masteff

Okay, I've talked myself into this. Just hadn't walked thru one where simply paying past due rent wouldn't cure the pending eviction. If I was documenting this to put in my file, I would probably write it up as: "Participant has been informed that he must vacate by 7/31/14 or he will be evicted. To prevent being evicted, he has located a new primary residence to rent but must have $X which is a hardship that he is unable to pay. See attached documentation." I would want a copy of the lease agreement as well as the normal hardship statement about not having it available from other resources, etc. Oh, and I might like a letter from the aunt stating that she will evict if he doesn't move out. It has to be involuntary. Not just that he wants to get his own place.

In the back of my head, since he's self-employed, you have until you file to remove the excess contributions. But you'll want to review that. It's been around in different forms but Vonnegut's was the easiest to credit. A few of the longer versions get really silly with stuff like: 'Scooby-do-be-doo'-Scooby-doo

So then you may simply have a difference in words going on between you and the CPA. You asked us if he can "participate"; that speaks to eligibility and whether he can be in the plan at all. If the CPA is referring to the owner having a lack of SE earnings, then he's more likely speaking to the ability to make contributions. You must be a participant to be able to make contributions, but not necessarily vice versa.

Sure, it's an eviction. But this isn't to prevent said eviction. It's to get a different residence after being evicted. If you do a strict reading of the reg, it's pretty unforgiving: "Opps, sorry, you got evicted, can't help you now." Unless anyone can find a more liberal way to interpret "prevent". Edit: for the sake of agument.... it prevents the eviction, not because it remedies a current broken lease agreement but because it allows the employee to obtain different lodging prior to the eviction. This avoids eviction if one presumes the ultimate consequence of eviction is being without a residence whatsoever.

"(4) Payments necessary to prevent the eviction of the employee from the employee's principal residence or foreclosure on the mortgage on that residence;" I'm one of the more liberal on approving hardships but, based on the regs, no, because he's not purchasing a residence nor preventing eviction or foreclosure.

The Original Post stated "Instead, the company would rather use the distribution for other plan obligations". The OP may have misdirected slightly by offering some specific examples but I take those as being possibilities, not as exclusive options. So... if a dividend is not used to repay the loan nor allocated to participants, what other uses are permissible and what are the ramifications (such as the dividend not being tax-deductible to the company)? Can they use it to make distributions in cash in lieu of shares? Can they pay plan expenses from the plan with it? What else could the plan do with the cash for purposes that are related to the plan and plan's obligations?

I think the "paydown the loan or allocated to participants" stuff is coming from the Code and Reg for 404(k) which defines when a dividend paid to an ESOP is deductible for the employer. I know enough to find the cite; I don't know enough to guess the implication of making a dividend that is not deductible under 404(k). EDIT: take a look at 1.404(k)-3 http://www.ecfr.gov/cgi-bin/text-idx?SID=0113444e058db10b6a025fa9a983938b&node=26:5.0.1.1.1.0.3.151&rgn=div8

Since you're in the same tax year, I'd do as suggested above... run a retroactive payroll change and return the entire amount on the next paycheck. This fixes comp and taxes directly on the employee's W-2. Been there, done that, moved on. If they are on a manual payroll or otherwise unable to process a retroactive change, the most thorough way would be to recalc all affected payrolls and net the changes to single adjusting line.

A recent summary on the topic, see the last paragraph starting on the 2nd page: http://www.groom.com/media/publication/1000_Dold-Levine_MAG_05-11.pdf

408(p)(6)(C ) says 'year' means calendar year The "only plan" rule is in 408(p)(2)(D) Also, see this FAQ (such as the 3rd from last question): http://www.irs.gov/Retirement-Plans/SIMPLE-IRA-Plan-FAQs-Establishing-a-SIMPLE-IRA-Plan

And as suggested further above, also verify state law for simultaneous death rules. IF the spouse can be deemed to have died simultaneously, then you'd go back to the original participant's beneficiary designation for secondary benes. This may be one of those cases where filing with the court for an interpleader may be the best course of action. And remember, your first duty is to the plan, not to someone's last will and testament. If you find a legal means to fulfill it, fine, but that will has no meaning to the plan.

Not conclusive but I might point in IRS Pub 523 on page 10 that the list of "Decreases to Basis" includes "deductible casualty losses". On page 9 it gives "swimming pool" as an example of an increase in basis. Since the hardship reg specifically says w/out regard to deductibility of the loss, I would print those two pages from the publication and attach to the documentation to show why you concluded the pool was part of the residence. While you can clearly have a "principal residence" that does not have a swimming pool, I don't think that prohibits a swimming pool from being part of the residence. Does the pool have its own electric and water feeds or does it get fed from the main structure? Or I could, instead, point out that 280A seems to equate "principal residence" with "dwelling unit" which would exclude an outdoor pool. But that's the only section I found which uses that narrow of a definition and it's done for a very specific limited purpose in the tax code.

While I like SearchLight's answer, I would argue the tax year in question 2011 is still open for amendment and therefore the loss technically would still qualify for deduction and I could argue for the plan permitting the withdrawal. If the plan did permit the withdrawal, I might mitigate risk by putting out a memo to participants stating that after X date, the plan will no allow w/drawals for losses related to Irene. This way, Bob doesn't make a fuss in 6 months that you let Joe do it today. But then be prepared for a flurry of information requests on how to do a hardship, even if they don't take one.

The first thing that comes to my mind is a "term certain". Could I take, for example, a 60% J&S with 10-yr certain, then my spouse would get 60% and someone else could get any remainder of the 10-yr certain? If so, the advisor needs to simply be told that not all plans have the same distribution options. EDIT: Or perhaps they need to be told that not all pensions are term certain. And that there is no other "40%" to be given elsewhere because of actuarial equivalence over the combined lives of the J&S.

Okay... two separate issues: 1) suspension of EE contributions 2) suspension of ER match 1) Since it's a mandatory contribution, not an elective deferral, then you do not have to suspend the EE contribution. 2) Suspending an ER match has nothing to do with the hardship rules. I think you inadvertently distracted the discussion w/ that bit. I suggest you look at 401(a)(4) and 401(m) as they apply to 403(b) plans. The question to me is: can you ever suspend a match for an individual participant, such as for withdrawal of mandatory ee contributions?

2 points for BG5150! It does appear to be HEART related http://www.irs.gov/irb/2010-06_IRB/ar09.html

Made me look! This thread touches on a few of the nuts and bolts of mandatory employee contributions: http://benefitslink.com/boards/index.php?/topic/37502-mandatory-deferrals/

This was discussed in a recent thread. http://benefitslink.com/boards/index.php?/topic/55687-can-i-aggregate-individual-retirement-account-individual-retirement-annuity-rmds/ If you have a code citation but are unwilling to rely on it then you would be well advised to spend a few bucks consulting with a competent professional tax advisor.

Unless I'm really missing something, it's a trick question. You state "mandatory employee contributions". Hardship suspension applies to "elective deferrals". "Mandatory employee contributions" are not "elective deferrals".

I hate to pull this answer on you but: What does the plan say? You're looking for clue words like "active". We had a plan that mentioned leaves of absence. It may be a matter of back track from defined word to defined word; eg, to be a Participant they first have to be an Employee which requires Employment with the Employer. You might also glance in the break in service section. I'm inclined to think you could make it be either date, but the mechanism to do that would be the plan document.

Been a while since I had student loan but my first suggestion is to see if you can move them some place else, such as to Sallie Mae. And I'll point out to be careful of your wording... "take money out" and "take a loan out" can mean to different things: a taxable distribution vs a non-taxable loan.

I'll go one better than a spreadsheet and give you an IRS chart: http://www.irs.gov/pub/irs-tege/rollover_chart.pdf If by "new" you mean 2001, then yes. It was added by Section 642 of EGTRRA.

I really think it's worth a call to the DOL and/or IRS (I'd start w/ EBSA since it's terminated). The plan was terminated in the 80's; the excess reverted to the employer... IMO, the money lost all qualified nature at reversion. I see it as a payment from the employer's general funds. I'm thinking 1099-MISC, no election forms, etc. Just seems like a can of worms to try to claim in any way that it's a distribution from the plan. Wouldn't it be like the IRS to ask for the last 30 years worth of 5500's and plan amendments?

You might start with the DOL website: http://www.dol.gov/ebsa/publications/SEPPlans.html http://www.dol.gov/ebsa/publications/simple.html

http://www.irs.gov/pub/irs-tege/rollover_chart.pdf