BG5150

From the folks who sponsor our doc: [quote] As long as the original beneficiary has not taken control of the account they may be able to disclaim the account. If they disclaim they are treated as if they predeceased the participant. The account would then go to the next named beneficiaries. In the XXXXXX PPA document the order of beneficiaries is (1) spouse then (2) children and then (3) other heirs/estate at plan administrator discretion. Slightly different in PostPPA. In order to be a qualified disclaimer: - Must be made within 9 months of the participant's death - Must be done in writing and be irrevocable - Beneficiary cannot have taken control of the account. This generally means they have not taken any distributions (except RMDs), changes investment options, or the like. If they have taken a distribution they can disclaim the remainder of the account but not the amount distributed. Once the account has been disclaimed the former beneficiary cannot have any control of who gets the assets - it has to follow the beneficiary form (if applicable) or the default under the plan documents. [/quote]

I looked in the BPD and I didn't see anything. But it's late on a Friday afternoon. I sent Datair an e-mail. I hope they can help. On Monday. Have a great weekend everyone!

Husband and wife own a company with a retirement plan. Neither ever named an alternate beneficiary. Wife dies. Husband does not want to be the beneficiary, but he wants the benefit given straight to the children. Is there any way to do this?

I would express your concerns to the TPA so no one can blame you when the poop hits the fan...

We use Datair's doc, and they came back with pretty much the same analysis as you just shared. Thanks.

The audit exemption is only for partial plan years that last 7 months or less. It doesn't look like you had a short plan year.

Does anyone have a quick summary or chart that shows what SH Notices still need to be sent and which ones don't?

If the plan term date is in June, how could benefits be based on compensation earned in a period when the plan was not effective?

I am tempted to try and talk call all my Off Cal sponsors and try to talk them into becoming calendar years. I may even just do the short year for free! lol

Thanks. Now it looks like there's a resolution to add loans int he file, but no formal amendment, SMM or anything like that. Plus, I don't think there was any sort of loan documentation created when he took the loan.

Mr. Bags: You are right that the TH exclusion is gone. Only plans that are solely funded with deferrals and a Safe Harbor contribution get the pass. Keep in mind, that includes discretionary match that satisfies ACP SH.

Plan has no exclusions to compensation. Employer did vacation day buyback, but did not withhold 401(k) deferrals. Were they required to? Also, they do a 4% profit sharing each year, and did not remit the PS for the buyback. I am thinking they owe a 50% QNEC on the missed deferrals (plus earnings). No match. The missed PS may be ok. The PS allocation is New Comparability, and if it passes testing they are ok. Is it your opinion the Employer must do a Profit Sharing Resolution each year to memorialize the amounts everyone gets because it is New Comp and not a stated formula?

No. ADP test is still cool.

That gets tough when you have a big provider potentially sending out dozens if not hundreds of these checks. Often there is a central check issuing/mailing center and it is very difficult to add in a mailer, especially one that runs several pages. The organization may be printing thousands of checks nightly; who is going to pull those checks?

Did the plan need to have loan provisions already in place before they issued CARES loans? We have a client that issued an $80,000 loan without having a loan provision in the plan. Could we retroactively amend the plan to allow for loans?

How many plans do not allow for direct rollovers under $200? All of our documents allow them without a minimum. I never thought to choose otherwise. Wouldn't it just be safer to send a 402(f) Notice to everyone? And, Like RBG said, they are still eligible for the 60-day rollover, so I think the notice would still be required.

Side note: I always thought it was silly to allow the SPD to be given up to 90 days AFTER becoming eligible.

What is the cite for that?

There is no arguing. Those eligible but not contributing are still "covered" by the plan.

It goes in the "special extension (enter description)" line just underneath the Form 5558 line.

We are taking RBGs advice for the two plans we have that are taking advantage of this.

But I wouldn't make a habit out of it.

SOME. But there is plenty that still applies.

First, the plan document must allow for involuntary rollovers; not all of them do. One place I worked, put the cap at $1,000 so they did not have to worry about forced rollovers. Second, will someone please show me the exception to providing the 402(f) notice if the distribution will be less than $1,000 or $200? It doesn't matter whether, or how much, taxes will be taken. If the distribution is eligible for rollover at all, the notice MUST be given, in my opinion. The special tax notice explains a lot of things other than the 20% withholding. It mentions withdraws under age 50 1/2. They types of accounts that may accept a rollover. It explains direct and indirect rollovers. It explains treatment of loans, Roth, company stock. I see nothing in 402(f) that mentions any thresholds. (OK, I probably wouldn't send one for a distribution under $10, as no 1099 is generated for that.)

They do: https://www.pbgc.gov/prac/missing-participants-program