hr for me

I can say this happened on our plan(s) back in 2015/2016 but (those employed at the time) allowed the employees to either stay, distribute or roll out of the 403(b) into the new plan (not exactly sure what made this a distributable event but the IRS didn't question this). Yes, the full forfeiture balance was transferred - are you allowing current employees to distribute/roll out of the 403(b). This last year (2018), the 401a portion of the 403b account was audited which lead to all these distributions/rolls and merging of money. At no point did the auditor have an issue with transferring the forfeiture balance, just that we hadn't used it quick enough from 2015-2018. But this is just one personal experience and I wasn't around at the time, just for the audit (lucky me!)

I wonder if you could compare this loan investment more equally to something like a frozen GIC fund. That is you know standard payments of return are going to be paid out on a specific calendar basis, but the investment itself can't be liquified. So there are no "funds" to switch. Fund A and Fund B are not equal to this Loan Fund you've created. You are playing with paper money, not real dollars. That's what is different between other funds and loans. The other funds are backed by real $s. The only earnings that this Loan investment is getting (or not) is the interest paid back by the employee. I just don't see this loan investment equal to other funds/investments. One can't choose to invest 100% of their 401k balance in the loan investment fund....and honestly trying to make it equal to other plan investments seems risky. In no general way are participants choosing a loan as a good investment strategy. Maybe (although I personally don't think so) a good personal financial strategy when extra $s are needed, but not really an investment strategy. Moving any money between sources has many implications (regardless of what fund they are in)...I think that is my sticking point....it's not about funds, it's about sourcing. The loan was sourced from specific groups....(in our plan, SH, Match and PS can't be used for loans only Employee money - deferrals/Roth/Rollover, so all is 100% vested, but the Rollover has much easier access to distributions than the deferrals/roth.....moving money between would mean changing the characterization of that money....again regardless of any investment it was in) I personally wouldn't want to be involved in deciding it this way..... I don't know who your guru is, but if you trust them and rely upon them, then do what you are hoping to do....I'd just make sure my E&O/EPLI was up-to-date.....

I've never heard where you can move money between sources (deferrals vs match vs profit sharing) as some have attached restrictions on loans/withdrawals/vesting, etc that others do not. You can move money between funds/investments. The loan however is sourced from specific sources and goes back prorata to those sources. I can't say I've ever seen loan balances invested in those same funds, because in the end, it's play/phantom money that does not exist in the bank/trust. But I am a dinosaur and your use of funds and accounts is not how I would have defined them... A participant's total balance is a matrix/table of sources and funds. Other than moving in our out of a LOAN source (by taking a loan or repaying it), I can't say I've seen reclassified sources except some vague rememberance of being able to reclassify some contributions back in the olden days of ADP/ACP nondiscrim testing (way before safe harbor and the nondiscrim rule changes)..... and if I remember correctly, the employer could only move match into deferral since it became 100% vested....but I could be wrong on that...it was the 90s after all!

https://www.nolo.com/legal-encyclopedia/do-i-pay-health-insurance-while-im-fmla-leave.html There are multiple choices -- we ask for a check monthly OR a 1 time upfront if we know how long they are going to be out. Only con of waiting until they come back is if they don't return, it's hard to get those premiums back then. Even if treated as a loan.... We prefer the "pay as you go" to keep up with the amount owed.

If I remember Post86 correctly from back in the day, he would have to take a proportionate share between basis and earnings no matter the type of withdrawal. So I agree your 90% would be what is taxable for any type distribution or rollover purposes.

processed payroll on Quickbooks for more than 12 years...this is a payroll/tax issue, not a TPA/recordkeeper issue. From my recordkeeping/plan testing and auditing days....The only place I see that the TPA could have caught this is in annual census data - but I have found at least my current TPA doesn't want to see all the difference pieces of compensation to check accurate plan comp, bat they ask us to calculate plan comp. Back in the day, we audited plan comp/gross/w-2/pre-tax deductions and any excludable comp in our annual testing process. And I suspect even with the big name payroll providers that plan comp is more often wrong than one might assume....but is a big area of liability. That said, this lady created her own mistake if she didn't realize that pre-tax deferrals meant that she didn't pay taxes on them! She shouldn't be processing payroll or working on the 401k information!

Our HOA does allow for us to put a lien on a home (and we have) and we can take them to foreclosure (but luckily they and the bank got wise). Sometimes what can happen is the bank holding the mortgage will pay the lien and then charge it back to the mortgage (I am assuming through escrow accounting?) But yes, I'd approve this. But then again our annual HOA fee is $300 in total....

also consider if any of the sources had any J&S provisions as part of their distribution choices...... we just had to split out some sources that were rolled together when the IRS auditor found and didn't like it..... (even though there WAS a distributable event in between)...but we really wanted to get the audit finished and it wasn't terribly hard to do... but luckily this combination occurred in 2016 when we moved to a new recordkeeper (and i wasn't at this employer at the time)...

I agree with NOT using 001 -- it will cause issues possibly with forms not being filed for years (dealt with this a decade ago and it was not fun). I'd keep it clean and use a later number

I'm sitting next to you 'Cuse......

The plan administrator/company needs to be covered under their own corporate E&O since they are employees of the company, not the TPA. Why would the TPA be willing to take on the liability of the plan sponsors actions (Since we all know that the plan sponsors sometimes do what they want outside of TPA advice)

Agree with Luke......it's going to depend on the dollar amounts. I've been able to argue sufficiently small while under audit and only had to correct a few deferrals/match/PS/SafeHarbor on the incorrect pay definition (ours was Overtime, which got pretty significant for a few employees, but they were NHCEs). So the question is how big is the error?

are commission wages part of the plan defined eligible compensation for the deferral/match calculation? And agree I would look at post-severance compensation in the plan document too.... Has a distribution already happened?

are you asking the 3rd party COBRA admin or are you calling HR benefits directly? I wouldn't expect the COBRA admin to have anything but the plan rates (at least none of the 3 companies i've used for outsourcing COBRA handled the SPD or participant questions beyond the eligibility and payment and continuation piece for us - we still did all the behind the scenes work with the broker and insurance provider)... it would generally be up to the HR department to provide you with SPDs and information beyond the increase in rates.

Looking at this from an accounting point of view --> where was the check deposited? To regular the employer account such that they then paid each loan payment as they came or directly to the 401k plan/trust such that it was a lump sum? If to the 401k, how was the extra over time accounted for? That might help decide the "pre" vs "extra" question.

I had that happen for one company for one year - where the IRS/SSA came back a year or so later and said they had never received the W-2/W-3 packet. I just checked to see if it had been electronically sent (and in the end I accidentally sent a partial one) and just forwarded on the ones that were missed. No big deal and no penalty. And you have to remember it's only been this year that both employee and SSA copies were due by 1/31. In the past employers had 'til 2/28 to send the W-2s to the SSA. I honestly don't think anything is checked or found quickly by the IRS.

We once had to argue with a client that used SAP (german) that the termination date was the last day worked and NOT the first day NOT worked. We had the same issue with date of death -- they apparently use the first day FULLY dead. That was a crazy conversation!

Regardless of any laws, I'd have a tough time justifying paying this guy any wages or income at all knowing that he was unwilling to make an error right that the employer is now on the hook for (it might be different if there was no loss to the employer, but $8k?) Does it bring into account any ethics or moral issues?

From a payroll perspective, generally your % is going to come out of gross wages either way. It's just the taxable income calculation that is going to be different (either $94k will be taxable or $100k will be taxable, but the $6k will still be deferred either way). Just to throw in another kink -->Now if you have other non-taxable benefits (section 125), you are going to have to check with HR/your plan document and payroll to see whether those are included or not. In my experience, generally they are included in the % deferral calculation, but there might be other things that are not (imputed income for GTL or a company car for instance). In the end though those things would be in/out for both 401k and Roth.....

This is incorrect. There are no laws that require the employer to keep prior coverage/plans and levels for COBRA participants, just that they are also offered the same plans as favorable to the current employees. Can you imagine the HR nightmare of having a person COBRA for 18+months which could possibly be 1-2 plans ago? That's just not how COBRA works. If they don't like the changes/increases, then they have a choice to drop COBRA and find something else out on the market. This also means that if the employer were for some reason to totally cancel coverage for all employees that COBRA would disappear for all employees (both current and those on COBRA).

I know in TX, we are a small group and do ask if the employee/family members are covered elsewhere, but it has to do with the % that must be covered to have a small group plan (you can exclude those covered elsewhere so they don't hurt the %). But all we ask for is the name of insurance in case our benefits broker/insurance carrier decides to audit. The best thing you can do is (gently and nicely) ask your HR why it is necessary. They should be able to give you an answer like I did above (albeit possibly different reason). We are grandfathered under an old plan so some PPACA effects don't hit us, but it is possible this has something to do with PPACA issues.

I do agree that his account was closed when that check was written and his balance went to $0. And it's even easier the longer that money is out of the account. That's why I was asking about the timing. You might search on hardship distribution returns. I know there was a conversation lately about that not being allowed once the money went out of the plan.

Not only no longer an employee but would he even be considered a terminated participant at that point? How long has it been? More than 60 days?

I didn't open Tom's but back in the day when I did recordkeeping and processed loans, we also had a loan amortization worksheet. It came out pretty close to our recordkeeping system and we caveated to participants that these were estimates or models only. I actually still use the same worksheet for personal reasons (mortgage, car loans, etc). Since Tom posted his, I won't attach mine (it was created by actuaries at the large HR consulting firm I worked at)

and what if the preliminary test is wrong and you "sent back" too much? I agree with stopping/slowing further deferrals to minimize the refund and to let the HCE know that he will be probably be getting some refund after actual ADP/ACP testing . But there is no reason to "send it back" now and many reasons to not do so. This is not a mistake/error that you just send back through payroll. The plan needs to follow the participant's deferral election and take the proper steps going forward.