GMK

Consider issuing a W-2c with the correction. http://www.irs.gov/pub/irs-access/fw2c_accessible.pdf And if possible, hold off on issuing W-2's until later in January, assuming the contribution election is made in time.

For the purposes of discussion, While ACA may not help lower wage working families with coverage costs, aren't they in the same boat as far as costs go with or without ACA. They might be better off overall by switching to a different low paying job, one that doesn't offer health coverage, to get the subsidies. But I don't recall that lowering the employees' cost of employer-provided coverage was a goal of ACA. Might the proposed eligibility changes put the employer at risk for the shared responsibility penalties of $3000 or $2000 per? For my curiosity, what is the reference for the statement that most companies require a very large payroll deduction for family coverage? I understand that many companies are continuing to shift the costs to employees, but I'd be interested in seeing the numbers. Thanks.

Agreed. I said "because" to fit the case being discussed, but the more accurate wording would be: No RMD from the IRA for 2013 if the IRA balance as of 12/31/2012 was zero.

You got it right. You can wait until April 1 to take the RMD, but if you take your distribution before then, the first portion of the first distribution(s) is deemed to be RMD until the RMD requirement for 2013 is met. One RMD from the plan for distribution year 2013. No RMD from the IRA for 2013, because the IRA balance as of 12/31/2012 was zero.

When the participant reaches age 70-1/2 and is no longer employed by the plan sponsor, then the first moneys distributed are deemed to be RMD. So, yes, you do the RMD first, and then the rollover.

http://www.dol.gov/ebsa/pdf/2010-5500inst.pdf page 7 A plan with fewer than 100 participants can file as a small plan. and from long ago: http://benefitslink.com/boards/index.php?/topic/16331-80-120-participant-rule-question/

Really? Don't get hung up on the word "retirement." After you reach age 70-1/2 and are no longer employed by the employer who sponsors the plan, you have a Required Beginning Date for that plan, and you have to take an RMD from that plan by your RBD.

Employer also needs to get payroll plugged into "their records," or it'll happen again, which would be a foolish outcome.

We who read these boards know that this is a widespread problem that could be avoided, because so many people post about it here. But the IRS doesn't have to deal with what's posted here. Perhaps it's time to write instead to the IRS, the President, the congressional oversight committees, your senators, and your congressperson. If they get too much mail about this, they may be motivated to fix it. OK, maybe not, but it could improve the odds. Merry Christmas.

The more gmk's, the merrier (assuming that's who I really am ) Couldn't find a direct answer to your question. I believe that if your plan's coverage meets or exceeds the state-specific EHB-benchmark plan's coverage (and you don't have a specific annual or lifetime dollar limit), you're probably OK. http://www.cms.gov/CCIIO/Resources/Data-Resources/ehb.html

What Grinch, Pilgrim?

If 1% after $20,000 is a de facto annual limit, why isn't 30% after $20,000 also a de facto annual limit? Both reduce coverage, but neither one limits the annual dollar amount. Not saying you can do it, just curious about the reasoning.

Additional background: http://benefitslink.com/boards/index.php?/topic/53880-esop-and-change-in-distribution-policy-after-required-forms-signedcompletedsubmitted/ http://benefitslink.com/boards/index.php?/topic/54684-can-a-company-change-its-reason-for-a-denying-a-claim/

From a Big 10 (11 12 13 14) neighbor of MI, we don't see it so much as evil, but as consistently overrated in everything. MSU is simply the better team this year.

Forget settled. Until the check is issued, the funds are in the plan.

I do not know of a fool-proof (which would be good for me) way to verify this. If someone does, please post. We send a mailing at least once a year to former employees who are still participants, regarding distribution options, fund line-up changes, fee notices, etc., as applicable. If the letter comes back undeliverable, we google for evidence of whether or not the person is still alive, send an e-mail and/or call to try to contact the person, and like that. Haven't had to go beyond that, so far.

FWIW, this feels like it's not getting the deferral money (from the mid-month pay) segregated from company funds timely, and the only benefactor is the plan sponsor. There are some things an employee is not allowed to waive, and I suspect that timely deferrals is one of them, but I don't know that for sure.

And so much better than the poorly designed (narrow lane, small radius, tight corners) round-abouts that keep springing up around here. It was better when people thought octagonal signs mean "Yield" ... well, yah, they still think that, but it's not like the unpredictable behavior in a little round-about. And it's too cold too soon. OK, rant over. edit: Thanks, BG, for your post #6. That helps.

Unless your plan document says otherwise, an in-service distribution is one that a participant is allowed to take before terminating employment, that is, while the participant is still an employee of the company sponsoring the plan. This is in contrast to distributions that are available after separation from service. How does the company view Mr. heart surgery's employment status? Have they notified the payroll department of his termination change of status? Have they sent him a COBRA notice? If he walked in and started working, would they pay him or escort him out because he is not an employee anymore? You may be able to prevent the loan, based on the payroll only payback. (I don't know or care, I hate loans). But why can't he have his hardship distribution? He doesn't pay it back, right? and it appears from what you've posted that your plan document allows for hardship distributions prior to an employee's termination.

For future reference, print Post #2 by ERISAtoolkit in this thread: http://benefitslink.com/boards/index.php?/topic/48347-ira-owner-turns-age-70-12-but-dies-before-rbd/ in your RMD note book.

Since the election change event occurred, the participant can make the 125 election change. The only question is the timing of the participant's notification. It's just my opinion, but I would not have a problem disregarding the unpaid leave of absence days during which the participant is not covered under the health plan. I hear what you are saying, but what would it mean to receive a 125 election change notification from any employee, active or on unpaid leave, who is not covered under the health plan? Notification when their health coverage is reinstated would be sufficient for me.

^ I agree. Just emphasing to general readers that it has to be an RMD year before there's an RMD. No RMD if still an employee. Can be confusing.

I'd check with the insurer. If the insurer denies adding the spouse, tell that to the employee in writing and explain why. If the insurer is OK with it, I'd let it go, but give the employee verbal grief about how they need to take this stuff seriously and could have been denied. And if it's OK in this case, it should be OK-ed in future similar cases. Although information about deadlines is in the SPD, it can be a detail that those who do read the SPD miss. To alert new hires, therefore,we have them sign a 'promise' to tell us if certain, listed basic things happen in their lives that might affect health or pension coverage, like, marital status, added child, Medicare eligibility, address and phone, etc. The paper reminds them that eligibility for some benefits requires notice within as little as 30 days after an event.

Read this well-stated, concise sentence carefully. (It would not be an "RMD year" if he were still an employee.)

Thanks for the clarification, Mr. B. As suggested above, replace this TPA with one who doesn't make up their own 401(k) rules.