MoJo

Our discussions with a variety of payroll providers usually starts with them responding with "Huh?" and goes no further. The problem we see is that most client provide the payroll files extracted from their provider to us (a recordkeeper) without modification - hence no ability to add the student loan match on the "normal" file. That creates an issue. While still in discussions (and awaiting guidance), our plan sponsors seem to think they'll just do an annual match for these people, despite doing a payroll by payroll match for deferrals. We have a problem there. Possible BRF, possibly timing (and testing considerations), partly a "we're not going to do that this year (after having done the match for everyone else). Our clients range from plans in the mid 5-figures to over a billion in assets, so, we have varying levels of sophistication (or lack thereof). GUIDANCE PLEASE! (if the IRS is listening)

Absolutely the best approach. We start with Legacy.com which is pretty helpful. In a couple of cases, at the frustrated suggestion of a member of my team, we've called the coroner of the county where thy died and ask who claimed the body. One actually said it wasn't their county - and inquired on our behalf to the neighboring counties (where we got the info we needed). They actually are very helpful! (I think they don't talk to the living very often). If you can get a death certificate, it will usually indicate if they are married and spouse's name.

Loans are evil. Run through 72(p) sequentially....

So, first, this is a "firm" statement from the IRS of what they have been saying for some time - so the way we are interpreting this is "they mean it this time" especially since they've given the transition period (amnesty) to fix (certain) past sins. In other words, "fix it now, or if we catch you, you really going to get it this time ...." A problem, in our opinion, does exist with respect to the plan documents. Our document (prototype) has *always* said forfeitures must be used no later than the end of the year following the year in which incurred, and for those who have accumulated forfeitures (despite our constant nagging), we've advised them that a correction requires going year by year and reallocating forfeitures based on the year in which incurred. NOTHING we read in the proposed reg grants "amnesty" from having to follow the provision of the plan - and we doubt the IRS will allow you to ignore the plan provision in order to take advantage of the transition rule. We do have clients with individually designed plans, that don't say when forfeitures have to be used, so maybe they can take advantage of the transition rule. For now, we're advising our clients that "the IRS really really means it this time, so when we've told you in the past you had to do this, we believe you have to do this, or else!" I doubt many will pay attention, so we will be dealing with audit issues ultimately.....

We're assuming the normal EPCRS "missed opportunity" rules will govern - and are trying to impress on our clients that 1) corrections can be costly; and 2) we "think" most won't elect to defer, so you'll be making QNECs for people who didn't want to defer (given the opportunity) and generating lots of small balance accounts...

Precisely what my ops/treasury teams are arguing for. But those pesky clients.....

Just to put some practical in this.... Chances are that if a plan has a $1000 cash-out limit, it's because they don't want to deal with rollover IRA issues - and those concerns may still be valid. As a practical approach - as a recordkeeper that provides prototype documents, we will "default" those who have $5000 to $7000 (unless clients tell us otherwise), and default those at $1000 (or less) to stay at $1000 (or less) (unless they tell us otherwise). We actually don't have any plans with anything between $1000 and $5000 (out of about 6000 plans)

Somehow I seem to find the use of "fair or decent" adjacent to "we leave to the Members of Congress" to be quite humorous, if not distressing....

When we have this many changes, we will probably reissue the SPD in full. Easier. The key is timing here....

And that is the sleeper issue that few are talking about. It is a nightmare to track "regular" participants, LTPT participants, and "former" LTPT participants who may have already achieve vested status, or who will gain vested service under rules different from "regular" participants.

This is boiling down to a philosophical question. What is the purpose of a 401(k) plan. Originally, as noted by Paul, it was a tax deferred savings vehicle, as a "supplement" to a pension plan. Now, however, it is clearly the predominant *retirement* financial resource and as such, IMHO, leakage is a very real concern. What most employers we deal with consider (because we discuss it with them) is that the downstream impact of leakage is employee who can't, and therefore don't retire when appropriate - resulting in an aging workforce, with attendant decreases in capabilities and productivity, loss of open slots for other's advancement, and - and most importantly - skyrocketing health care costs for that aging workforce. We have this discussion especially when a client is acquiring another entity with a plan, and deciding whether to demand it be terminated before closing or kept/merged into an existing plan. Fundamentally, while most clearly perceive their 401(k) balance as theirs - it really isn't (legally) - they are beneficiaries of a trust, established for certain purposes, subject to certain restrictions, and for which they receive a tax benefit. Leakage is real, and a real problem for the employers we work with. There is a balance here - and requiring documentation (especially since we, as recordkeeper do the review) isn't really a burden (except to my ops team!)

We are still reviewing this to determine whether we want to offer it to our clients. Most of our clients use our outsourcing services where we collect an review the necessary documentation to determine if the need exists - so whether it is implemented or not, it won't have must impact on our clients - except for the occasional gripe from a participant who complains (but - they are generally the one who actually don't meet the criteria for a distribution.) Our concerns, as have been mentioned, are the "actual knowledge to the contrary" provision, and whether an employer's knowledge is imputed to us, as their agent under our outsourcing; the potential for abuse (and if/when a serial requester can be determined to be abusive and denied); why? I mean the point of a retirement plan is to provide financial resources for retirement - and now we are basically going to allow participants to turn their balance into a Christmas Club account? Leakage is an issue, and this may exacerbate it. Now, that said, my ops team that has to review and process these requests are all in on implementing this. When speaking with clients, I always ask "do you trust your employees to be honest and not abuse the ability this provision gives them?" The reactions are uniformly priceless and in the negative.....

Theoretically, I would agree - but practically, one who can appoint a fiduciary is a fiduciary by virtue of appointing fiduciaries being a fiduciary functions (say that three times real fast). You point that out. However, absent the plan sponsor appointing a fiduciary, how does a fiduciary get appointed? You could appoint a fiduciary directly in the plan documents (and that *might* be a settlor act), but the plan sponsor (at least indirectly) has the power to "fire" the fiduciary by amending the document. It become somewhat of a tautological conundrum. The more you try not to be a fiduciary, the more you likely are becoming a fiduciary - because trying to insulate yourself from the hire/fire a fiduciary, the more you must have the power to hire/fire a fiduciary.... In court, I'd not be able to express the position that an employer isn't a fiduciary with a straight face. The one exception would be where the employer screws up bad enough that the DOL forbids the plan sponsor from being a fiduciary and appoints an independent fiduciary (and yes, it has happened - I worked for a trust company that became that fiduciary when the DOL found the "plan owned" wine collection and oriental rugs in the homes of the company owning family). It's not bad to be a fiduciary, it's just bad to be a bad fiduciary....

Custodians sign custody agreements. Trustees sign trust agreements (and the trust agreement spells out the role of the trustee - even if it is "merely" a non-discretionary, directed trustee). Neither signs anything else (and since our prototype no longer contains an embedded trust agreement, it is separate from all other plan documents). That non-discretionary trust agreement also spells out the role of the other "fiduciary" responsible for the directions (and is signed by the plan sponsor as well).

We use a TransUnion service - with pretty good success. For the tough ones, including those deceased, we use a variety of techniques - including calling the coroner in the county of last residence to ask who claimed the body! Surprisingly, most of the coroners are more than happy to help (apparently carrying on a real "live" conversation is something they appreciate!)

I too am looking for guidance - but if you read the text of the act with respect to this, is simply says that *if* you get 500 hours in the requisite number of years you *must* be allowed to participate. It doesn't say "unless otherwise excluded" (except, those under age 21 if the plan so provides.) I find it hard to believe the IRS will "regulate" such an exception.

I would add "under current Roth rules" it must be available as a general option available for all. Maybe (but I doubt it) the IRS will change those rules and allow a plan to offer Roth only for those people whose catch-up must be Roth....

Absent the conclusion Cuse peaks so eloquently of, what would the point of the LTPT legislation be? I think it clear that is is a clear indication of Congress' intent that "thou shalt not exclude LTPT'ers." Exclude who you want for "normal" participation, but LTPT will override... And by the way, in the 403(b) world with universal availability, S2.0 specifically made these rules applicable in that world to clear indicate that it overrides the 20 hour per week exclusion allowed as an exception to universal availability.

I agree the EOB is probably the most comprehensive resource around - but I would caution the "casual" user - it presumes you know what you are looking for and are searching for the right thing. In my experience, most of the time, people are asking the wrong questions. We have the EOB as a resource, but we've recently added ERISAPedia's service as well. ERISAPedia allows one to browse a bit more, see things in context, and refine the search. Context is often very important, and it's hard to get that from EOB....

Base don what you've provided, it is unclear as to the sequence of events. Did A & B merge, then B terminated the plan? Or did B terminate the plan, and then merge with A? It makes a difference....

To be honest, the reason these rules exist is because a bunch of doctors figured out they could form two corporations - one employs all of the doctors with Rolls Royce benefits, and one for the staff, with no benefits. Same ownership, abusive no doubt. Granted, many "serial" entrepreneurs may have multiple otherwise unrelated business, but the "potential" for abuse still exists. I have seen many companies have a "shared resources" entity providing management to a variety of other entities in different businesses, but the same ownership.... It is what it is....

Whether they "feed off each other" or not is irrelevant for controlled group status. It is purely a question of ownership, and can be determined with mathematical certainty. What business form are these businesses (corporate, partnership - including LLC, or sole proprietorships) and who owns interest (and amount) of each. Feeding off each other *may* bring in the affiliated service group rules (bit those are more complicated).

I would assume it is a missed deferral opportunity and would require correction under EPCRS....

Great. That gives us about a month to adjust.... Gosh, I though there would be more pressure....

We don't believe that terminating participation is a distributable event. That would require either a separation of service from the employer (not necessarily the plan sponsor) or a plan termination (unlikely, as the plan sponsor wants to continue the plan.) The solution is a spin-off to the now non-participating employer's plan.