BG5150

Did B have a plan in 2019 with deferrals? If so, they can't have another 401(k) plan for 12 months after the last deferrals are distributed from the terminated plan

So, if it's not a recapture account, the revenue sharing deal is between the TPA and the provider. The the TPA tells the sponsor (employer) that it will offset the plan's fees by the payment. If that's right, the sponsor really has no say in the matter, except determining if it thinks the fee the provider is paying the TPA is fair given that the funds originally came from the plan. The TPA would simple get to keep the difference between the payment from the provider and the offset fees. What the TPA does with that difference is up to them--they can earmark it for future fees of the plan to the extend future payments fall short. Or they can just pad the company's profits. Or do a profit sharing to its own plan. Or use the funds to add staff or technology. The list is endless. At least that's the way I see it. I think the 408(b) Notice should outline the fees paid back to the TPA. The Service agreement can say any revenue will offset fees. But I don't think the SA needs to say what happens to a surplus. If there is extra laying around and the revenue doesn't cover fees, the the TPA can discount the fee, using the slush fund. Example: Slush fund: $1,000 2019 Revenue: $2,000 2019 fees: $3,000 Invoice: Fee: 3,000 Revenue sharing; (2,000) Discount: (500) Due: 0

When do you complete your compliance testing for plans moving to a MEP? Unlike a regular plan termination, where we still have the assets and can do all the testing and required corrections and contributions before the assets get liquidated. How do you handle that for a plan leaving for a MEP? Just do the annual work and do the corrections/contributions to the new plan? Hold off on the transfer until it's all done?

Here's a quick rundown on if/when they are plan assets https://www.benefitslawadvisor.com/2013/07/articles/erisa-fee-recapture-accounts/dol-provides-guidance-on-erisa-fee-recapture-accounts/

If the board wants contributions to be fully vested immediately, they can do that without being safe harbor.

What does the document say?

Why do you believe that? I see nothing in 402(f) that says there is a cutoff. If it's an eligible rollover, then they have to get it. "There's no taxes taken out, so they can just roll over the entire amount" you say. however, how does the participant know that? 402(f) notice. The notice is for eligible rollovers, not eligible rollover distributions where there is withholding.

But the gain on that investment came from dollars provided by me. I took them out of my pocket, parked in the 401(k) plan for a short time and then was taxed on that amount on the way out.

How does the arithmetic work if there is (nearly) zero gain in the account. For instance if the money was invested in the money market. Scenario 1: Account balance $50,000, salary $100,000. Income $150,000. Scenario 2: Account balance $40,000, loan payment $10,500, salary $100,000. Income $150,500. I look at it this way: say I always wanted to see what $20,000 in cash looks like? Where can I get my hands on some cash? My 401(k) Plan! I'm conservative, so I've kept everthing in cash. I have $40,000 in there I haven't paid taxes on, so I take a $20,000 loan. I get the amount wired to my bank account and then proceed to get 20,000 singles in cash from the teller. Then I go home, dump it all on the bed and roll around naked in all that cash! $20 grand, tax free! whoo hoo! Then the next day, I stack it neatly up and I'm ready to bring it back to the bank and put it into my account. Still not taxed. Now I'm gonna pay it pack. Lets say there's $100 of interest due by time I pay it back to my account. So, I reach into the coffee can and pull out a $100 bill that I've PAID TAX ON ALREADY, and put it into my account, along with the original 20 large. Next day I write a check for $20,100 which goes into my account in a couple days. Then I get fired. (I skipped work the day I was rolling in the dough, so to speak). So I want to take a distribuiton. I take it all in cash. My 1099-R is going to say $40,100. I will be taxed on my $40,000 basis, plus on the hundred bucks I've already paid tax on.

Is it that hard to use the participant's individual rate of return? Or even the plan's rate of return? Will the record keeper not calculate that for you?

My question is: if the employer has to reimburse the plan, where does the money go? It cannot go back into the participant's account. If not, then where?

I just use A.

If you cannot find it, that doesn't mean there is no plan. He may be lying and saying he has no other employee, and filed an abbreviated form that is not available to the public. Are you a W2-paid employee? Do/did you work full time?

I've often seen A used in conjunction with C, non-farm income.

Were these remaining assets ever reported on the 5500? If they were, and if it's a significant amount, did no one notice that the amount of the distributions were way less than the opening balance of the 2017 5500?

I think that would be more trouble than it's worth.

Would any of the plan communications have ANY participant information in them? Other than an asset statement, what else would have someone's name on it?

Bill tried to find Larry for me to no avail. Maybe on Wednesday. (If I'm sober enough to get to the sessions...lol)

I'm on opposite sides for those two sessions. Nat'l Harbor 11 then Potomac C....

I met Bill, but I think Larry is ducking me. lol

This is what our loan policy says with plans that use hardship reasons for loans. Notice nothing in there about limiting the amount to only the need basis.

There are no taxes on a Loan unless they default. No 10% penalty either.

That provision only limits the REASON for a loan, not the AMOUNT. Look at the maximum available loan section in the loan program and/or the SPD. It probably says minimum $1,000, max $50,00 or highest outstanding balance... It probably doesn't say the amount is limited to the hardship need. So, to me, in theory, you could have a $40 medical bill and get a $50,000 loan.

If a client's plan is excluding leased employees, do you check to see if: A person shall not be considered a Leased Employee if: (i) such person is covered by a money purchase pension plan providing: (1) a nonintegrated employer contribution rate of at least 10 percent of compensation, as defined in Code section 415(c)(3), but including amounts contributed pursuant to a salary reduction agreement which are excludable from the employee's gross income under Code sections 125, 402(e)(3), 402(h)(1)(B), 403(b), 132(f) or 457, (2) immediate participation, and (3) full and immediate vesting; and (ii) Leased Employees do not constitute more than 20 percent of the Employer's nonhighly compensated work force. I never thought to ask if their leased EEs are covered under a MP. And what is the second part saying? Leased EEs must make up more than 20% of the workforce in order to be considered leased and able to be excluded?

Bonds don't cover plans. They cover people. And to answer one of the other questions: I'm guessing the identity thieves opened accounts in the participant's name. Interestingly enough, there is a relevant article to this in this quarter's Plan Consultant Magazine.