masteff

I respectfully but adamantly disagree unless you can show regs, PLRs or case law to support your position. You're saying the effect is more important than the cause.

I'm willing to be corrected but I believe it's definitional of a CODA. From 401(k)(2)(B): (i)may not be distributable to participants or other beneficiaries earlier than— (I)severance from employment, death, or disability, (II)an event described in paragraph (10), (III)in the case of a profit-sharing or stock bonus plan, the attainment of age 59 1/2, (IV)in the case of contributions to a profit-sharing or stock bonus plan to which section 402(e)(3) applies, upon hardship of the employee, or (V)in the case of a qualified reservist distribution (as defined in section 72(t)(2)(G)(iii)), the date on which a period referred to in subclause (III) of such section begins

In this case, it's only a hardship in the eyes of the plan for the purpose of qualifying for the distribution. For tax purposes, 59 1/2 superceeds, so it's rollover eligible.

IMO - You're way overthinking this. 1) The regs on both hardships and plan loans are absolutely silent as to downpayments. You're adding in qualifications that don't exist. The exact wording from the hardship regulation is: "Costs directly related to the purchase of a principal residence for the employee (excluding mortgage payments)". Furthermore, in commercial lending, a downpayment is a minimum amount the borrower must bring to the table. If the borrower wants to pay down more, the bank is not going to object because it reduces the bank's risk. Generally speaking, in banking there's no such thing as a downpayment that is too big. 2) BG's and my exchange this morning concluded that under the hardship safe harbor, you don't have to consider whether or not the employee can get a mortgage instead. Edit: Question: is there something in your plan document or your SPD that's causing you to use the word "downpayment"? Did that word come from you or from something written that you're trying to comply with? (remember that we don't have your exact plan in hand so you have to tell us if it has language about downpayments)

D'oh! You're correct. While regulation paragraph (d)(3)(iv)© gives us the laundry list of alternative sources, the "safe harbor" in (d)(3)(iv)(E) says (and I'm mainly putting this here so we can all refresh ourselves on the exact wording): "(E) Distribution deemed necessary to satisfy immediate and heavy financial need. A distribution is deemed necessary to satisfy an immediate and heavy financial need of an employee if each of the following requirements are satisfied— ( 1 ) The employee has obtained all other currently available distributions (including distribution of ESOP dividends under section 404(k), but not hardship distributions) and nontaxable (at the time of the loan) loans, under the plan and all other plans maintained by the employer; and ( 2 ) The employee is prohibited, under the terms of the plan or an otherwise legally enforceable agreement, from making elective contributions and employee contributions to the plan and all other plans maintained by the employer for at least 6 months after receipt of the hardship distribution." This does raise to me a question for the OP to review. Is the intent of the plan that a person taking a "hardship" loan be suspended from making contributions for 6 months?

One thing to consider in this amendment is whether they want a time window during which the employee must start work at the new company. This way, you reward the people who come to the new company w/in some reasonable time frame (3, 6, 12 months) and not someone who goes away and then shows up several years later. Ex: "employees of the ABC company who start employment with XYZ company between 6/7/2012 and 12/31/2012". Just be careful if some member of management remains in the former company to wind it down because you might find yourself amending your amendment (at my former employer, we often (privately) called certain amendments by the name of the executive it benefited; which is to say, I'm speaking from experience on this one).

reduce eligibility for - no. result in taxation of - possibly. Depending on the type and the amount of other income, social security benefits might be partially taxable. Some retirees mistakenly equate their SS being taxed with it being reduced. http://www.ssa.gov/planners/taxes.htm

I'm guessing that you're questioning whether funds are available from an alternative source. The short answer is the regs say "© Employer reliance on employee representation. For purposes of paragraph (d)(3)(iv)(B) of this section, an immediate and heavy financial need generally may be treated as not capable of being relieved from other resources that are reasonably available to the employee, if the employer relies upon the employee's representation (made in writing or such other form as may be prescribed by the Commissioner), unless the employer has actual knowledge to the contrary, that the need cannot reasonably be relieved..." Two key pieces being that you can 1) rely on the employee's representation that they haven't already qualified for a mortgage and 2) that you don't have actual knowledge to the contrary. Merely having cash on hand equal to the required down payment is not the same as qualifying for a mortgage. Personally, I would reduce the cost of the residence by the amount the employee has saved for the down payment and permit a loan for the rest (subject to the maximum loan limits). Of course some of it may depend on the plan's exact wording and your interpretation of what it means to "otherwise meet the safe harbor hardship rules". The word "otherwise" begs the question "other than what?"

1) Roughly speaking, if you didn't reamortize and simply took two weekly payments per semi-monthly paycheck: Weekly payments = 52 payments per year 12 months / semi-monthly * 2 weekly payments = 48 payments per year This leaves you 4 payments short per year. Since a quarter is 13 weeks, it would take about 3 years before any payment is more than an entire quarter behind. So you wouldn't violate the grace period on a loan with a remaining term of 3 years or less. 2) What does your loan docs say? At a former job, we had employees on different pay cycles so our loan policy said we could reamortize if they switched cycles. Also, does it say they agree to $X per pay check or $X per week? If it's "per week", then I'd declare 2.167 weeks per semi-monthly (52/24) and be done. Of course then you have to figure how JH will count the payments and calc the interest; might have to reset JH to semi-monthly just so they apply the payments correctly.

They'd get credit for the $1000 of withholding on their next tax return, putting them back at even.

No.

See Q&As 1 thru 7 in this Notice (#6 discusses withholding): http://benefitslink.com/src/irs/notice2008-30.pdf Basically, from your perspective, it's a normal direct rollover. As far as I can tell, the info in this older thread about the 1099-R reporting is still correct: http://benefitslink.com/boards/index.php?s...c=43334&hl=

If her US Passport really shows her as having only one name, then you have no real standing to refuse it. My thought is of the first time I ran across "NMI" as in "John NMI Doe"... "no middle initial". Here it would be NLN "no last name". (Some places use FNU/LNU "first/last name unknown", but that's less appropriate here since she simply doesn't have one.) First I'd call my insurance carrier and ask what they suggest since that's the benefit most likely to get messed up as a result.

The nonspouse rollover rules as discussed in Notice 2007-07 reference 401(a)(9) for the term "designated beneficiary" and direct us to Reg 1.401(a)(9)-4. There we find Q&A-3 which says only an individual may be a designated beneficiary. Ergo, a tax-exempt organization is not a designated beneficiary and cannot elect to rollover. So as said above, it was never a rollover eligible distribution. You could probably pay it to them and then file a 945-X to fix it from your side.

In IRS Reg 1.414©-5©, "day-to-day operations" appears to only apply to "permissive aggregation", so unless you're trying to go that route, then you can ignore it. As to the 80%, I think it's a matter of who and how you count "directors or trustees". The reg says in part: "For this purpose, common control exists between an exempt organization and another organization if at least 80 percent of the directors or trustees of one organization are either representatives of, or directly or indirectly controlled by, the other organization. A trustee or director is treated as a representative of another exempt organization if he or she also is a trustee, director, agent, or employee of the other exempt organization." If we count your 4 directors plus your board members, then neither org has over 80% (assuming only the one common board member counts as a "representative" of both orgs).

And while you're giving them regulations to ponder, RBD for 5% owners is discussed at: § 1.401(a)(9)-2 Q&A-2(b)

EGTRRA Section 646 eliminated the "same desk" rule; "separation from service" was changed to "severance from employment" unless your plan did not make the appropriate EGTRRA amendment. However, the control group rules still apply. See Section III here: http://www.irs.gov/pub/irs-drop/n-02-4.pdf (I don't deal enough w/ the control group rules to offer an opinion on whether they apply to you or not.)

Since I don't have the resources to effectively search PLRs (which is just about the only place I'd think this topic might possibly have been covered), here's my one thought... How much is being requested versus the total purchase price? If the 4 units are roughly same sized then you could estimate the "principal residence" portion is 1/4th of the total cost. As long as the distribution isn't more than than amount, then I'd think you'd be w/in the intent of the reg.

Okay, here it is... It's part of the change from Form SSA to Form 8955-SSA (specifically question 8). IRS on 8955-SSA question 8 http://www.irs.gov/retirement/article/0,,id=252298,00.html IRS FAQ on 8955-SSA http://www.irs.gov/retirement/article/0,,id=238940,00.html 8955-SSA Penalties http://www.irs.gov/retirement/article/0,,id=252909,00.html MEGK - no, your friend has zero room to complain because IRS explicitly extended the time for 2009 and 2010. The notice your client/friend received was received timely according to the IRS FAQ that I linked above. Edit: And I missed this the first time: "A plan administrator may answer “yes” to question 8 if the required information was timely furnished to participants in other documentation such as benefit statements or distribution forms. A separate statement designed specifically to satisfy this requirement is not required." (emphasis added) Edit 2: This article suggests it stems from IRC 6057(e) http://www.ftwilliam.com/articles/8955.html

To me, nearly any outflow of money is a distribution. Whereas a withdrawal is a participant initiated distribution. http://www.merriam-webster.com/dictionary/withdrawal And some people get odd terminology from their own plan docs or from their trustee's procedures.

You need to talk to a lawyer, perhaps your divorce lawyer if that person is still around. This board is really more for people involved in the actual administration of the plans, not for legal issues outside the plan (while it does involve money paid from a plan, you're particular problem is occuring outside the plan that paid it). It's really a question beyond this forums areas of expertise.

It might be informative to explore the question "does the brokerage firm offer IPOs to any of its account holders?" Not all trading firms offer access to the primary market (ie, IPOs). The broker in question may only offer the secondary market (ie, the exchanges). Alternatively, some firms restrict primary market access to account holders with assets above a certain minimum.

I agree... so follow your plan's ERISA claims procedure. Look in your SPD. If he refuses to accept your response so far, then from this point forward, only deal w/ the ex-participant as per that procedure. This may mean making him file a formal claim. The ERISA claims procedure exists to protect both the participant and the plan. If you stick to the procedure and he doesn't then he loses traction if he tries to involve the DOL or take you to court.

This would have been in the early 2000's. The IRS may have been less insistent but I recall guidance from either the SSA or the PWBA that, if it wasn't mandatory, it was certainly "encouraged". At the same time, they also made a change in the timing of when we'd have to report someone on SSA, which they said was to reduce the number of people getting no-longer-valid notices. And I'll stand by my two posts in this old thread on the topic: http://benefitslink.com/boards/index.php?showtopic=38472

Be sure to follow, and require the former participant to follow, your plan's claims and appeal procedure. I will note that it was not required to report subsequent zeros on form SSA until 10 or so years ago. My experience is that plans did not report such zeros. Therefore a fair number of people reported prior to that date have potentially erroneous info at SSA. You might also look to an older version of your plan document and provide the person with the section on deminimis cashouts. $850, even with some growth, would likely have been cashed out.