masteff

The question of deliberately defaulting a loan has been kicked around before. Click at the top to go back to the main message board page, then use the search box using: +loan +default +payroll (the plus sign forces it to find that word) That won't get all of the prior threads but will get you started. You could also try +loan +default +preemption since some of the debate goes into state payroll laws and ERISA preemption. Basically some think the participant can deliberately stop making payments while others say they can't. The plan document, plan loan rules, and the loan paperwork may have some bearing. To the best of my memory, no one has come up with a definitive answer (except in cases where the doc, rules or paperwork addressed it). So the best that can be said is: yes it's allowed by some plan sponsors (which doesn't mean it's right or wrong).

Which type of 1099? I'd say no on a 1099-MISC as it either a) is not paid in the course of trade or business or b) is paid to a tax-exempt entity. Off the top of my head, can't think of any other 1099 flavor that might apply.

See Page 10 of the 1099-R instructions (which indicates nonqualfied distributions are prorated). And: http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-on-Designated-Roth-Accounts#25 Since I make designated Roth contributions from after-tax income, can I make tax-free withdrawals from my designated Roth account at any time? No, the same restrictions on withdrawals that apply to pre-tax elective contributions also apply to designated Roth contributions. If your plan permits distributions from accounts because of hardship, you may choose to receive a hardship distribution from your designated Roth account. The hardship distribution will consist of a pro-rata share of earnings and basis and the earnings portion will be included in gross income unless you have had the designated Roth account for 5 years and are either disabled or over age 59 ½.

I suspect that this is such a specific nuance of the health reform that most accountants aren't aware of it yet. Seems to me that anyone who likes writing articles could sell one on the topic to any number of accounting (and other professional) magazines right now.

Just as GMK wonder, Q&A-39 here http://www.sevenhillsservice.com/ftpgetfile.php?id=133 suggests the employer will still pay the penalty for an employee using the subsidy. And the share an average worker pays for family coverage is 29% of the cost. http://kff.org/report-section/ehbs-2013-section-6/

You might try to track down IRS Notice 89-111 which provided guidance on reporting of dependent care plans. Not having access to it, I can't say if it answers your question sufficiently or not. Edit: it is referenced in Notice 2005-61 http://www.irs.gov/irb/2005-39_IRB/ar14.html

We fixed a problem once by including people using their unique company issued ID numbers.

Here's the legal cite... Reg 1.402(c )-2 Q&A-7 says in part: "If the total section 401(a)(9) required minimum distribution for a calendar year is not distributed in that calendar year (e.g., when the distribution for the calendar year in which the employee reaches age 701⁄2 is made on the following April 1), the amount that was required but not distributed is added to the amount required to be distributed for the next calendar year in determining the portion of any distribution in the next calendar year that is a required minimum distribution."

Even if it's due and payable on 12/31, it's not deemed or actually distributed until some later date. So I have no problem with payments continuing (it is due and payable after all, so they better pay on it!!!), unless you have either a) a provision that says a "due and payable" loan can only be paid in full or b) a provision that bars any loan payments at all during the termination. If we look at it in terms of commercially reasonable lending standards, in my opinion, it's entirely reasonable to continue accepting payments until the event that zeros out the loan.

Pardon if I'm missing some aspect since I don't deal routinely w/ testing like some of ya'll do, but I thought BRF testing had to do more with current and effective availability, not utilization (except to the extent that utilization might prove lack of effective availability). http://benefitslink.com/boards/index.php?/topic/39583-er-matchbrf-issue/ What aspect of a separate limits on regular vs residential loans would make either type of loan (or loans in general) less available to NHCEs?

1) Is the participant in question currently eligible to take the distribution? (And has completed or will complete a form to that effect) 2) Is the participant in question currently eligible to make a rollover contribution to the plan? Especially, does the plan accept rollovers? (And has completed or will complete a form to that effect)

EDIT: deleted my query about a statement BG made which he has now withdrawn. leaving this for now so the next post makes sense. feel free to delete that too BG and I'll delete this.

1) Be careful of the date of the posts when reading threads. This thread was 18 months old prior to today's posts. 2) Your logical flaw is that the participant's vested plan account balance should include the participant's outstanding loan balance. It is an asset of the account. Note the warning in the last line of post #2 above. From the original post, we can deduce that the outstanding loan of $4150 is not included in the stated balance of $15850, therefore it must be added back before completing the calc. The math in posts # 2 and 3 is correct.

His point is it's no different than if you were deducting the $800 from one employee's paycheck on a pretax basis while another employee elects to not have it deducted. The 2nd employee is $800 cash ahead of the other employee who instead has $1000 worth of insurance coverage. A couple of tax codes are at play. One lets the employer pay for medical coverage without it being taxable to the employee. Another lets the employer give the employee a choice between a certain amount of cash and the benefit received without that choice resulting in taxable income. While certain rules (e.g. discrimination) do apply, the IRS generally doesn't care about the cost sharing arrangement of the benefits in the cafeteria plan. Meaning it's irrelevant if the employer is paying for 20% or 0% or 99% of the cost of the medical coverage. For example, where I work, I only pay 5% of the cost of my medical but I pay 100% of my dental, and I pay it pretax thru a 125 plan. And it would be no different if, instead of deducting it from my pay, my employer put a certain amount of cash into the plan and I made an election to use it to pay my portion of those coverages.

I'm curious as the "bal comprised of employer securities" suggests they think she could do a distribution of less than the entire account. Do you happen to know the source of the money invested in the employer securities? If they were only bought with employee contributions, then it doesn't have to be a lump sum. See reg 1.402(a)-1(b) and 1099-R Box 6.

Agree. Reg 1.402©-2 Q&A-7 and Reg 1.401(a)(9)-7 Q&A-1

A number of things have the label "safe harbor" but are unrelated. W-2 wages are a "safe harbor" definition of compensation, but are not the mandatory form of comp for plans using the ADP/ACP testing "safe harbor" (and both are unrelated to the hardship "safe harbor", etc). The following may be of use: http://www.irs.gov/pub/irs-tege/epchd304.pdf http://www.ftwilliam.com/Docs/Compensation_6-20-12.pdf

In defining the RBD, Reg 1.401(a)(9)-2 Q&A-2(a) uses the phrase "from employment with the employer maintaining the plan". The Regulation clearly (at least to me) disregards that the person continued working at an unrelated employer. My question is does the person have any ongoing work relationship with the prior law firm? QDROphile covers a number of issues in which it might be ambiguous, but you have yet to describe anything which indicates to me that the person has any continuing form of employment with the prior firm. About the only possibility I see unanswered is: if he was accruing benefits in the prior plan by using earnings from self employment, then will he have any future earnings from self employment from that firm (perhaps by some aspect of his contract w/ the prior firm) that will also accrue a benefit? This will require you to communicate with the prior firm. You might read thru the following thread which does not directly discuss your "not retired" argument but does hit on a couple of related issues w/ some useful cites: http://benefitslink.com/boards/index.php?/topic/47337-rmd-and-in-service-distribution/ I just want to emphasize what QDROphile says here given that it's now Dec 30th.... if the rollover to your plan has not been distributed from the prior plan by tomorrow, then it will count as being in that plan for purposes of determining his 2014 MRD, meaning he'll have to take one. (By virtue of Reg 1.401(a)(9)-7, an in-transit rollover counts as being received by the receipient plan for purposes of determing the MRD.)

Somewhere in your plan it likely says something to the effect of: deferrals can't be distributed before the earlier of 1) termination, 2) age 59 1/2, 3) hardship, 4) etc. Since the money was not eligible for hardship then it was distributed prematurely.

Ditto to the above, especially what K2retire said about the client's attys figuring it out. Since you're not privy to the transaction details, you can't begin to say what is or isn't proper. And what QDROphile said about confidentiality... this is not an open and shut transfer of records to a successor TPA.

Section 416 says "compensation (within the meaning of secton 415)". Reg 1.415©-2 says normally it's by date paid but... "...a plan may provide that compensation for a limitation year includes amounts earned during that limitation year but not paid during that limitation year solely because of the timing of pay periods and pay dates if— (i) These amounts are paid during the first few weeks of the next limitation year; (ii) The amounts are included on a uniform and consistent basis with respect to all similarly situated employees; and (iii) No compensation is included in more than one limitation year." So the question is, what does the plan say and how does the plan normally treat such pay for all similarly situated employees?

I'd say you're well outside the 2.5 months in the 415 regs for compensation paid after severance from employment and move on.

408(k)(7) starts w/ the statment "For purposes of this subsection and subsection (l)". So the definition of comp in 408(k)(7)(B) (i.e. 414(s)) is what I would use. I wouldn't over construe "total compensation" in (k)(3)© because that term is used in the header of the paragraph and occurs nowhere else in Section 408.

When did they most recently try to find him? Have they tried the Social Security Administration's Letter Forwarding service? http://www.socialsecurity.gov/foia/ltrfwding.html If the person is alive, he's most likely receiving SSA benefits, so SSA should have a current address.

Agree w/ PensionPro, because of the word "OR", it will occur no later than required by statute. Note that 408(k)(2)(B) uses the qualifier "at least".