Bird

My feeling is that if a plan already allows loans and hardships our clients will extend those provisions. Some might add them. I'll be careful to explain that it is not required. I'll get on my stump and say I'm not so sure it is the best public policy to look to tap into retirement savings whenever a crisis arises. I'm not saying I have a better answer (and probably would have to cave in if forced to vote on such stuff) but something about "we are shutting everything down and you can take money out of your retirement to get by" doesn't sit right with me. I get it, this is extraordinary and at the end of the day probably concede that it's necessary, but the knee-jerk reaction is troublesome. I generally don't like the idea of making up rules as you go along. FWIW

No problem with any of it. We repeatedly advise our clients to make sure that they have deferral elections on file. If they don't, well, yeah, then you could have a troublesome situation in the event of an audit (or complaint - we've certainly seen situations like that brought up on the board by participants who had no idea there was a plan, let alone that it had SH match available).

Ditto. More words does not make a better argument.

Larry pretty much handled this but no, I didn't say it is not a good design in certain circumstances. In this case I would probably lean towards the SH match. But I would also give a clear warning on how/when it could blow up - higher deferral rates for staff*, the potential need for TH minimums due to mid-year suspension, and maybe most importantly, limitations on making higher contributions if desired (in the sense that they'd have to start with a 3% staff contribution when it would be baked in with a SHNE). *If you step back and look at this objectively, the public policy aspects of this are lousy, to say the least - high deferral rates being a bad thing...

So someone cut and pasted a signature? Yours are the only eyes actually looking at it. Fax it back to yourself so it gets all blurry ?

Not to drag this out but you're (the sponsor) pretty much spinning your wheels and wasting money with a SH match only plan. I have a couple but hold my breath for the reasons you describe. But wait, a company with a $1M payroll has a TH plan? And a $10,000 contribution? Something is wrong with that scenario. I'm not saying I couldn't imagine it but that should be awfully rare.

I live in that market and pretty much tell owners "you're pretty much going to have to give 3% to your employees." I don't run into many problems.

Exactly. That's going to cover most of the "claims" and I don't think anyone will be looking for proof 3 years from now.

I disagree. I'm no lawyer but this didn't make sense to me so I reviewed the case...ok, I read a review of the case. I believe that drawing an inference from that case to this situation is not valid. The Kennedy case was one where an ex-spouse gave up her right to any pension benefits as part of a divorce settlement. But the participant did not change the beneficiary designation which named her as the primary beneficiary. Both she and the estate filed claims and the plan decided she was the beneficiary. I won't get into the legal reasoning but it went to the Supreme Court and they sided with the plan - she was the beneficiary because the beneficiary designation said she was, and a separate document waiving her rights had no impact. The first sentence of the (Trucker Huss) review said: "In a victory for plan sponsors and administrators, the Supreme Court ruled recently in Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, 129 S.Ct. 865 (2009), that retirement plans may rely on the plan terms and beneficiary designation forms in determining the proper recipient of survivor benefits." (My emphasis in bold.) Plan terms in the instant case say wife is beneficiary. No ifs and or buts; the designation signed by the participant before the marriage is simply invalid.

Is the SH hard coded in the plan?

It more or less* boils down to Fidelity's role and whether they paid son with the employer/sponsor's approval or whether they had the authority to pay without the sponsor's approval and did so. *But I imagine their lawyers will take the position that they have no responsibility either way. You're going to need legal help on this. First step is to wait for the wife to submit a claim. Then someone** has to ask the son for the money back; it might not be impossible. **But this is where the rubber meets the road, or sh*t hits the fan. If the employer signed off I think you'll have a hard time getting Fidelity to take responsibility. You're going to need legal help on this.

Understood but I think it still fits. As to your second point, I agree.

I'd say absolutely yes to 1, 2 and 3. Q4 is the $1M Q. Most likely answer is someone didn't know what they were doing.

Something has been bugging me about this but I wasn't paying close attention. I don't think it is a missed deferral opportunity - in fact absolutely not - and I think IRS Notice 2016-16; C-1 (my bold) is specific to your situation and says it is ok. I looked at the cross-referenced part and it seems confirm, but I suggest you pick the notice apart word for word to make sure. 1. An updated safe harbor notice that describes the mid-year change and its effective date must be provided to each employee otherwise required to be provided a safe harbor notice under § 1.401(k)-3(d), 1.401(k)-3(k)(4), or 1.401(m)-3(e), as applicable, within a reasonable period before the effective date of the change. Whether this timing requirement is met is based on all of the relevant facts and circumstances, but this timing requirement is deemed to be satisfied if the updated safe harbor notice is provided at least 30 days (and not more than 90 days) before the effective date of the change. If it is not practicable for the updated safe harbor notice to be provided before the effective date of the change (for example, in the case of a mid-year change to increase matching contributions retroactively for the entire plan year, as described in section III.D.4 of this notice), the notice is treated as provided timely if it is provided as soon as practicable, but not later than 30 days after the date the change is adopted. For purposes of this section III.C, if the required information about the mid-year change and its effective date was provided with the pre-plan year annual safe harbor notice, an updated safe harbor notice is not required.

I think we need more info. Why was the stop payment done? If the check was just lost, then it should be re-issued; I wouldn't change anything else.

Well, this is one of those "it's not easy" problems. If you're going to pursue it, you (or someone) has to figure out why the error occurred and whose fault it was. Actually, first thing is to figure out if there was any harm - you (or someone) would have to figure out the gains or losses on the two accounts, and see if you were harmed by the error. If not, move on with your life. If so, then you have to press them quite a bit harder to admit the error and fix it. My guess is they put you in a default account, probably a target date fund. The performance on this may or may not have been better than your "many" funds; my guess is that there's not much difference. I see a lot of people put 5% in 20 different funds but in no way does that guarantee improved performance, it just spreads things out so much that good, or bad, performance in any one fund is meaningless...and the 20 funds might have an overall return similar to any one in the middle. It's almost certainly not worth hiring a lawyer unless that other account is huge (and if it's just one year's contributions then it's not huge). Either do a lot of homework and prove to them that you lost money, or badger someone just for the heck of it, or let it go.

If the other account was set up with the same investment allocations as your original account, then combining them should fix it nicely. If not - and you'd have to look at this other account and transactions in it closely - well, then it may not be the best way to correct it. To the extent you can't confirm it for yourself you should ask them to provide details to satisfy you that it was in fact handle correctly.

no

I find this a strange request. My guess is that 100% of third party administrators are using some type of integrated software for filings. I don't think we could use the system "in its native format" if we wanted to. What is your role and how are you handling this now?

So was the main problem that they stopped withholding on your loan? That points the finger back at your employer, not the 401k people, although the 401k people did give you bad advice (that you could get a new loan). Ultimately, you have to get your employer to step up and fix it, and it won't be easy (maybe to get them to admit, and definitely to fix it). They might say "well you should pay attention to your paystubs." I'm not sure if there is a legal counterargument to that. I'm concerned that if you pay someone it won't necessarily get this fixed, so be sure to explain things thoroughly and get an estimate before you open your wallet. (As I see it) the only way anything positive happens is to get your employer to admit their mistake and work with the 401k people to correct it. I repeat, it won't be easy.

I agree with the others. I would add that it's unusual, at least in my experience, to not allow an in-service withdrawal at NRA. It's possible that it is in fact allowed but not where you are looking.

No. A plan and an IRA (and a SIMPLE IRA is a form of an IRA) are two different animals.

You have to get your benefits/payroll people to try a little - or a lot - harder to get the default fixed. It is not acceptable for them to say the 401k company screwed up and then not make them fix it. It is possible that your payroll department screwed this up. None of this is easy and I'm sure you have other things you need to do but you need to look at your 401k statements, compare them carefully to your paystubs, and figure out if your loan payments were improperly treated as 401(k) contributions, or...what. It is possible that your payroll department wasn't remitting them properly, or wasn't remitting them at all. If you can't figure out your statements, park yourself in someone's office and make an absolute pain in the a$$ of yourself until it is fixed.

BG's advice is correct. We can't help you with those decisions. I will throw out a couple of comments: If you take your money now, it is likely to take a week or more to be reinvested in your new plan. There is absolutely no way to know but it is possible that the market will be rebounding while you are out of it. (It could continue to go down of course.) There's no right answer on what to do but be aware of that. You are invested in a mutual fund which is essentially a basket of different stocks. Individual stocks in the portfolio might indeed lose all of their value and essentially poof away, but that is extremely rare. Typically some other company will buy the assets, even if for pennies on the dollar, and you might up with tiny shares of some other stock. But it's not like your mutual fund shares are going to disappear or go to zero. There are many stocks in the fund and you own a piece of all of those companies.

Interesting question, as the concern about risk usually runs the other way - that is, if Bob potentially mis-ran the plan, does Sue want to continue that plan or should the original plan be terminated and Sue starts a new one? I think many in our industry are overcautious about such things and frankly, if I were running Bob's plan I'd have a hard time recommending the extra cost and hassle (and asset leakage) of terminating that plan and starting a new one (i.e. "I ran this plan but can't be sure it's ok"??!!). Anyway, no, I don't think there is a risk to Bob if he sells the biz and Sue takes over his plan and messes it up.