AlbanyConsultant

Because it wasn't agreed to at the start of the loan? I suspected that might be the case.

We're taking over a plan with several loans outstanding, and the plan sponsor has never known that they could pass loan admin fees to participants (if properly disclosed), so they are now interested in doing so. If I tell the investment product to take loan maintenance fees from participants, they will do so from all participants with loans - they can't exclude certain loans. Is there any issue with starting to charge the annual fee to the existing loans once they've gotten a disclosure notice that this will start happening?

This seems to be a situation where the P and AP attorneys are working together to get this resolved smoothly, so I think this is something they have cooked up together. To Larry's point, I could have them re-word it to attach the 401(k) and safe harbor sources, and that would have the same result as taking the money only from the daily-valued accounts. Are we supposed to be reading "plan" in 414(p)(1)(A)(i) as a disaggregated portion of a plan - is that where the idea of them being allowed to instruct by money type comes from? Otherwise, I'm not seeing it in there. Couldn't they say that (2)(B) gives them that authority? The individual accounts are with MassMutual; I believe they have a two-step process where first the money is moved to an account for the AP and then the AP elects when to take the distribution (it's at AP's discretion at that point). So even if the QDRO says that it is for an immediate distribution from the P's account, that's not exactly how it goes. I expect that I can submit Form whatever to MM saying create an account for AP and segregate $130K as of today from P to AP (well, maybe it needs a separate enrollment form to create the account, but you get the idea). MM will do a pro rata transfer from all funds P holds. Thanks for the quick responses.

A plan has 401(k) & safe harbor on a mutual fund recordkeeping platform, and the profit sharing in a pooled account. Participant P has a current balance of $200K in his individual accounts and $50K as of the latest valuation in the pooled account, and the segregation amount is slated to be $130K. For the sake of ease, obviously, it would be awesome to pay out the QDRO from the platform. The attorneys are writing that into the QDRO. Do they have that right? Isn't that the Plan Administrator's authority to decide where to pay the QDRO from? As long as the dollar amount is satisfied, that should be all they care about, I'd think. Any thoughts?

The plan doesn't have QJ&S, but I suggested that he get the spouse to sign off because he was putting someone (the executor) between the account and his spouse, and if he wasn't trying to scheme his way out of something, he should have no problem doing that. Haven't heard anything since then.

I've got a lawyer (naturally) who wants to establish a trust for the sole benefit of his wife as his plan beneficiary. He's wondering if this requires her consent, since she is technically not directly the beneficiary... but she kind of is ("kind of" isn't his term, of course). No, I don't know why he's going through all this, or if he's trying on purpose to not have her sign something - I'm trying to get those details. Any initial thoughts? Thanks.

The RK isn't keen on the idea of forfeiting money from a source that is fully-vested by definition, so I think I'm going to have to go the fee route. It's almost chicken-and-egg: if there's no distribution, then how can there be a distribution fee? LOL I can't cash him out because I outsmarted myself. I restated this document at a time when I was having a lot of problems with uncashed checks, so I made the autorollover threshold $0 - any forceout has to be rolled over. Millennium Trust will take small amounts (and if their fees eat it up, so be it), but I'll be darned if they get the fees for it and I don't! And I would have the plan sponsor pay for the distribution fee, but this is one of about 25 participants where the balance is less than the combined fee of the RK + us. After years of no PS, they made a small one two years ago and then haven't made another since, resulting in a large number of people who had never deferred with relatively small profit sharing balances. So while the plan sponsor might be willing to pay for one distribution, they certainly don't want to pay for two dozen of them. Thanks for all the ideas, moral support, and sympathy...

A terminated participant has a residual balance of $5... so his RMD is less than the cost of the stamp it would take to mail the check to him. I know there's talk of not having RMDs if the AB is <$50K, but that's not here today. Any thoughts on just giving this a pass? Thanks.

FWIW, I've seen this done a bunch of times by different TPAs and never seen anyone implement a waiting period in making this change.

OK, I know I know this, but just not today. Like it says on the tin: if a rollover comes from a SIMPLE IRA to a 401(k) of the same employer, does that count as a related rollover? Thanks.

Well, at least the auditor and I were both wrong... So for a 2017 calendar year plan year for an S-corp on extension (so due 9/15... which I know is a Saturday), the allocation can be either: Made by 9/15 and deducted on the 2017 return; Made by 10/15 and deducted on the 2018 return. And that's it. Any deposit after 10/15 is not considered "for 2017" and shouldn't be allocated based on 2017 information? With the exception of things like SH and QNEC as Tom pointed out (which may be what I was thinking of in the first place). Thanks, everyone.

Currently working through an IRS audit on a calendar year plan, and the auditor mentioned that the 2017 profit sharing contribution was due next week. Casually, I said, "Sure, if they want to deduct it for 2017, otherwise they have until the end of 2018." He directed me to Publication 560, which says that the last date to make a contribution is the due date of the employer's return (including extensions) - link, see Table 1. And now I see the 401(k) Fix-It Guide supports the same timing: What? I'm looking for anything to refute this, but I'm coming up empty. Is this real life?

Waiting in my email this morning was the BPD! Perfect timing! Here is the entirety of the discussion of "ad hoc" (I have edited out language that clearly has no bearing): This sounds like just another form of option benefit payment that can be eliminated to me, but of course, that's what I want it to sound like, so maybe I'm biased...

Unless there is a compelling reason, whenever we take over a 401(k) plan we at least discuss the topic of removing installment or annuity distribution options because they are not protected benefits and I like things easy. In this latest plan document I'm taking over from, the language suggests that the "ad hoc" distributions it allows are a protected benefit. This one, I'm less sure about. First of all, I'm presuming (since I can't get a copy of the basic plan doc, only the adoption agreement) that by "ad hoc" distributions, they mean amounts allowed to be taken out by a terminated participant in any amount at any time. Any thoughts as to if this might actually be protected somehow? Thanks.

Thanks to both of you.

So, the 5% owner hits age 70.5 in January 2017, and we do his 2017 RMD in 2017. No one blinks. Now we find out that he sold his portion of the business "one second after the stroke of midnight" (who knew lawyers could be poets?) (I find it hard to believe that that's what they were doing while singing "Auld Lang Syne") into 2018 to avoid taxes in 2017, and he is arguing that he doesn't need a 2018 RMD. I explain that, at least in this instance, once he is in RMD pay status, that's where he stays. Grudgingly accepted. Here's the question - his wife turns 70.5 in 2019. Is she off the hook because the stock was sold before the calendar year in which she turns 70.5? If she is still employed in 2019, do I go to the definition of HCE, which has a lookback year and because her husband owned more than 5% of stock for a second in 2018, she has to take a 2019 RMD? Or do I go to the definition of "5% owner", which does not includes a lookback year? Personally, I'm hoping she terminates and takes her entire balance before the end of 2018! Thanks.

Sorry - by 'personal 415 limit' I meant that since the daughter's max limit is the lesser of her eligible compensation or $55K, then in this case it would be $0. Upon re-reading that, yeah, I was unclear. Nothing to do with 403(b) here. Thanks, everyone.

Complete brain freeze here... The calendar-year safe harbor plan has a 12-month elapsed time eligibility to defer, and the owners hired their daughter in August 2017... who deferred $5K in 2017 (and more in 2018 so far, of course). We got the 2017 annual data yesterday. Going "by the book", what's the right ordered solution here; what is violated "first"? My first thought is that she violated her 'personal 415 limit' and that it has to be distributed to her and is taxed in the year of distribution, but that seems way too easy. Also, I'm remembering something about double-taxation under 402(g)...? Thanks.

I don't call the IRS any more than I have to, believe me, but when there's a letter saying there there is a missed filing and threatening penalties, that leads to very nervous clients, so I have to do something. I don't agree with their logic, but doing what they told me to did resolve the issue each time, so there has to be some kind of method to the madness. Maybe I'm the guinea pig for a new pilot program?

This has happened a few times in the past couple of years, so I was wondering if anyone else had the same experience... Plan sponsors change their EINs for reasons. When we complete the 5500-SF, we note on Line 4 that in the previous year, they used to be a different name and different EIN; presumably that is there to help EBSA track the filing when the EINs don't line up. A year or so later, the plan sponsor gets a letter that a filing is missing. When we finally speak to someone, they tell us that the old EIN needs to have a final 5500-SF filed showing the participant count going down to zero and the assets transferring to the plan under the new EIN. "But it's the same plan." Doesn't matter. In their tracking, that EIN is still open and needs a filing until the participant count (and the asset values, but that's secondary, it seems) goes down to zero and a final filing is received. We have been instructed to correct this issue by actual IRS agents by sending in amended filings showing this, even after they acknowledge that we have entered the information on Line 4 of the new EIN's filing that references the old EIN. So we have started proactively filing final 5500s for plans where the EIN changes (and "first filings" under the new EINs) when we see this happening. We've gotten no correspondence back on any yet, but there are so many questions... What about timing requirements? What is an appropriate date to use as the transfer, and when does that mean the 5500 is due? Whose crazy idea is this, and are they serious? And so on. Anyone else running into this? When it happened once, I was willing to just go with what the agent told me to close the issue. But when it got to several times, and now that our filings that continue the pattern seem to be going through OK, I'm wondering if this is some new directive that I missed. Thanks.

The problem is that I restated, not amended, so there was no specific language about this particular change (meaning I didn't put any in the adopting resolution). But I went back to the doc provider (Datair), and they confirmed that their doc reads such that the employee would not be able to continue deferring after moving back to the union at a later date. Here's the kicker. I called the client to explain all this, and he listened very patiently before asking why I had gone through all this trouble: didn't he send me the amendment that changed the eligibility to exclude union employees that was effective right before they bought their first company that had union employees two years ago? Why, no, in fact, that hadn't been provided to us. Well, he's going to look for it and get it over to me now. So this is all moot for this plan. But thank you all for your insight, anyway!

When we took over this 401(k) plan, union employees were not excluded, but the plan sponsor wanted us to exclude them when we restated the plan document, so we did on a prospective basis. What happens when a union employee goes non-union, and then switches back to union status? Can he defer from that new union pay because he was grandfathered? Or because he switched to an ineligible class after the amendment date, can he not defer any longer? Thanks.

I'm hopeful for SSN, because I believe that the former rk used that as the identifier. I'm hoping at least those are real. I had mistakenly thought that I needed SSN and DOB or last known address to do a participant search, but I guess SSN is usually enough, so that should help somewhat. DOBs are trickier... there are so many places that just don't get them, it boggles my mind. CuseFan, even if I were to "run", I couldn't leave them in the lurch with just a "yeah, you're in deep trouble, best of luck, bye!" (and I'm not suggesting that you would, either). Yes, I will have to impress on them that this work will be above and beyond the expected admin costs, but it is necessary if they want their plan to be correct; I think they know they are in trouble and want to get back into safer waters... the question is how much are they willing to spend to do so. I'm thinking that, as a large plan, this is audited every year... how has this not come up before?

The discussions of us taking over this ERISA 403b plan were going well, until they mentioned that they "purge" their employee records every couple of years. They are currently with a low-cost (and low-service, but you didn't need me to say that part, did you?) recordkeeper that never questioned any lack of data or plugged data, and there was no TPA (the plan sponsor did their own employer calculation and their auditor did the 5500). After they revived me, I started ticking off all the potential problems: RMDs, no ability to deal with missing/lost participants, proper coding of 1099-Rs, etc. It's one thing if it's a smaller plan and you can get your hands around all the participants - maybe they know that there is no one who is 70 years old, and maybe they can track down all the terminated employees with balances. But it's a different story when it's maybe 100 or 125 people in this situation, and the whole HR department is new in the past 6 months. I've asked them to take a second look around for information, but let's say they really don't have dates of birth for those who separated from service more than three or four years ago. Possibly a bunch of the addresses are no longer valid and no one has followed up on them... or are "c/o the plan sponsor". On a scale of "very" to "run away". how screwed are they? There's no easy fix to this sort of stuff that I can see. Any suggestions on how to get this plan back on the straight and narrow without it costing a fortune are appreciated, thanks.

I was not aware of that exception. Thanks, AKconsult!