word on whether or not the IRS will get their head out of their ___ and fix this idiocy? This client is already plunking in about $100K in match!! Why stick it to them??

Consider a calendar-year SHNEC plan that is effective 1/1/15 and the document is signed 9/1/15.

Does the plan have any obligation to a long-time employee that terminated 8/1/15?

Is this employee included or or ignored in the contribution and nondiscrimination calculations?

Is the answer different in the world of DB plans? Must a DB plan that is signed on 9/1/15 with an eff date of 1/1/15 benefit an employee that left on 8/1/15?

Employee was allowed to participate from day 1, when plan has a 1 YOS requirement. Only one ee (a Non-Highly) was affected.

ECPRS Appendix B, Section 2.07 contains the rules for retroactively amending the plan to conform to the operations. In the examples, they indicate that the amendment was submitted for a determination letter.

I don't think today I am even permitted to submit my pre-approved document (or an amendment thereto) for a determination letter.

So can I do the amendment without submitting for a DL?

For plans that have an exception to the allocation conditions, specifically retirement, I've always treated as: if the person had reached normal retirement age they would receive the contribution regardless of reason for termination.

On the ERISA Outline Book, it mentions:

"Another common exception is for a participant who has reached the normal retirement age stated in the plan, and retires before the end of the year."

A coworker questioned the "retires" part because we can't find any definition of retiring in the AA, BPD, EOB. When you say retire, many would assume leaving the workforce and enjoying endless margaritas on a beach/etc. The only reference that can be found is NRA, which is easily determinable. Outside of using a dictionary...

So, is this exception solely in reference to NRA? Could a plan modify the reason for leaving work as part of the conditions?

I am new to this forum and need help determining how much does my ex will get in QDRO Distribution.

Here is the language in our MSA according to which, she is entitled to half of portion of marital value but she is not entitled to passive gains that occurred due to premarital balance.

'The parties shall divide the amount in the 401k for husband equally and in-kind in accordance with the following: the parties shall equally divide those funds accumulated in the account between the date of marriage April 2012 to date of filing for complaint of divorce May 2014, plus or minus any market
appreciation or depreciation on the aforesaid funds until the date of distribution. any contributions(including any market appreciation and/or market depreciation thereon) made my the husband to the retirement account prior to the date of the marriage and after the date of the filing of the complaint for divorce shall not be included in the portion of the plan to be equally divided by the parties.'

Below are the values o​f my 401k account

Value at date of Marriage:- $48812

Value at date of filing of Divorce:- $104819

Contributions made during the marriage:- $30994

Increase in Value during the marriage :- ($104819-$48812) - $ 56007

Increase in Value due to gains(not contributions) during the marriage - ($56007-$30994) = $25014

So while my Ex is entitled to Half of $30994(Contributions), she is not entitled to half of $25014. This amount($25014) has the gains also due to premarital balance.

Can someone please help me provide a number which my Ex- gets and how is it calculated based on the MSA..

Thanks

Record keeper requires spousal consent for all distributions. However the plan is not subject to J&S, there is no old money subject to J&S and this has been confirmed. Plan document does not require spousal consent, this has been confirmed. The record keeper has agreed that spousal consent is not required but it is "industry standard" to ask for spousal consent.

Questions: By requiring spousal consent, isn't the sponsor not following the terms of the plan document by requiring a participant to do something that is not necessary? Would a DOL or IRS auditor take issue with this in a similar manner as any other operational failure (maybe not as severe)?

thank you

Could someone please confirm if I'm correct in regards to this procedure of rolling Traditional 401k funds into a Roth IRA?

1) Code "G" will be used for this distribution.

2) The total distribution amount will be included as "taxable income". However, taxes don't actually have to be withheld at the time of the distribution. The taxable amount will simply be added to the participant's ordinary income for the year.

3) There will only be 1 1099-R issued.

Do you agree with all 3 of these procedures?

Stale dated checks got returned to participant accounts. Let's say we send a letter or two using skip tracing services, but everything turns up a dead end.

Let;s say further that the balance is greater than $5,000. May I set up a missing participant IRA and be done with it?

I thought no, unless it was a plan termination, but I certainly like the idea of making lost participants someone else's problem!