GMK

BG - from what I've read on these boards, it seems unlikely that the plan can get the money under these circumstances. Probably better for the company to make a reminder to itself that there's money available to pay future expenses when they arise. (and it's a shame that anyone would spam a legit question posting.)

Maaza's posts are spam.

Aawww, BG beat me to it. Anyway, here's an earlier discussion that might help: http://benefitslink.com/boards/index.php?showtopic=42295

Maybe this will help clarify what's going on: If she is 80% vested, then 80% of her account balance is hers (in the example, 80,000 out of 100,000). The other 20,000 isn't hers. If she withdraws 20,000 one week before her 5 one-year breaks in service, the withdrawal comes from the portion that is hers. She can't have the part that isn't hers. After the withdrawal of 20,000, HER balance is 60,000, and 20,000 still isn't hers. Technically, at this point she is 75% vested in an account balance of 80,000. Later, after the 5 one-year breaks in service, the 20,000 that isn't hers is removed from her account. This leaves her account balance at 60,000, and it is all hers (100% vested). If there are withdrawals, the vesting percentage changes. What doesn't change is the amount that isn't hers. If there is a forfeiture, the vesting percentage changes, because there no longer is any of her account that isn't hers. To borrow Mr. Lesser's line, I hope that helps.

FWIW, I think that Querky has it right.

I prefer to give participants information. That gives them the power to make their own decisions (and be responsible for the results) and reduces the possibility of future complaints ("I should have been told about that!"). In answer to this participant's question, I'd tell her that terminating the plan is being considered, but the chances are about 50-50. If the plan is terminated, she would become 100% vested. She can choose to wait until September, but there's no guaranty of the termination, so she could end up simply delaying her receipt of her 40%. Then, she chooses.

Thanks for the update, Chris. Glad to hear you're in a better place.

Me, too, actually. Fortunately, our POP easily meets eligibility. (BTW, for future reference, the post numbers are in the upper right hand corner of each posting.)

but see post #4, above, please.

Up in these regions, that's a heat wave, Tom. We're all waiting for that first sign of Spring, orange barrels on the highways.

After further review, I think you're right, JRG. (I didn't go back and connect all the dots.) or maybe leevena sees something that's not in the linked article.

gizmo's post is spam and inaccurate. Since this is an old post, I wonder if we will get any follow-up. FMLA makes it unlawful for any employer to interfere with, restrain, or deny the exercise of any right provided under FMLA; or to discharge or discriminate against any person for opposing any practice made unlawful by FMLA or for involvement in any proceeding under or relating to FMLA. If you feel your rights under FMLA laws have been denied, address the matter with your employer in writing. If you are not satisfied with your employer's actions or decisions with regard to your FMLA claim, you have the right under the law to file a complaint with the state or the U.S. Department of Labor or bring a lawsuit.

Spot on analysis, AtA. Since (b) continues since forever to be the norm where I live, I pick ©. (When in doubt, pick c.)

I agree with leevena. As a reference, this summary may help: http://www.mhmresources.com/doc/FF/MHMR-FF0708a.pdf including the special treatment of POP plans (bottom of page 3).

My understanding is that the company payments to buy the shares because of the put option are not part of the distribution. They are a separate transaction. Once the shares are distributed from the ESOP the distribution is complete. The ESOP reports the distribution as it would any other, so start with a 1099R. Then the payments from the company are 1099B's. I haven't worked through how to do the 1040 reporting of the basis on the series of 1099B payments, but in the course of the 5 years, the participant should not be taxed on more than the distribution plus interest payments, and only on the interest payments if the original distribution was rolled over.

No question, you get a "Right On!" for that (with apologies for using a prehistoric phrase of encouragement). and thanks for the interesting discussion on a grey Friday afternoon.

Now, for the employee that doesn't sign the deferral form at the meeting, but decides to talk it over at home, you may be waiting a while. But if people won't turn in the forms, you can't stop them. (~Y. Berra)

After further review, I see how you will take care of defining a 'default' fund without having it in the Plan Document. On the deferral election form (of Bill's 2 forms) is a sentence over the employee's signature that basically says, "Subject to changes that I may make to my investment elections, I hereby elect to invest my Plan account in the Wonderful Balanced Fund." Not bad, Austin.

If any thought is being given to allowing the posting of reprints (I hope not, but..), I suggest limiting them by character count, not paragraphs. I also suggest that any reprint that has been posted on these boards may not again be posted here, in whole or in part, without the prior approval of a site moderator.

Austin - Sorry to be unclear. I should have said that we administer our small 401(k) and an ESOP. For us, automatic enrollment is no more complicated than non-automatic enrollment. I think it's easier to administer, because we don't have to wait (forever?) for the employee will respond. And to use Bill's two-form procedure for non-responders, you need the plan to define a default investment. I appreciate that some sponsors may not provide adequate administrative support for their qualified plan for whatever reason. And I can understand that it's no picnic having to deal with them.

Not in all cases. We work with a small plan (<100 employees) with automatic enrollment. The plan has 98% participation. The other steps in your summary above are to sit down with the employee and explain what happens if they do not make an election, and then if they do not make an election, tell them what deferral rate and fund(s) you enrolled them in. And financial advisors or not, the plan sponsor is responsible for the fund selections. But you gotta deal with the people in your plans.

So they only do the mindless tasks like approving the list of funds available for investment? I'm glad I'm not in those plans. Just saying. Since the participant has to sign and date the form you propose in the OP, it's an election. Don't know if you would want to also include a similar statement about the deferral rate.

or could you amend the plan to add automatic enrollment with default elections for those who do not submit their election choices? or am I missing something?

The "trick" here is to send each distribution receiver a letter listing the steps for reporting the 1099-B on Schedule D, and especially instructing that basis equals stock distribution amount (taxed on the 1099-R), and net gain = 0. That's easier than trying to explain it over the phone, and it avoids the possibility (likelihood?) of double taxation for those distribution recipients who don't normally deal with Sch. D. As to whether a 1099-B is required, we assume that since the company is likely to buy back distributed stock each year, for example, for diversification distributions from an ESOP-owned S corp, the company is regularly redeeming stock. If stock redemptions are on more of a hit and miss schedule, most years no stock buy back and some years maybe, then that, to me, would be purchasing on an irregular schedule and not require a 1099-B.

If there is going to be a policy change, I would prefer the original new policy, with the clarification that government documents are not considered articles. But, I'm not as optimistic as others seem to be that the individual causing the problem will follow the rules. Dave, It's your forum. Whatever you decide is OK with me. After further review of the arguments against the policy, I continue to support the policy as Kevin C posted, and remain convinced that this policy is consistent with and promotes the purposes of these boards. I stand with Dave. For what it's worth, I do not sell or defend investment/insurance/tax shelter/pension/etc. products, including scams, and I have no friends.