eclark

I have a 401k client whose plan allows for loans and hardships. The only source of funds in the plan are salary deferrals. This client has a participant who has already taken a loan and now wants to take out the rest of his money. The participant claims he doesn't fall under the hardship rules but says it's his money so why can't he have it? The client is considering adding the in-service distribution provision so the participant can get his money but when I told him the participant would need to continue paying back the loan, he went ballistic and said that didn't make sense. I figured the participant made an agreement to take a loan against his account balance and just because in-service provisions are added to the plan that doesn't negate the loan agreement. Am I way off base on this? Does the participant stop making the loan payments and then get 1099'ed for the entire amount at the end of the year?

We have a husband/wife profit sharing plan where the wife owns 100% of the stock of the sponsoring employer. There is also a participating employer who has adopted the plan that is owned 50% by the husband and 50% by the wife. Both fathers of the husband and wife work for the sponsoring employer that is owned 100% by the wife. The husband's father is over 70-1/2 so a minimum distribution was calculated for him however, the question has come up that the husband's father is not a deemed owner since his son doesn't directly own any of the stock of the sponsoring employer so he is not required to take the minimum distribution as he has not yet retired. Is this correct? He is not required to receive the minimum distribution since he is not deemed to be an owner of the sponsoring employer?

We have a plan that uses the elapsed time method for eligibility and the service is 12 months with January 1st and July 1st as entry dates. This plan has an employee who was hired 5/17/04, terminated 12/30/04 and was then rehired 6/5/05. If I read Sal's book correctly, because this employee came back within 12 months of her termination date, I need to count the 5 months she was gone as part of her service so she would enter the plan on 7/1/05. Is this correct?