austin3515

What are people doing to notify participants about the new hardship distribution rules, since the document providers have yet to issue their stuff? At least Relius has not yet done so...

Unbelievable. I was researching from home. I read the preamble to the regs which says in no uncertain terms though shall not add an EACA mid-year!!! I emailed a client and told them we had to do it 1/1 or we couldn't do the EACA this year (They wanted 4/1). After finding the portion of Sal's book that clarifies that if only newly eligible ees are swept in (which is my situation) it is ok to do. So I had to email the client and tell them I messed up. Embarrassing. But it's still stupid that there is a disincentive to adding auto enrollment covering all employees mid-year.

I read in one article that it was possible to add an EACA mid-year, but you would only be eligible for the 90 day withdrawal benefit, and not the 6 month penalty free ADP correction period. That is fine with me, but everyone else seems to say (and really preamble to regs was pretty on point) that you can;t add an EACA mid-year. Which is really stupid. Follow-up: Anyway, let's say hypothetically I can't be an EACA for year 1. So now what, I have to be an ACA for 6 or 9 months, and then I can switch to an EACA, right?

Is a money purchase plan sponsored by a governemnt/government agency subject to the same spousal waiver rules applicable to private money purchase plans? i.e., must the spouse consent to non-annuity payment of benefits?

Can I ask what this was about? I have never heard of a DOL audit (aka Investigation) getting to this level. just curious was this like embezzlement or someone who forgot to send an SAR or somewhere in between! Perhaps you're not at liberty to say which I understand...

I meant to come back and clarify that this was a tax-exempt entity 457b plan and that all monies were 100% vested. I submitted a question to ERISApedia and essentially got the same answer. Thanks Carol!!

This hasn;t happened, thank goodness, but the question being posed by a board member is, if a participant were to embezzle money, or was terminated for some other crime against the employer, is there a way to forfeit their balance? My assumption is that nothing the participant can do will eliminate the liability to the participant. Yes, I am aware of the fact that this is doable in a 457f plan which is still subject to a substantial risk of forfeiture. I assume there is no possibility of this in a 457b. Let me know what you think!

My understanding of this (and I base in part on the wording of the plan documents) is that the participant is responsible for the RMD's. The recordkeepers will send notifications to the age 70 folk to remind them. But there is no such thing as a failure of a 403b plan to pay an RMD as there is in the 401k world. Read the document. What you will find is that the Plan does not have an affirmative obligation to pay the RMD, entirely for the reason described by Peter above.

Plan has up to ~12% profit sharing (after integrating w/ SS) plus a 6% matching contribution. As a result, after taking into account 401(k) contributions, a handful of participants each year will require a portion of their 401k refunded. 4.04 of EPCRS states: A plan that provides for elective deferrals and nonelective employer contributions that are not matching contributions is not treated as failing to have established practices and procedures to prevent the occurrence of a § 415(c) violation in the case of a plan under which excess annual additions under § 415(c) are regularly corrected by return of elective deferrals to the affected employee within 9½ months after the end of the plan's limitation year. So I'm ok with this policy, correct?

I think forever now I am going to be asking "Where are the sodas for next year?" I like that a lot... I have a sneaking suspicion the Secretary of the Treasury reads these boards (because why wouldn't they after all (isn't that the new standard for truth?)) and picked up the phone and made this happen. A lot of people are saying that's what happened.

Are they waiting until after the mid-terms or something??

Ahh yes. But hopefully the IRS guidance in response Trump's Exec Order will alleviate that even for these.

That's actually an interesting point. But interestingly if we "insist" that we only allow clients with few than 100 participants, perhaps we can avoid the worst part of sponsoring a MEP anyway which would be the audit? If we have all of the records to do the SFs wouldnt be THAT much extra work if we're already doing client level testing/allocations, etc. Is anyone out there doing this?

OK, got it. This is what I skimmed over.

Well we do have commonality if we operate in say "Alaska" and have only Alaskan businesses as clients. They list geography as a commonality?

What do you think about this language though (italics)? That seems to provide a way? "The group or association is not a bank or trust company, insurance issuer, broker-dealer, or other similar financial services firm (including pension record keepers and third-party administrators), or owned or controlled by such an entity or any subsidiary or affiliate of such an entity, other than to the extent such an entity, subsidiary, or affiliate participates in the group or association as an employer member of the group or association."

https://content.next.westlaw.com/w-017-1687?isplcus=true&transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1 So can we sponsor a MEP as long as our own company's 401(k) Plan is a participating employer?

Tom I knew I had seen something somewhere! Thanks!

Yes but by not using the example of X% of $360,000 they seem to be uncomfortable writing down on their website that any contributions can be determined by referencing comp >$275K. Do you agree? Why else wouldn't they be explicit about that?

Bump up. Any uodates to this conversation? Just seems hard to believe that this was not addressed yet. At first when I saw this link by the IRS I thought, "great, they finally addressed" https://www.irs.gov/retirement-plans/401k-plans-deferrals-and-matching-when-compensation-exceeds-the-annual-limit Except that they almost intentionally did not use the most apporpriate example which would have been someone electing 3% of $360,000. Instead they said she could elect $1,500 from each paycheck all year. I guess that helps a little, but still leaves open the question if "3% of $360,000" is an acceptable deferral election. Anything? Anyone? Or is the most recent guidance the Q&A above?

If you want to know the truth I wish all of our plans were balance forward. The number of things that clients can screw up is decreased dramatically versus recordkeepers!

We don't have our consultants doing any of those things. They do of course end up "servicing" the client, which takes time. I just don't think you can do anything more than process data at those levels. We spend a lot of time fixing stuff like "Johnny's money is in Susans account." My point is with 120 plans you're not even checking to see if Johnny's money went into Susan's account. We ask "Total wages on the payroll report are $1MM but on the census file it's $950,000 (which we see a lot)". With 120 plans you're not even getting a copy of the payroll report. We're asking "you said Johnny worked 1,000 hours, but he only made $3,500". At 120 the expectation/assumption is the client gave accurate data. I get that this is a different business model than ABC Bundle Co. I'd be curious to know if anyone agrees with me :) (the dissenters are on record!). We're more 60 to 80 at the top and no one is slacking off.

I'll say this: 120 plan case load is a data processing shop. You're not asking any questions, you're not scrubbing data. The assumption is the client sent you good quality data. You're not doing participant level deposit reconciliations; you're assuming the client sent in everything correctly. These are bad assumptions but we charge our clients accordingly. So this gets to the heart of what others have said before me. I wanted to clarify that 60 vs 120 is the difference between a consulting service and a data processing service (assuming of course similar books of business). OK fine if it's 120 safe harbor plans with no more than 15 or 20 people, maybe you can do a bang up job.

Plan excludes Taxable fringe benefits and bonus from Comp. Problem is, I don't have them segregated from the client. Client has a straight 5% profit sharing contribution. I can probably get away with rate group testing using the total comp, but can I try and pass the 414s testing, by dividing eligible comp by total comp (including taxable fringe?). My denominator is a safe harbor 415 definition of comp so I suppose so. Agree?

You know I would be glad to, except that I would not have written it the same way now that I know what I know from the previous posts. I would have talked to the CPA about the 1040 to see if they prepared it correctly with the indicated notice--if they did(which let's assume most do it correctly) I would certainly like to mention that to the IRS.