Below Ground

If you have explained why the data is needed, and the client still refuses, this client is an accident waiting to happen. While you might want to send something that explains ADP Testing (etc...), I would still get away from this client ASAP. Why? If there is no trust between myself and a client, how can I know if I am serving that client's needs. How about if the client does something really stupid, but says its your fault since you didn't say it couldn't be done. You can't keep a client out of trouble if they won't tell you what you need to do the job. There are simply some people who you just can't work with, and there are those really special people that blame others for what they do every time. I suggest that if you find one of those people (it sounds like you have) you will just be wasting your time and money, and exposing yourself to BIG trouble. Yes, I am speaking from experience. While I was able to prove that I was "innocent", what a waste of time it was!

I think you need to define what the last valuation date is for this purpose. Does this mean the last valuation immediately before payout, or a specific date? You should carefully review language of both DRO and Plan. Is there language in either that can come back and "bite you"? If so, I would ask for clarification. If the Valuation Date is deemed to be each day, which it seems to be, you probably need to tell ex-spouse a value now for purposes of making elections. You should first note that account is subject to daily valuation. I would then say something like "you will receive 50% of the vested account value as valued on the date payment is made". Then you can say "the vested account was lasted valued at $$$$". And yes, this does make sense to me. Hope this helps.

I agree with WDIK. Long ago (in the 80's) I thought you should do something for the reporting of the "year of failure". Let's just say that the KISS Principle wins again! On face value, the instructions for 5500 are clear (sure they are!). Besides, why complicate the issue.

Good luck with your business.

Deferral amount, perhaps? If same, shoe size.

EOB? Erisa Outline Book? Mine for 2007 never worked. Luckily, I got the hardcopy too. I won't make the mistake of getting the CD again.

Thanks Janet. I was afraid of that, but oh well. What can one do?

Have a small 401(k) plan that was late for one payroll period for a few weeks. (Was caught and corrected within 2 months.) The penalty tax is well under $50. (The cost of a EPCRS filing is obviously not justified.) Is there a level at where the tax is just ignored (no filing) since the amount is so small? I don't know of any, but thought this was a good question to post.

We have had problems with "speed issues" on a regular basis. (I have found that to be the case with most on-line systems.) On a few occassions, we have had the other problems you noted. I'm not sure what you could do about it. I have called about having the number of redrafts reset, which AccuDraft has done without a problem. If you like the product I guess it is just something you need to live with.

What are the problems? We primarily use AccuDraft. We have some problems, but have the "same problems" with other vendors.

Assuming it is allowed by plan terms, and related issues are satified (money type, age, hardship allowed, ect...) they principal may be able to get a hardship, in-service or loan from which to get monies needed. I suggest that the loan may be the best approach since it is not a taxable event (assuming no default). I do not believe the "transfer" of your post would be allowed.

I must admit Mr. Presson, I too felt oh so smart for once!

You should be okay. In fact, many "boiler plate amendments" for compliance with Final 401(k) / (m) Regs actually include language that says "If Safe Harbor... discretionary match must...". If your Plan used such amendment, you are without a doubt okay. I know I am not Mr. Poje, but I hope this helped.

I fully concur and agree with post by J Simmons.

Since no one else replied, I will say that I agree with your "notion of separate testing" for this purpose. I wish I could give you a cite supporting that position, but as you have probably found, there is very little in the way of clear guidance for issues like this under MEPs. I also note that how you determine key employees is another area that I find to be "grey". Do we have an issue of separate testing here also? Anyway, hope this helps (I suspect not.).

ACP Test will only include those people eligible to share in tested allocations. However, the allocation must pass coverage testing.

Got it, I think. Thanks again.

I'm not sure I follow.

Tom, thank you for your prompt response. (I sent Tom a message asking specifically for his reply.) Since most plans I do match a single stated percentage with a dollar or % cap, I will stop losing sleep over this issue. I guess the right answer depends upon if the word if, means "if". Again, thanks.

Comments of msmith and Tom Poje have made me rethink what I previously felt was "rock solid logic", and quite frankly, are a grave concern. That logic was.... "Plan fails ADP Testing, resulting in Excess Contributions. Excess Contributions were not eligible for match, so any related match was forfeited. Excess Contributions were then reclassified as Catch-Up Contribution which are eligible for matching if plan matches Catch-Up. Matching on these Catch-Up Contributions do not need to be forfeited as discriminatory matching. I guess this is not as rock solid as I thought. Specifically, Mr. Poji, could you comment on 2 points (I added bold) from your post: Even though these elective contributions are not distributed, they are still excess contributions, and accordingly, the related matching contributions made with respect to excess contributions may be forfeited [1.414(v)-1(d)(2)(iii)] but… If the plan applies a single matching formula to deferrals whether or not they are catch-up, the matching formula is not treated as a separate BRF…but the match is still included in testing. [preamble to the regs on catch-up – see also 1.414(v)-1(d)(4)] I can't see how "may be forfeited" makes sense. How do you determine "may"? I am also unclear on how the BRF facet factors in. I respect your opinions and I appreciate your clarifications. Ultimately, does anyone know what the "right position" on this issue should be? Thank you for all comments. Edited By Adding: While I know ASPPA does not make or enforce rules, The ASPPA Defined Contribution Plan Series Volume 2 seems to support the "rock solid logic" I stated above. Specifically, page 3-23 says "the plan must forfeit the matching contribution associated with distributed excess contribution". Catch-Up is not distributed. You will find this about 1/3 down the page. While it may turn out that the logic was wrong, and maybe I am reading this wrong, but that's why I reached that position.

Janet, I think you are right to be a little cranky.

Thanks for replies. We are the TPA. It does sound like a good solution, but she trust no one, period! She says we are an "agent" for the sponsor so we can't be trusted either! She already received the appropriate forms directly from us. She mailed back to sponsor, not completed, telling the sponsor that this is what is going to happen.... (as detailed in my initial post) I've been doing this a lot of years and this is a first.

Terminated person has a little of $3,000. Plan has cashouts retained for $1,000 and below, so no "automatic direct rollover". Also, person is no where near NRD. Person was provided with appropriate notices and election forms. However, person does not want to complete election forms as provided to receive payout. Person wants the payout, but wants to use her own election forms that she makes up! Specifically, she demands that she send Trustee forms that she approves of, the trustee's signs and mails back to her, and then she submits forms directly to the institution holding the money. (She will not send any form she signs to the Trustee.) Stated reason is that she doesn't trust anyone in the process and wants to process payout herself. Any comments or suggestions on how to deal with this are appreciated.

While actual plan language will control, typically documents will say discretionary as to rate and limits. You need to check the document to see what it allows, and just as important, what it does not say. For example, a document may say that the employer can define the matching formula as it sees fit each year. That would allow for caps to be a part of that determination, as the employer defines a formula. You situation seems to be like the typical language that says "uniform percentage", given the "discretionary matching contributions" in your post. Does a "discretionary uniform percentage" allow for caps? Well, that depends upon what "uniform percentage" is deemed to mean. I am sure that many would say that this means only the match rate. To support the need for having the plan specifically state caps are discretionary, I can tell you that one Volume Submitter I use has languauge that specifically says caps can be defined each year. Also, a very popular prototype has an option for caps to also be discretionary. It would appear that you must have specific language in this regard. Conversely, I have had a number of clients define that their plan's uniform percentage includes caps. Many of those plans have gone under audit (IRS and DOL) and have passed without problems. Of course, having langauage specifically include caps makes sense if you have the choice in language. I don NOT see a need for VCP. I would "tighten up" language if possible. Hope this helps.

Thanks for your reply Bill!