austin3515

Can a sponsor require employees to fill out a form affirming the fact that they do not want to participate in a 401(k) Plan? The point would be to prevent that employee from coming back and suing for not being offered the Plan. Any technical references would be ideal. Thanks

I just saw somehting that indicated that IRAs are not subject to the anti-assignment rules. Can husband roll into an IRA and then give the money to wife - i.e, roll into her IRA? Thanks, Appleby. I tend to think your right, but we heard of someone who somehow pulled it off without a QDRO. I know not everyone follows the rules, but I'd just as soon hear if there is another way. Thanks,

Husband has a 401(k) Plan with a previous employer. Husband and wife are in the process of a getting a divroce. Wife wants to receive a portion of husbands account balance as a rollover without obtaining a QDRO in the interest of accelerating the process. Is there any way to do this? Is there a loop hole for married people that one spouse can roll to the other spouse's account?

I also found in the "available on a resonablyu equivalent basis" definition of the DOL regs that you should employ the same criteria as a commerical lender. The Equal Opportunity Crecit Act or soemthing like that prohibits not providing loans on the basis of age. So there are two laws which I think are being violated by even considering age here.

I had an interesting question from a client: Is there any rule prohibitting a loan to a participant who is 63 (only 2 years from Normal Retirement), that will not be repaid in a time frame that can reasonably be expected to be repaid. (for example, over a period of 20 years, long after the employee will retire).

Nothing is more certain than death and taxes that's for sure. I totally agree with all of you. I'll let you know the resolution

What you said about demonstrating the ability to segregate the funds in twod ays is true. And I don't dispute that the DOL would give them a hard time on this if they came in. But I have spoke to a few ERISA attorneys on this and they all seem to agree that it could be argued that as long as the money is in within the outside 15 day window then the area is gray enough to give the sponsor the benefit of the doubt. But it is a matter of professional judgment. And the lost earnings do go to the affected participants in order to make them whole. Also, if 8 months have elapsed between the time of the late deposit and the time of the correction, than you would certainly need to calculate "interest on the lost interest" in order to make the Plan whole.

He didn't quote, but that is a good question. It's not part of the Plan Document.

You would have to calculate "interest on the interest." You haven't schedule G yet, so just to be safe, the interest, plus the "interest on the interest" is the PT to be reported on Schedule G.

A TPA just told me that all trades are executed on a shares certain basis. If there is a trading error related to the deposit being a day or two late for whatever reason, then the TPA needs to ensure that the right number of shares is deposited to the account. Therefore if the price of the fund decreased, the TPA can keep the extra money, and if the price increases, the TPA needs to make up the difference. Per the TPA this is very isolated (a few times a year). HAs anyone seen or heard of this? Is this a common policy? They made it sound like everyone does it...

If you're saying that the money was only 2 weeks later than usual, and not outside the 15 day outside window, I agree (as an auditor) that calling that a PT is a bit aggressive. Mind you the DOL may agree that it is a PT, however, there is substantial grayness involved before the outer window such that the benefit of the doubt goes to the client... If I saw this I would include it as a management letter, indicating that they should pay better attention and be aware of the risk.

Can it be a vague reference? Like "fees may be deducted?" or "if fees are deducted it will be based on account balance size?"

Can a sponsor sponsoring a 401(k) plan stop paying administrative expenses, and instead charge them to participants on a monthly/quarterly basis without notifying participants of the change? Assume the document allows payment of expenses, and that the expenses are reasonable (flat charge per month per head).

It's actually a DOL issue. Take a look at the DOL's Voluntary Fiduciary Correction Program to see how this should be corrected. Also, if you do a search for the "FAQ's on the VFCP" the DOL's FAQ's should pop up for you which is an excellent summary of the program.

SORRY!! If you fail the ADP, you must forfeit the match related to those deferrals. But if all you fail is the ACP, then you get to keep it. Is that more accurate? My question is actually about a 403(b) plan, where they are exempt from the ADP anyway.

No, if they're vested they get to keep it!

The second paragraph was to point that this would be N/A for a regular corporation as the additional money would just be bonussed out. I'm aware that there are no owners in a nonprofit. The benefit of failiing is to keep the additional match and be no worse off. The only hitch I've found so far is that the distributions need to take place before 2.5months after year end to avoid the excise tax for late distribution.

Small NONprofit has only one HCE, the CEO, who is 100% vested. Can they intentionally fail the ADP/ACP testing, knowing that he/she will be entitled to keep the excess matching contributions, which, had the test been passed, would have been foregone? If the only HCE was the owner, their would simply be easier ways to get the money out of the company.

If a terminated employee would have received a matching contribution but for the fact that he/she was not deferring, then the participant is benefitting. If a terminated participant would not have received a match even if they were deferring, the participant is not benefitting. Of course, if the terminated participant worked less than 500 hours, it doesn't matter anyway because the participant is excludable.

Got a client that has pooled separate accounts as their investments. On Schedule D, one line item is reported for all of the sepate investments options in the aggregate, because there are apparently "sub" pooled separate accounts. What should I do on the schedule of assets held? Should I list out each of the different investment options, or just list the same line item that is reported on the Schedule D?

What are other CPA firms doing to establish the proper payee is receiving funds from distributions from retirement plans? For example, as a CPA, how would you ensure that if the trustee says John Doe received a $10,000 distribution, how do you know that the trustee sent it to John Doe and not the Administrator who set up a bogus bank account to steal John Doe's money? Are you sending out confirms? How do you know you have the right address? I don't believe the question changes if the distribution elections are done paperless on the Internet or via paper forms (which can easily be forged) Please advise

Does anyone where I can find the 1983 GAM on the internet?

I work for an accounting firm, and this is something that comes up often - checks are printed but not mailed. If the check has not been mailed, then nothing really has happened. It has to be mailed. I actually think there is something called the "mailbox rule" somewhere. Probably lots of court cases on this one.

Never heard of such a thing. What's more, I can't see how its possible, since based on the DOL's correctiion program (VFCP, Voluntary Fiduciary Correction Program), the lost earnings is the greater of actual earnings that would have been earned or the underpayment penalty rate under IRC 6621(a). The former changes constantly, and the latter changes quarterly (or monthly?) Take a look at this program - it will have some good examples. A quick internet search should turn it up. Remember, the PT Excise tax is ONLY on the lost earnings - not the total amount of the late deposited deferrals. Read the instructions to Form 5330. There is an excellent example on how to calculate excise taxes on loans (which is what depositing deferrals late would be).

Good to see you again, Mr. Burns...