FundeK

Does the document specifically state that if they make after tax contributions, they are not eligible to make pre tax? If so, I would say the 25% after tax would be viewed as having reached a plan imposed limit at which point the additional deferrals would be classified as catch up contributions. Anyone else have an opinion?

Are they a participant in the plan? If so, I would say they should receive a copy of the SPD at a minimum.

You are correct. A plan imposed limit or a statutory limit must be exceeded before a deferral can be classified as a catch up contribution. In your example below, the participant's annual addition limit has been exceeded by $2,000; therefore, if he is catch-up eligible, the $2,000 would be classified as a catch-up contribution. I also read that a plan could be written to have a 0% deferral limit and allow catch up contributions.

Treas. Reg 1.401(k)-1(d)(2)(iv)(3) states that one of the deemed hardship standards is for the Does this mean that if a participant submits a past due bill for college expenses, it is not a qualifying hardship because it is not for the payment of tuition for the next 12 months?

What do you consider the "payoff" date? The day the participant calls to request the balance? What if it then takes him a month to send the check in? Also, can the participant call an automated voice response system, and if so, does it know to calculate the accrued interest? Sorry, just a few questions to clarify how this would work. Thanks

If an active participant decided to pay off their loan early, you would have them send a check for the current loan balance, right? There would be no accrued interest charged. Same thing with an offset. Participant is mearly paying off a loan balance. I have never seen any addtional fees or expenses charged. Why type of fees or expenses would there be? (I am assuming here that the payments were current.) I have never seen early payoff fees, is that possible?

I would say no. If the loan is being offset, not deemed, I would not accrue interest.

Anyone have a good New Year's resolution you would like to share?

I have read through the articles on Benefits Link, but I am still a little confused. How exactly do the new regulations regarding QJSA/QPSA explanation requirements affect DC plans? Is there any additional explanation required other than including a statement that the annuity willo be purchased with the participant's account balance from an insurance company? Thanks!

An RMD is not eligible for rollover, therefore, the participant can choose whatever withholding they would like. We default to 10%, but allow a lesser withholding.

Participant dies, designates 2 beneficiaries (70% to one and 30% to one), 30% Beneficiary is also deceased. Does it matter if the Beneficiary died prior to the participant? It seems to me that if the Bene was alive when the participant died, the funds would be paid to the Bene's estate. However, if the Bene died prior to the participant, the funds would go the participant's estate. Any thoughts or guidance would be greatly appreciated!!

This probably isn't correct, but it is what we did at my previous employer. We sent a check (for the contribution amount), addressed to the company, and instructed the to run it through their payroll system and withhold normal payroll taxes. WE did not issue a 1099. We forfeited the earnings. If there were no earnings, we sent a check to the company for whatever we were able to generate with the trades, and the company was responsible for making up the difference when they paid the funds back to the participant. How far off the mark was that procedure?

If the participant was allowed into the plan due to a payroll clerk miskeying in the date of hire, wouldn't that be considered a mistake in fact? It would be a typo as R. Butler indicated. The date of hire was in fact mistaken, thus allowing early entry.

What does the plan document say? It could be written to have a distribution hierarchy or to be prorata from all sources.

I agree with Harwood. The distribution in the year of death is based on the participant's life expectancy, subsequent distributions are based on the beneficiary.

No form was signed by the participant. The RMDs were forced payments. We believed the participant was terminated. The participant received a letter (both years) telling them that if they did not respond we would force their RMD payment. They did not respond either year, and they cashed the checks. The plan does allow for 59 1/2 withdrawals. I have it stuck in my head that if you start RMDs, you can not stop them ever. Is this true?

Participant is not a 5% owner and is still actively employed. He took RMDs in 2001 and 2002. He decides he no longer wishes to take RMDs. Can he discontinue the payments? Here is my logic (or lack of): (Assume plan allows participant to begin RMDs when he hits 70 1/2. Also assume plan allows 59 1/2 withdrawals.) Participant techinically has not hit his required beginning date because he has not retired and is not a 5% owner. Could we classify the 2001 and 2002 payments as 59 1/2 withdrawals and not issue him any additional payments until he retires from the company?. Thanks for you help.

I found this in the ERISA Outline book. Chapter 7: Taxation Rules - Section XIV (Death benefits): Part D (Rollover by surviving spouse) 2.g. What if surviving spouse is a participant in the same plan as the decedent? In this case, the spouse could elect to receive the deceased participant™s benefit in the form of an eligible rollover distribution (e.g., single-sum payment), assuming the plan offers such a distribution option, and then direct a rollover to the surviving spouse™s account in the same plan. There is no prohibition in the tax code that the recipient plan of a rollover cannot be the same as the distributing plan. If the spouse makes such an election, the direct rollover could be accomplished simply by transferring the inherited account to the account held for the benefit of the spouse in his/her capacity as a participant in the plan. The IRS acknowledged its agreement with this approach in a Q&A session with the American Bar Association™s Joint Committee on Employee Benefits, held May 11, 2002. Note, however, that this approach would not be permissible for a non-spouse beneficiary who participates in the same plan because non-spouse beneficiaries do not have a rollover option.

Does the client have any proof that the TPA received the information. Was the information sent registered mail where the TPA would have to sign for it? As a recordkeeper, if the Client could prove we received the information and it was subsequently lost, it was our fault and we would provide lost earnings. However, if the Client could not prove we received it, it was all on them to fund the correction. Who would be responsible for the breach if the Company could prove the TPA received the information but did not process it. I assume this still is a delinquent contribution in the DOLs eyes, but would they treat it any differently? (Just wondering)

If you were in the business of approving hardships, what kind of supporting documentation would you request to approval a hardship for medical expenses? Would an Explanation of Benefits suffice? How about a letter from a collection agency? Would you always require a bill stating the type of service rendered and date service was performed? Thanks!

I am sorry, but I am having trouble finding 411(f). I am searching Checkpoint but I am having no luck. Can anyone assist? Treas Reg 1.417(e)-1(b)(2)(i) states : Written consent of the participant and, if the participant is married at the annuity starting date and the benefit is to be paid in a form other than a QJSA, the participant's spouse (or, if either the participant or the spouse has died, the survivor) is required before the commencement of the distribution of any part of an accrued benefit if the present value of the nonforfeitable benefit is greater than the cash-out limit in effect under §1.411(a)-11©(3)(ii). I just wanted to verify that I am reading the above Treas. Reg. correctly. To me, it reads that a participant's waiver must be in writing; therefore, it could not be done electronically. What do you think? My last statement/question is this...The distribution can not commence before the end of the 7-day period that begins the day after the explanation of the QJSA is provided to the participant. So, how would you do this if the unmarried participant can waive the annuity electronically? Am I making any sense at all?

Single=Unmarried. It all seemed so logical when I first typed it, now that I reread it, not so clear.

Do we need a written signature for a single participant, in a plan subject to QJSA requirements, for an annuity waiver, or can an electronic signature suffice? So, I guess the questions is, could you have a paperless distribution feature for single participants in a plan subject to QJSA requirements? Thanks!

I hate to keep quoting the ERISA Outline book (actually I don't), but I found this in Chapter 6: Plan Distributions - Section V (Death benefits) 1.c. Power of attorney. If a person holds a power of attorney (POA) with respect to a plan participant, can the POA change the participant's beneficiary? This was the issue in Clouse v.Philadelphia, Bethlehem & New England Railroad Co., 787 F.Supp. 93 (E.D.Pa. 1992). The case involved a general power of attorney. The court concluded, in reliance of Section 37 of the Restatement (Second), Agency, that a general power of attorney did not authorize the POA to change the beneficiary designation. A more specifically-drafted POA was needed. Also note that the terms of the plan document need to be consulted to ensure that the plan's procedures for changing beneficiaries are followed. You may have already seen this, but I thought I would throw it out there anyway.

I pulled this from the ERISA Outline book, Chapter 6, Section VII (minimum distributions) 1.d.2) Attribution rules apply to determine ownership. To determine whether a participant is a 5% owner, the attribution rules under IRC §318 apply. These attribution rules are made applicable through IRC §416, which is cross-referenced in the RBD definition in §401(a)(9)©. For example, suppose the company employs the mother of the 100% owner of the company. By attribution under §318, the owner's mother is a 5% owner. See IRC §318(a)(1)(A)(ii). The mother's RBD is April 1 of the year following the year she reaches age 70½, even if she continues working for the company. The §318 attribution rules are explained in Part A. of the attribution definition in Chapter 1.