austin3515

Why would it be of no value? The link is in hand, and the credentisals are in hand? This is akin to locking a deadbolt but leaving the key in the keyhole? You agree that if it was snagged in transit, then anyone (including a hacker in North Africa) can access whatever is "encrypted"? All they need is the name or email address, and that is already in the email. Whatsmore, when you click the link it will say "Please enter your email address" so it's not even like they have to be clever about trying to solve a puzzle.

I dont undertand though. Between point A and point b the email istelf is on a dozen different servers and travelling over "public" lines. Anyone can snag the email in transit. In other words, if what you were saying was true, and email could not be snagged in transit, why would we need encryption at all? You would never send an Excel file unencrypted in any way right? Isn;t that because it might be captured in transit? If it can be captured in transit so to can the email (which includes the combination to the lock?).

Are you suggesting that the "enter your name or email address to decrypt" method is acceptable to protect SS#'s? I can't tell from your response...

I can;t figure out why that's even an option. Anyone with the email can access the files. I strongly recommend you require the passwords to open. The email (and thus the key to vault since the email itself includes the credentials (aka their name)) is traveling unencrypted all over the place and can easily be snagged in transit. Maybe its ok for internal financil documents or soemthing, but definitely not for SS#'s and DOB's. I'll bet if you asked Sharefile they would say the same thing I am.

Thats the Office 365 one. It is brilliant. You can either sign in or get a one time code sent that is valid for I believe 10 minutes or something. The problem as you suggested is they have to find an early secure email from you be able to get back in and send something encrypted. Sharefile allows you to upload files through the use of a simple link that we can include in our email signatures (so our clients need only find the last email we sent them).

We use Sharefile and I suppose it is OK, but it is too complicated for a lot of our clients and I presume there must be a better option out there. I'm curious if anyone uses a different system. Sharefile is integrated with Outlook so we can easily encrypt our attachments, AND our clients can upload files directly to our own personal in box. But the password thing is clunky, clients always forget their passwords, etc. Anythng better out there?

Enjoy!

OK, we'll all be waiting with baited breath to see what the response is! I won't be able to make it myself.

The winter virtual one?

Well there is one practical disadvantage. If you're the one calculating it, your client needs to provide you additional information. So I suppose it is more work for you and more work for your client. But if you're goal is to do what's best for your client then that wouldn't be a disadvantage at all! It will save them enough to make it worth the extra 5 minutes of work.

This is what I came up with to really isolate the crux of the question. I dispensed with all the deemed loan stuff, and just stuck to a straightforward fact pattern that comes up all the time. Question: Participant's 401(k) Elective Deferral account consists of $9,000 of a participant loan and $1,000 of Mutual Fund A. Participant's Profit Sharing Account consists of $50,000 of Mutual Fund A (the Participant is already 100% vested in this account). The Plan exclusively allows for hardship distributions from 401(k) Elective Deferrals. The Participant would be eligible for a $5,000 hardship distribution, except that the liquid balance in his 401(k) Elective Deferral account is just $1,000. If the Employer/Plan's administrative policies surrounding participant investment direction allowed for it, would the Participant be permitted to elect the following transfer? Transfer $9,000 of "Loan" TO Profit Sharing (FROM 401(k) Elective Deferrals). Transfer $9,000 of Mutual Fund A TO 401(k) Elective Deferrals (FROM Profit Sharing) Proposed Answer: Yes. The balance in each respective plan source is identical before and after the transfer. The only difference before and after the transfer is the investment breakdown of the investments allocated to each source (as happens normally in a participant-directed 401(k) plan). The laws governing participant loans are designed to make it clear that participant loans are investments.For example, see page 12 of the following document prepared by the US DOL which states in part regarding participant loans: "The loans, which are considered investments of the plan, must be available to all participants on a reasonably equivalent basis, must be made according to the provisions in the plan, and must charge a reasonable rate of interest and be adequately secured." https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/publications/meeting-your-fiduciary-responsibilities.pdf

Great idea!

Plan covers only the 100% owner and his wife. The Plan has to be aggregated with another plan to pass coverage (i.e., the other plan covers nonexcludable employees). What's really happening is that there are leased employees who are benefitting in a plan that has an identical design (which is why we can aggregate). But is my plan a one-participant-plan eligible for the 5500-EZ? i.e., is it exempt from ERISA?

Exactly. To tell you the truth I think that if we could ever find a PEO that would let us do everything related to the admin for our plans, that would be the home run scenario for this stuff. Because if you're the PEO, you're already running the payroll, the data is yours, etc. And of course you're not a 316 you're the actual administrator. Anyway, obviously finding a PEO who would let me do that might be harder then finding the Lost Ark. And yes PEO's are expensive but there is a clear value proposition there, where I think this 3(16) stuff just does not add enough value to justify the extra fees that they charge. But that's just me.

Nothing. And I recently spoke to a wholesaler for a large recordkeeper and he told me his region added something like 80 new plans and one took 3(16) services from a TPA. And I'd venture a guess that that one client is getting "ripped off."

Pretty much the thought process we are going through! Major major committment, entirely new operation. And getting plenty of new business without having to mention it... But I do like the idea of saying "hey, I can send notices for you and sign off on distributions." This processing payrolls and getting full census data each pay-period seems like an overreactive fix to a problem that I don't see is out there.

In general, I am pessimistic about the 3(16) business model, but I get that there are aspects of it that appeal to clients. My question is, do I have the latitude to pick and choose which things I will offer as a 3(16)? So for example, I think it rather unappealing to clients to take over the deposit process because most clients want to be involved in ACHing funds out of their own operating account. But I think in general clients LOVE the idea of a TPA signing off on distributions. Signing a form 5500 - not a big deal since I already prepare a signature ready form. But responsibility for sending out notices? Quite appealing. So the question is, can I have a "3(16)-lite" offering, charge a little bit more for it, and take over those things that are the most value added (emphasis on the word value). I already understand the concept behind the full suite of services, so no need to sell me on that!

In this example, the funds are money, and money is fungible. You're question is framed in the context of somehow getting a boon for the participant by somehow circumventing the vesting rules. This ignores the fact that you are transferring an equal sum of money into the profit sharing account. A you know, people rebalance their accounts in participant directed 401ks all the time, and can indeed switch their accounts between Fund A and Fund B in different sources as I described. So this actually happens, so it is unclear to me why you would suggest it cannot and therefore presumably does not happen. And how can you account for the existence of pooled accounts where all investments are commingled and there is NO attachment of source to any underlying investment?

What's the difference between your question and this question: "can I change how my 401k is invested from Fund A to Fund B? And can I also change how my match is invested from Fund B to Fund A?"

For treating a loan like an investment? And in the face of no plan provision, no regulation, no IRS Q&A, no promissory note provision, no absolutely anything beyond conjecture to suggest that source is as intrinsic to that investment as its interest rate (which is plainly stated in the legally binding promissory note)? That's really the position here, that somehow source is intrinsic to the loan. You can;t just say that it is without something written into something legal that makes it so (or a regulation that makes it so, or an IRS position). Yeah I don't think this is in the same category as botching the top-heavy issue on a 401(k) only plan. Not even close. And I would still like others to clarify that you can most definitely trade Fund A in 401k for an equal sum of Fund B in match. There has been ample suggestion in this thread that that is not possible, but again it implies that somehow source is intrinsic to an investment--it is not. I'd appreciate it if others would say so if you agree. This is just totally uncontreversial, but it is the foundation of my argument. I saw more than one suggestion that what I have suggested is impossible because the funds are somehow "stained" by their source.

This question overlooks the whole point of all of this which is the other side of the coin. Could $3,000 in Fund A, 401k, be switched with $3,000 of Fund B in Match. And the answer is "yeah, obviously." Please tell me no one disagrees with THAT?

As I said before, a "pension celebrity" that you all know said this would work. And that is more than good enough for me!

He ends up with 2 taxable distributions - one for the loan defaylt and one for the distribution. That;s twice as much in taxes. And I still end up with basis which is "bad" (in my opinion).

Here is another example. Participant A has $10,000 of Match and all of it is allocated to an illiquid privately held stock. Participant also has $10,000 of liquid mutual funds in his 401k account (yes, of course this can happen, just because it never would doesn't mean it could not). Now the Match says you can take everything after 5 years of participation, and the 401k says you have to be 59 1/2 and this guy is only 40. And he wants an in-service distribution. How do you all feel about moving the illiquid investment sourced to match into the 401k account, and transferring the liquid investments sourced to 401k into the match? If this is OK, then my scenario should be ok. If you're not sold, how about this? The participant is magically able to sell the illiquid investment to cash, and turn aorund and by liquid investments within the match account. He then sells all of his liquid funds in his 401k account, and buys the same illiquid investment back the very same day, all within his 401k account. So now I have moved my illiquid investments to my 401k account, and my illiquid investments to the match account. If that works (and I cannot fathom a suggestion that the previous paragrpah is not allowable) then merely cutting out the middle step of liquidating to cash should be moot, and back we go.

a) Participant has max # of loans already b) The plan sponsor has agreed to pay for the tax impact of the default so the participant is whole anyway. Because taxation is unavoidable anyway, they didnt want the guy to have go through all that trouble. PLUS we would end up with basis in the plan, and my feeling is that basis is almost never accounted for correctly in the long-term. c) We just wan the loan and the problems with it to go away. Hence trying to rebalance the account to put the loan in a source that is currently distributable.