FundeK

Situation: Participant's spouse is deployed overseas for military duty. Participant would like to take a distribution from a plan with a QJSA requirement. Participant has POA for spouse (not sure yet if it is durable, limited, etc). Is there any POA that would allow the participant to sign off on the QJSA waiver as the spouse to take a total distribution from the retirement plan? Does the POA specifically have to address the retirement plan? Has anyone run into this issue?

Can anyone point me to information on where we stand with the SEC's proposed 4 p.m. "hard close" and the redemption fee issues? I was under the impression that the 4 p.m. "hard" close was not really an option anymore, and they are pursuing other alternatives, but I can't really find an update anywhere. Also, when are they expected to give us something solid? Thanks!

If a participants in a qualified plan are responsible for paying quarterly investment management fees, why type of legal requirements must the plan meet regarding disclosure of those fees? Thanks

Can anyone tell me how they are handling IRA's rolling into a retirement plan? Are you requiring any type of documentation detailing that the IRA is qualified or what portion may be after tax? My understanding is that the IRA custodians generally will not sign off on the rollover contribution form indicating all $ are qualified because they do not track after tax, it is the participant's responsibility. Is it true that for an IRA distribution, the entire amount of distribution is recorded in box 2a, and box 2b is checked indicating taxable amount cannot be determined? In the past, we required the Plan Sponsor of the distributing company to sign off that the funds were coming from a qualified plan, or required a copy of the determination letter from the distributing plan. This doesn't seem possible with IRA custodians.

Yes, as long as the loan policy allows for refinancing.

Can anyone cite something in the DOL regs that would support a TPA firm providing the service of reviewing and approving loan applications? The plan sponsor signed a blanket loan authorization contract/agreement, and has no involvement in the process unless the participant does not provide supporting documentation, or another issue arises. The auditor is stating that it is not acceptable to have a TPA firm perform this service. Do you have any idea why? Also, why would an IRS auditor be reviewing DOL requirements? Thanks

If you give a participant a choice to view their statement online OR receive a paper copy, does this meet all requirements for participant statements?

Can anyone point me to information on the delivery of participant statements in an electronic format? Do you have to give at least one paper statement per year, or can you communicate all statements electronically? Also, I am not sure where to locate the DOL's safe harbor guidelines regarding electronic communciation. Can anyone help?

Because the former spouse is deceased??

The definition of alternate payee includes a spouse, a former spouse, or a child or other dependant of the participant. So an alternate payee can be a current spouse right? When would this happen?

Can you post the section of document that addresses this? Is this a prototype, volume submitter? I have seen documents written to only require pay back of the er monies, or the entire account balance. If the document really doesn't say, I would think the Plan Sponsor could "interpret" and apply it uniformly. If this is the case, it would be beneficial for them to put the "policy" in writing to be kept with the plan document.

can a participant roll assets out of a qualified plan into a ROTH?

The regs do not indicate who must witness the participant's signature because the participant's signature does not need to be witnessed. It sounds like you require it as an "extra", so I would assume that you could decide who must witness the signature. A single participant, in a plan subject to QJSA, could consent electronically, and there is no witness there. Perhaps you should consider removing this requirement, it is seems like it would be quite cumbersome to administer.

If the participant is in a financial situation where the expenses from 2002 or 2003 still haven't been paid, and the expenses meet the definition of medical care (213(d)), then I would approve the hardship. They obviously need the money if they have bills that are 1-2 years old.

Under the safe harbor hardship rules, expenses for medical care described in 213(d) are an approved reason for hardship. When I look at 213(d)(1)(D), it states the medical care is for insurance covering medical care referred to in subparagraph (A) and (B). (A) states that medical care is an amount paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body. Situation : Participant is out on medical leave for at least a year. She wants to take a hardship to pay for COBRA premiums for the next 14 months. Do COBRA premiums meet the safe harbor definition of medical care, and can you approve a request for payment for 14 months in advance?? Thanks!

If the document doesn't contain specific language defining "financial necessity", it is up to the plan sponsor to create their own policy defining it, and adhere to it as Jon Chambers stated.

Corbel has a nice notice that includes a table of factors to allow the participant to calculate their own benefits based on the factors in the table. Do you perhaps use any Corbel documents?

Does this apply to plans that use facts and circumstances or safe harbor?

Did the DOL or IRS issue any type of relief for correcting delinquent loans that became delinquent due to administrative error? I have been told there may have been some type of guidance issued, or someone was thinking about issuing guidance, or they would prefer to torture us....Anyway, I can't find anything anywhere. How do you handle loans that are in default because a payroll deduction was never started? Do you deem the loan, or allow a corrective action? Does it matter if the loan was issued prior to 1/1/04? Are you tired of all of my questions yet? Thanks!

I know that in the past, it has been very effective to explain to the participant that they will be taxed on the ENTIRE amount unless they come up with something showing what the basis is. This usually works when the after-tax balance is rather large. I have seen the participant find prior statements (some dating back many years) and I have also seen the company find "missing files" when the participant put serious pressure on the Plan Sponsor. I would say that the company needs to show they did their due diligence and can not locate the information. At that point, your only option is to issue the 1099-R as Harwood explained.

EPCRS (2003 Update) - Section 6.07, as part of VCP, allows a plan to report the deemed distribution on a Form 1099-R for the year of correction.

I love your approach; direct, to the point, and no fluffing it up! Most of the plans I have seen did not specifically address this issue. I have never seen a plan allow the participant to take a distribution because there was no distributable event. Do most prototype of volume submitters address this, or would it normally be seen in an individually designed?

Kirk said: KJohnson said: Thank you for bringing this to my attention. I was incorrect in my intpretation.

Can someone please help me calculate the vesting in the following situation? Plan changes from calculating vesting based on Plan Year/1000 hrs to elapsed time effective 10/1/02. Participant was hired 2/1/00, terminated 12/31/03. Are the vesting compuation periods as follows?? 1/1/00 to 12/31/00 - Worked 1000 hrs - credit 1 YOS 1/1/01 to 12/31/01 - Worked 1000 hrs - credit 1 YOS 1/1/02 to 12/31/02 - Worked 1000 hrs - credit 1 YOS 2/1/02 to 2/1/03 - Anniversary date - credit 1 YOS There is an overlap in the 2002 year because of the change in vesting calculation. Or is it 1/1/00 to 12/31/00 - Worked 1000 hrs - credit 1 YOS 1/1/01 to 12/31/01 - Worked 1000 hrs - credit 1 YOS 1/1/02 to 12/31/02 - Worked 1000 hrs - credit 1 YOS 10/1/02 to 10/1/03 - Anniversary date - credit 1 YOS does the effective date of the amendment now become the date you count from for elapsed time purposes? I tried to read Treas. Reg. 1.410(a)-7(f), and DOL Reg. 2530.200b-9(f), but there were no examples, and I am having trouble interpretting. Thanks!!!

Are you referring to the "available on a reasonalbly equivalent basis" provision? I am including a section from the ERISA outline book below. Sal always states is better than I ever could! The basic loan documents that I have administered in the past never allowed a terminated employee to receive a loan. I never really thought about why until I wrote a set of loan FAQs and found this section in Sal's book. 2004 ERISA Outline Book Chapter 14: Prohibited Transactions - Section II (Definitions): Part B.2. (Lending of plan assets - participant loan exemption) 2.a.2) Limiting loans available to former employees and beneficiaries. The reasonably equivalent rule generally requires that loans also be available to former employees and beneficiaries, as well as to active employees. However, in Advisory Opinion 89-30A, the DOL stated its position that the availability of the loans may be restricted to parties-in-interest. That would include all active employees (see the parties-in-interest category under ERISA §3(14)(H)), and only former employees or beneficiaries who satisfy the party-in-interest definition in ERISA §3(14). Former employees or beneficiaries generally are not parties-in interest, relationships with a business substantially owned by the employer. Merely being a participant (i.e., still having an unpaid vested accrued benefit in the plan) does not make a former employee a party-in-interest.