BG5150

I there is nothing to say remove funds with earnigns, why do so?

It's been a long time since I've administered a plan that was effective before 1985....

I used "investment experience" as a synonym for earnings as to avoind being repetitive. My question boils down to this: When correcting this type of mistake, is it mandated anywhere that you must include the earnings in the correction, other than 6.02 of EPCRS where it says that the plan be put in the position it would have had the error not occurred?

We have several people who received too much match (per the formula) in 2014. Quick fix is to remove the excess amount from the partiicpants' accounts and have the plan administrator use the proceeds to fund future ER cotnribuitons. In the past, I would include earnings in the amount removed. Someone is now questioning that method. Is there anything that requires me to include investment experience along with the over-match amount? The only thing I can point to is the general correction principle of EPCRS that the plan be put in the position it would have had the error not occurred. Is there anything specific that details what is to be done in this case? EPCRS seems to address mostly under-contributions or overpayment of distributions. Did I miss something there? Should I turn my attentions elsewhere?

Is there a problem using one every year?

An 11-g amendment is used to avoid a failure, not correct one. It's considered a pre-emptive strike. At least, that's the way I've always seen it.

A rollover letter is not needed for balances under $200, as no taxes are withheld and the entire amount is paid to participant. You may want to add something like they have 60 days to roll the money into an IRA (or another QP) to get favorable tax treatment. All others must be given a 402(f) Notice along with the distribution paperwork and an explanation of what will happen if they don't respond timely.

Mike, If and when CAN you use it? Are there any examples or explanations of this topic floating around?

I've always used 14 A as the starting point for figuring out plan compensation. I see a lot of returns have both 14 A and 14 C figures, with C oftentimes quite a bit larger than A. Why the disparity? C is from the 'nonfarm option'. Why the big disparity? All these doctors & lawyers can't all have farm businesses on the side, can they?

I would put it right into their accounts. For the previously-paid out participants, If the amount is less than $200, send a check to last know address (after, of course, reopening the account) with a letter stating they have 60 days to roll it over. Well, it depends on how long ago they got paid out. people do move. Use yuor best judgement. For people over $200 and whose distributions were more than 180 days ago, I would send new paperwork. Less than 180 days, send check in same manner as the last distribution.

Just charge them an extra $3,000 for something....

How do you prove a postmark, unless you send it registered mail or some such method?

Hopefully, the plan is not Top Heavy.

If they qualify to file an SF, there is a question about the Sched A amount of commissions. I think it's in 10. That's all you need.

Different firms handle these tranactions in several different ways. Some have the check sent directly to the particiapnt. Some have the check sent directly to the company. Some have the check sent to the "non-financial" administrator for futherance to the participant. Some have the check sent to the "non-financial" administrator for futherance to the company for furtherance to the participant. Some firms even use a combination of the above. At my last job, we left it up to the plan sponsor. Each firm has its own reasons for its procedures.

This made me giggle. Where is this administration firm? North Korea or something?

OK. I agree with the fact that it's not a refinance. Makes sense. However, I do think the person would have to complete new loan paperwork. I don't think a mere amortization schedule is a legally enforceable document.

I would do an EZ. What's the penalty if it's caught? File an SF?

Does the plan allow for refinancing of loans? If so, I would redo the loan with the correct paramaters. Otherwise the pariticpant is bound to the original loan paperwork.

Side note: has anyone seen a plan that DIDN'T allow catch up? What was the reasoning behind it?

They can almost certainly supress the 1099-R, especially since it has not been issued yet.

Remember, now that the plan is no longer a 1-participant plan, they need to get a fidelity bond. Also, where are the assets held? Are they qualified assets or no? If more than 10% of the assets are in non-qualifying investments, they need to get a bond for the full amount of those assets...

Have the RK document what the criteria are to "auto-default" a loan. Then have them document when and where in the amortization schedule the loan payments satisfied those criteria. Did the RK come up with the loan agreement? Or did the plan adminstrator or TPA do it? Compare the answers from the frist two questions to the language in the loan agreement. Do they match up? If not, put your concerns in writing and ask the RK to respond to them point by point. Keep plan adminsitrator and plan sponsor and even the investment professional involved each step of the way.

And a word for the plan administrator: if the RK cannot maintain records and process transactions that are not only following IRS/DOL regs, but also following plan provisions, then a change in RK is in order.

First thought is that the 1099 hasn't even been issued yet!