masteff

1) Austin - See the 1.72(p)-1 regs, Q&A-13... it speaks somewhat to your original question. 2) Adding to Erisanuts comment... or if the part doesn't cure then it's a deemed distribution and results in a taxable event, which would be nearly the same effect as the in-service withdrawal. The main difference would be Q&A-19(b)'s restrictions on subsequent loans. And as indirect proof of IRS intent of ability of EE to cancel loan payments, Q&A-19(b)(2)(i) says "For this purpose, an arrangement will not fail to be enforceable merely because a party has the right to revoke the arrangement prospectively." 3) QDROphile - as you've posted that connundrum before, I've given it prior thought. This is the first time I've really poured thru the regs to try to answer it.... I would point to reg 1.72(p)-1 Q&A-19. In paragraph (a) it says: "General rule. Except as provided in paragraph (b) of this Q&A-19, a deemed distribution of a loan is treated as a distribution for purposes of section 72. Therefore, a loan that is deemed to be distributed under section 72(p) ceases to be an outstanding loan for purposes of section 72." So, for everything except it's effect on subsequent loans, the loan ceases to be outstanding. And paragraph (b) even permits a subsequent loan w/out mandating that the deemed loan be repaid first . Now to be my own devil's advocate... this merely reflects the Service's position and does not address potential ERISA fiduciary responsibility. I guess I'd be curious to know if anyone can find any examples of the DOL taking action against a plan sponsor for failure to collect a participant loan.

Okay, I'm w/ you now... so presumably he's a capital partner but does not participate in profits? In that case, my opinion is that he would not be self-employed w/ respect to the partnership. He would be an investor who is an employee of the partnership. But it would be good to have a copy of his K-1 in addition to the other partners, as it will reflect that he has a 0% share in profits.

Considered to not be self-employed for purposes of what? You have to give us a context.

To me it's simply definitional of "level amortization". Each payment is applied first to accrued interest and then to principle. So you'd only apply it to as much interest as is due for the next regular payment.

What does the plan document say about when to restore forfeitures? Under Code Sec 411(a)(3)(D) the plan must restore forfeitures to the participant after the distribution is restored to the plan. Your plan doc should have language about this.

Valid points. We only input an override limit if the employee specifically comes to us about it (our enrollment info mentions it and then the burden is on them to take action). We certainly would never set an override w/out the employee explicitly requesting it. It's the responsiblity of the employee to document how much they contributed at the prior employer. As for employees fixing it under the other plan, I suppose they'd simply never come to us, so we'd never do anything to override their standard limit.

Extra work and hassle. It takes time and paperwork to process those corrective distributions. But it takes less than 1 minute to key a number into my payroll system to cap contributions at some amount below the standard limit.

Websites like Bloombergs and Motley Fool can be great places for general learning about investing. Many of the major financial firms (Fidelity, etc) also have free educational resources online.

Federal law generally agrees w/ you but also provides "in lieu of [having a certificate of graduation from a school providing secondary education, or the recognized equivalent of such a certificate], admits as regular students persons who are beyond the age of compulsory school attendance in the State in which the institution is located". So your astute suggestion is covered by using federal financial aid availability as a criteria. http://www4.law.cornell.edu/uscode/html/us...01----000-.html (Guess I might note that I wouldn't have known that if I hadn't done a special project on financial aid and accreditation as a graduate assistant.)

Vocational schools can count as post-secondary education. To me it would depend on the specifics of the school. A safe criteria is whether students at that school can qualify for financial aid under state and federal programs. I've used that criteria for allowing withdrawals for cosmetology and hair styling (and TV broadcasting, graphic arts, etc). Oh, and your state's level of regulation of massage therapists might be an additional factor... for example, Oklahoma requires a certain amount of training and licensing, making training here more formal than in state's w/out regulation. http://studentaid.ed.gov/PORTALSWebApp/stu...sp?tab=choosing PS - good luck on determining how much hot coconut oil to allow as a "related expense".

You are absolutely correct, but from an administrative point of view, an ounce of prevention is worth a pound of cure.

Just throw this out there in case you wanted to try the match route... From what I've seen in a couple articles and from looking back at Notice 98-52, it appears you can have both a SH match and a discretionary match of up to 4%. Perhaps someone w/ better understanding of safe harbor rules can shed some light on it. For instance I can't figure if the discretionary is on comp beyond that covered by the SH match or it uses the same comp (which would effectively make a 2-for-1 match).

First.... Code Section 165, Reg Section 1.165-5 Second.... if the successor trustee wants the original trustee to "write-off" the bond because the successor won't accept the bond, then I take it to mean the successor really wants the bond to be abandoned. The difference between being written off and being abandoned is ownership. Let's take GBurns' steamroller as an example. If I've written it off, then I still own it and it's sitting on the corner of my property and when I move to a new location, I move the steamroller with me. But if I abandon it, then when I move, I leave it behind and foresake any right to ownership. The problem I have w/ abandoning a marketless bond is that it's not being very responsible as a fiduciary. If the asset has any potential for value, then the fiduciary has the duty to go out and try to sell it rather than abandon it. Now, if the asset is truly worthless, then as a fiduciary, you can probably abandon it. But you have to apply the tests of worthlessness in the fullest possible way. Any number of financial websites offer discussion about determining if a security is worthless. Much of this derives from case law. Best yet, if it's worthless or nearly so, find someone who will give nominal value and lock in the transaction.

I think you typo'd a number... $15,088 + $5,000 = $20,088 total It's essentially a recordkeeping issue and a matter of how your plan is designed. If you plan allows you to limit him in the current year based on your testing results (to the 6.56% stated above), then that limit superceeds the 402(g) limit for purposes of determining where regular deferrals end and catchup begins. The Code talks about applicable limits which can be statutory (eg 402(g)), employer-provided (eg a plan cap of, say, 10%), and/or the ADP limit. If your plan permits you to limit him in the current year based on ADP testing, it's a matter of how your payroll and recordkeeping system are setup... work it out so that $15,088 are recorded as regular deferrals and $5,000 are recorded as catchup. Otherwise be sure he's limited to $20,088 overall and then deal w/ the recharacterization later. (Only reason I'm slighly ambiguous is the plans I worked w/ didn't limit during the current year, so I've never administered that.)

Thanks for adding that Janet... I had the thought but failed to express it that a company may have very valid reasons from a compensation perspective to provide bridged service. The same can apply to vacation and, in some companies, service awards.

I'll add Notice 2004-50 Q&A-10. While not specifically addressed to executive physical programs, it does establish that preventative care services are sometimes disregarded for determining if something is a "health plan" that provides significant benefits in the nature of medical care or treatment. Q-10. Does coverage under an Employee Assistance Program (EAP), disease management program, or wellness program make an individual ineligible to contribute to an HSA? A-10. An individual will not fail to be an eligible individual under section 223©(1)(A) solely because the individual is covered under an EAP, disease management program or wellness program if the program does not provide significant benefits in the nature of medical care or treatment, and therefore, is not considered a “health plan” for purposes of section 223©(1). To determine whether a program provides significant benefits in the nature of medical care or treatment, screening and other preventive care services as described in Notice 2004-23 will be disregarded. See also Q&A 48 on incentives for employees who participate in these programs.

No, it's currently not provided for by the Code. Guess they didn't think "portability" thru on that one. See Pub 590 page 65, Rollover from a Roth IRA http://www.irs.gov/pub/irs-pdf/p590.pdf

The cost of immediate eligiblity from bridged service is immediate match and profit share, to the extent the plan offers them.

EGTRRA relaxed the restrictions on IRA rollovers to QPs. No longer does it have to be a conduit IRA. However, cannot rollover non-deductible contributions (aka, basis). Also, it's not mandatory that the QP accept the rollover. Have to verify w/ the receiving plan first. See page 24 of IRS Pub 590 http://www.irs.gov/pub/irs-pdf/p590.pdf And this rollover chart is help but very high level: http://www.irs.gov/pub/irs-tege/rollover_chart.pdf

Yes, elective deferrals to 403(b)'s and 401(k)'s are combined for purposes of 402(g). As for catch-up (I assume you mean the age-50 catch-up), apply it at the plan level based only on deferrals w/in that plan; do not base recordkeeping on deferrals to an outside plan. Example: Limits are $15,500 and $5,000 for total of $20,500. Suppose EE defers $10,000 in Plan A. This is below the $15,500 limit so Plan A records it all as regular deferrals. EE then defers $9,000 in Plan B. Again, this is below the $15,500 limit so Plan B records it all as regular deferrals. So neither plan records any catch-up contributions for the year, despite the fact that with a total deferral of $19,000 then $3,500 count as catch-up for the EE individually.

IRS Pub 560 may also be helpful; see page 9 which has a definition of compensation. http://www.irs.gov/pub/irs-pdf/p560.pdf

Just to take your example out a few steps.... Very few commercial lenders mandate automated payments. They provide it as a servicing option but the automated payments can be cancelled by the borrower, who continues to be responsible for making payment via manual payment to the lender. It is only after the manual payments go into arrears that lender excercises the default clause in the loan agreement. The case is not that the plan has made payment "optional" but has allowed the borrower to revert from automated payments to manual payments, which if not maintained will then result in default.

As for your next step... easiest place to start is w/ Janet's suggestion about requesting a copy of the Summary Plan Description (SPD). Read it over, looking for where they reserve the right to limit all HCE's in a uniform manner. If you can't find it, then ask the HR/Benefits dept to point out the specific location where it says that. If the SPD does not explain it in a reasonable way, then you'd want to pursue it further. You can always post back here w/ what the SPD says and we can give suggestions on where to go next.

Here's recent discussion on same question w/ respect to a hardship withdrawal: http://benefitslink.com/boards/index.php?showtopic=39058 My opinion is the analysis would apply for a loan as well.

Speaking just to the 1009-R question.... http://www.usccb.org/finance/DFI%20UPDATES...RKUP%200807.pdf Page IV-4 (pdf page 11) says: The sum of all pension payments issued in a calendar year are to be reported as the gross distribution amount on form 1099-R. If the diocese has properly designated all, or a portion of the pension payments as a housing allowance, the taxable portion of the total payments cannot be determined by the diocese, since the amount excludable from income as a housing allowance has to be determined by the taxpayer based on the three options shown above. Therefore, the taxable amount on form 1099-R should be left blank and the box “taxable amount not determined” checked.