austin3515

OK well listen, I had the idea. Personally I think it is a good one. I'm going to let my Senator worry about the politics, I'm just way too logical to worry about that piece of it!

Oh MoJo, I guess you got up on the same side of the bed as usually do. Do I think that legislation that helps the "poorest" Americans preserve their retirement nest-eggs will prove to be a popular idea on both sides of the aisle? Yes, I do. Realistically we are not talking about a change, at least in my opinion, that is going to break the bank. I know that 1/5th of the US economy was not important enough to get a CBO score before passing legislation in the House, but I think my change is critical enough to warrant that simple task. I'd venture a guess that most people will default. I'm dealing with a situation now where someone took a $40K loan and his employer was sold just 6 months later. He either writes a $39,000 check or defaults.

I know what needs to be done... They need to allow people to continue making payments to IRAs after they terminate. Your loan called for $100 twice a month? Deposit $200 to your IRA (no less than $600 a quarter) and you can defer paying the taxes. Banks will set up ACH's. They will report whether or not the participant "defaulted" by not making the necessary payments each quarter. We'll find a way for the plans to tell the banks what the loan specs are. I can see a PenChecks jumping at the chance to add "participant loan IRA's." I'm going to write my Senator!!

Anyone have a good definition of management services? I figure if a dentist tells you this procedure is running late, the assistant is going to listen, or if the dentist tells the hygienist to take X-Rays, they're going to do it. Isn't that managing? What if this particular location the dentist is the only person there to "supervise"? Couldn't it be a gray area? And why wouldn't every dentist be set up this way if it's that easy to circumvent the rules? Another thought, at some point the dentist starts to sound like a common law employee, right?

http://lawtonrpc.com/401k-loan/ Another article from our scholar. Nothing flagrantly wrong here, and he has dropped his double taxation argument. Perhaps we won him over!

Found it!

She is out on leave - she has a year to cure to the loan, and I think she gets the grace period after the end of the year (I..e, it goes into default in a year, and she then has a grace period). But double check the grace period thing. I think I had a thread on this out here once upon a time.

Because the match goes in as a nonelective contribution, do I need to be concerned with 401(a)(4)? I can't find anything in there talks about there being no need to test the corection itself for nondiscrimination.

Yes, it is absurd. What we are deliberating now internally is how hard we "look" for this when calculating a year-end match. It seems like a giant pain in the @$$ to try and find these. The amount of extra work coupled the amount of effort to find a possible small overpayment on match. I know, I know, we will do the right thing. Just annoying.

1.414(w)-1 2)Forfeiture of matching contributions. In the case of any withdrawal made under paragraph (c) of this section, employer matching contributions with respect to the amount withdrawn that have been allocated to the participant's account (adjusted for allocable gains and losses) must be forfeited. A plan is permitted to provide that employer matching contributions will not be made with respect to any withdrawal made under paragraph (c) of this section if the withdrawal has been made prior to the date as of which the match would otherwise be allocated.

Auto enrollment plan where participant takes a permissible withdrawal to close their account within 90 days. Match eligibility is immediate. Do they still get the match? Please please please tell me the answer is yes cuz I don't want to have to look for these withdrawals every time I run some numbers (let alone differentiate between permissible withdrawals and any other kind of withdrawal).

Hey whose to say Trump won't get the audit requirement change through sooner! I could see that being rolled into a regulatory initiative more in the near-term as a way to eliminate "job killing regulations"

Same idea, but you win by a mile on entertainment value. Bravo. Bravo!

WEll, this is what Austin said, and he seems to know what he's talking about: Whether the payments come from payroll deductions or your savings account is completely irrelevant. It is literally the same question as to whether the money comes out of your right pocket or left pocket. You got the money tax free, paying it back with after-tax dollars is even steven. I think if you think about it for as long as I have (a wicked long time!) it will start to make more sense...

Plan uses a 5 year cliff vesting window. So contrbutions made on account of work performed in 2017, 2018, 2019, and 2020 will vest on 12/31/2021. So the 2020 contribution might be in the Plan for less than 12 months. I know it's a facts and circumstances situation, and I think the structure of this is clearly vesting after future performance of substantial services when you look at the overall structure. But what about the fact that the last contribution might be funded during 2021 and vest mere months thereafter? Is there a minimum period of time that a particular years contributions must be subject to risk of forfeiture? The trail would be very clear that regardless of the timing of the deposit the contribution in the last year is allocable to services rendered in 2020. I'm surprised I was not able to find anything on point about this...

I asked an attorney and she pointed out my Rabbi Trust Document says the Trustee has the right to: I'm pretty sure the attorney who wrote this for me started with the IRS's model Rabbi Trust.

Geeze, that's a pretty pertinent piece of information to this discussion. Of course if you are the one doing everything it is only appropriate and fair that you should take responsibility for it. I personally relish the opportunity to have an open MEP plan for all those reasons - an Open MEP where part of it is that each participating employer has to use the same payroll provider that we can work with. That's not too much different than what you are describing. But that's just not the same thing as me being hired as TPA and being a 316 which is really what my comments are targeted to. You are doing 316 the right way. It's not you I have a gripe with.

TPA Jake, I cant imagine how you can do what you are saying unless you are the one processing the payroll, etc. Are you part of an employee leasing copany where you are directly employing the people who are participating in these plans? I just don't have access to the day-to-day procedures to be able to prevent and/or detect these things.

Yeah, that's what my wife told me too :)

I'm just glad my head is still screwed on right...

I just came across this article in today's Benefitslink newsletter. I'd be curious to know if others agree that it is factually inaccurate, and significantly so. The author purports that merely because the loan repayments are made with after tax dollars that the comp needed to repay the loan represents a double taxation (i.e., because of every dollar of loan payments = $1.33 of comp). But the analysis does not take into account that the $10,000 of pre-tax money was received without paying any taxes. So if I take a $10,000 loan and put $10,000 in my checking account, and then pay it back the next day, it does not cost me $13,000. that transaction is 100% tax neutral. The fact that principal might be repaid through payroll deductions does not change the fact that $10,000 came out tax free and $10,000 goes back in without a deduction. I have heard many people suggest (and I think it is true) that the interest is in fact taxed twice (I think others have "proven" this is mitigated by other considerations). But that's a lot different than what this article is saying. But who knows, maybe I am missing something... http://lawtonrpc.com/401k-loans-double-taxed/

TPA Jake - We are a TPA who could easily double our fees and be a 316. We struggle with what additional value we are adding. I can already mail notices without being a fiduciary, and I'll charge an hourly rate to do so. Compile the census? Give me a payroll download from your payroll provider and I'm good to go. But listen, to rebeat a dead horse. If you have a client who neglects to tell you who the family members are; or if the client census does not use the proper definition of compensation; or if your client failed to automatically enroll a participant who is eligible; or if they reported incorrect hours for someone and the vesting was incorrect; or if they hired a temporary employee without telling you this and did not recognize that service for eligibility; or if the client deposited Johnny's money into Susan's account and Susan already took a full distribution by the time it was discovered; or if the client forgot to send in the 401k withheld from the bonus run; or if the plan document does not exclude bonus, but the client failed to withhold 401k and therefore match from the bonus; and on and on and on and on; who is responsible? I've just listed the kinds of problems that have gotten my clients into trouble. And as a 316 I cannot figure out how to take responsibility for any of it. Have you had a critical matter arise related to a Summary Annual Report, or the formality of signing a 5500? How about a critical issue related to a fidelity bond? the answer for me is no and no and no. So what the heck would I be charing all of that money for? Listen, I hope you have an answer, because I would LOVE to double my fees, and that's the God's honest truth.

Well, they very clearly said the only thing that matters is was the individual employed on 12/31. I think they were pretty clear on that point. And by golly if someone is terminated 12/30 then they are not employed on 12/31.

Well, listen, if I get a census that says the term date is 12/30, I suppose I'm going to stop short of asking for the letter of resignation, if it's all sthe same to you :). I'm just going to assume the employment relationship ended on 12/30.

Thanks Bill! Sounds like the IRS is saying (Example 4) that the person is not employed on 12/31 in this example.