GMK

Further discussion here: http://benefitslink.com/boards/index.php?/topic/55686-loans-and-withdrawals see post #5

According to: http://www.irs.gov/pub/irs-prior/i5329--2013.pdf (page 3), the additional tax on early distributions does not apply to "Distributions due to total and permanent disability. You are considered disabled if you can furnish proof that you cannot do any substantial gainful activity because of your physical or mental condition. A physician must determine that your condition can be expected to result in death or to be of long, continued, and indefinite duration." If the distribution is being made due to the participant's total and permanent disability, then the IRS waives the 10% penalty, and the plan puts a 2 in box 7 on the 1099-R (under 59-1/2, no penalty) in this case. Otherwise, it's a 1 in box 7.

Drinks a lot, does he? I'd be less concerned about pool's being part of the principal residence and more concerned about the plan sponsor's owner approving a hardship to fix his own pool when he has some or all of the $75k available from other sources. In other words, load the file up with documents showing that other resources were not available. But, as BG said, I wouldn't approve or deny this one without advice from an ERISA attorney.

so if we assume an immediate and heavy financial need exists, then from http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics---Hardship-Distributions you can rely on the employee's written statement that the need cannot be relieved from other available resources ..."Unless the employer has actual knowledge to the contrary," and in this case the employer will know. So, if the owner may have other available resources, the Plan could ask for documentation beyond the written statement. The auditor will probably want to know who approved the hardship distribution. Could get messy; could come out clean.

When the pool owner repairs the damage to the pool, the cost of those repairs increases the owner's basis in the property (IRS Publication 523). My impression is that "principal residence" includes not just the house, but all of the property where the person lives, in contrast to the person's "secondary" residences (second home and vacation properties). This leans me with MWeddell, but I'm not a lawyer. Plan administrators maybe should consider adding a plan policy for hardships that prescribes some of these kinds of things with specificity, but in the present case, that boat has already sailed.

I got lost as to what you mean among all the words you used. That can happen when you work with ESOPs. From today's news, you can't presume too much, I guess.

^ agree

FWIW, I think this is a company policy decision that depends not only on whether the reasons for providing the car allowance continue during the leave, but also the value of continuing the allowance as an employee retention factor. Just apply the policy to similarly situated employees in a non-discriminatory way. FMLA does not require the continuation of car allowances. We do not have car allowances.

But not in the eyes of the IRS. The IRS did not recognize the marriage and did require them to file as single taxpayers. Now it won't let them file as singles. Instead, the IRS said, 'as of this date you are no longer single persons (for tax purposes), but you are now married spouses.' As a result, they must file as married persons (for better or worse). IMO, the basis for a special enrollment period is that when the IRS decided to recognize them as spouses, their status as "tax dependents" under the IRS rules changed. It's like the "tax dependent" status change that happens when the HIPAA events occur. Before the event, you weren't a tax dependent, and after the event, you are. In effect, the IRS adopted the same-gender married couples as spouses. Aside: I think this is a "same-gender" issue. In writing, I avoid a longer word if a shorter word is accurate, but in this case, it's the gender that's the same. Probably just getting too fussy in my old age.

Maybe one could argue that the spouse's status as a tax dependent changed (wasn't one before, is now). And if Medicare can have a special enrollment period, why not others? But it would be nice to get a few confirming words from someone at HHS.

You are reading the statement correctly. During the most recent 3 months your investments returned 1.64%. Over the past year, they returned 16.92%, which means they did better during the first 9 months than during the last 3 months. This is not uncommon. Distributions from the 401(k) are taxed as ordinary income and are subject to mandatory 20% federal withholding. You may also owe a 10% penalty tax for withdrawals before age 59-1/2.

This and other on-line articles all suggest getting advice from your lawyer before opening a same-gender special enrollment period. I agree that it seems like a valid newly-eligible / new dependent situation. https://welcome.willis.com/nlrgclientcommunication/Shared%20Documents/HIPAA/Special%20Enrollment.pdf

Consider, for example, a plan with one year of service for eligibility, but which has participation begin retroactively from the first of the year once the employee becomes eligible.

Right. Sorry for the question. My typing got ahead of my brain (easy to do). Only question might be whether vacation pay that is paid when one goes on vacation should also be excluded, the same as vacation pay that is paid at the end of the year if unused. In both cases, it's a benefit the employees accrue while working during the year (additional compensation above the normal wage), all of which they will receive by the end of the year, regardless of whether they take any time off. I couldn't find any relevant pronouncements.

I agree with ESOP Guy. Generally, vacation pay accrues at a defined rate while you put in time working. It isn't like a bonus that may or may not be paid and that may be based on factors that do not apply to determining vacation pay. Is the amount of the cash out for unused vacation included in taxable wages on the W-2?

For example, there's this: http://www.401khelpcenter.com/Bundled_RFP.html#.U5h1pulOVaQ The RFP will be lengthy, because it covers a lot of important topics. In evaluating the responses, focus on comparing the specifics of those things that are most important to your plan and your participants, like fees, investment options, service, etc. To me, the tough part is evaluating the performance of those who give investment advice, that is, how to measure how much better or worse participants would be doing by following the advice of one advisor compared to another advisor. It's basically the opposite situation of, for example, mutual funds, where you have tons of past performance numbers to compare.

Don't think that's Mr. Rigby's question, 2 cents. In practice, how do plan administrators know/verify that this person who presented them with a distribution request form is actually the deceased participant's surviving spouse? or do you just take their word for it?

Generally, a "tax dependent," either a qualifying child or a qualifying relative, http://apps.irs.gov/app/understandingTaxes/hows/tax_tutorials/mod04/tt_mod04_01.jsp is eligible for coverage. As Chaz says, check the plan/SPD. In addition, Michelle's Law may extend coverage eligibility for up to a year past age 25. http://www.dol.gov/elaws/ebsa/health/employer/657.asp

FWIW, unless the plan doc says differently, I don't see this as a new enrollment. The rehired employee basically continues her/his previous participation, just disregarding the period of time she/he wasn't an employee. The deferral rate election and investment elections that were in place when she/he left employment continue to apply and can be changed as often and at the times normally specified by the Plan for all participants. But maybe the plan doc specifies something different for rehires.

Having seen comments on these boards that it is foolhardy for the employer to be the plan administrator, I assume there's a way to farm the whole plan out to others who have the full fiduciary responsibility for the plan, including as plan administrator. And the employer simply pays the bills as they come in. If not, then it would seem that an employer without anyone to be the plan administrator has to terminate the plan, no?

Sounds like a case where the plan would be better served with 3(38), but then who picks the 3(38)?

To get the ball rolling, request (in writing) a copy of the ESOP's QDRO procedures, and find an attorney who understands QDRO's to prepare one for you. A QDRO is a qualified domestic relations order. It specifies to the ESOP what portion of your ex's account you get, based on the divorce decree. It also contains certain other information that may or may not be in the divorce decree. This should be described in the ESOP's QDRO procedure. It starts as a DRO (domestic relations order), which your attorney can draw up. After the divorce judge signs the DRO, you or your attorney submit the DRO to the ESOP. The ESOP's plan administrator determines if it is "qualified," which generally means that it contains all the necessary information and does not require the ESOP to do something that the ESOP could not otherwise do, such as, requiring a form of benefit distribution that is not available to ESOP participants. If the DRO is determined to be qualified, it is then a QDRO (qualified DRO), and you should be getting your share of the account. If the plan administrator determines that the DRO is not qualified, the plan administrator has to tell you why, and you then revise the DRO, get it signed by the judge, and resubmit it. Sometimes QDRO's go very smoothly, and sometimes they hit bumps and snags, so stick with it. Good luck.

^ It's not bad if you're very small. We'll keep auto enrollment. But then we handle the enrollments ourselves and do not rely on outsiders, except to provide the enrollment booklet.

^ then he'll have a lot of 'splainin' to do. The section of the Plan Document about the Trust should include clauses for adding and dropping trustees with a requirement that the changes must be in writing and (you would hope) with a requirement that an added trustee needs to provide her/his acceptance in writing.

Peter - If employees received a letter like this unexpectedly, they would be upset with the employer, which would be a disadvantage for the employer, both because the employees will bad mouth the "employer's plan," and because the employer couldn't do anything about how the plan treats participants. "At no cost to the company," except besides sending in the contributions, the employer would have to keep track of initial and revised deferral amounts or percentages for each employee, add the contribution calculations and amounts to the payroll and tax reporting software, and take the heat if contributions were sent in "late" (however late is defined for this). For a small company, this will be an added burden for the small (and probably overworked) accounting department. For a large company, it's no biggie, but they likely have a better retirement plan in place already. and what Kevin C said.