K2retire

The participant's daughter called the auditor and gave him an earful. That seemed to take care of the issue.

Testing software is generally designed to do this automatically. In fact, if the test fails, it will suggest reclassifying some of the deferrals at catch up, if the full catch up amount hasn't already been used.

It's also a provision that is frequently administered incorrectly!

Current year catch up contributions are not included in the ADP test or the 415 test. Whoever is doing the testing should know that and handle it appropriately whether or not the catch up contributions are segregated when deposited.

We had a DOL auditor suggest that the plan sponsor's HR director should drive to the last known address of an unresponsive participant and knock on the door to see if the occupants knew where to find her. She declined, citing safety concerns. The auditor apparently made some sort of contact that left the current occupants of the home with the impression that the participant (who was elsewhere recovering from surgery) owed them a share of her account balance. It got ugly.

Neither W-2 nor 5500 reporting requires a distinction between regular deferrals and catch up deferrals. Some (but not all) record keepers do. However, reaching the $18,000 limit is not the only way that a contribution can be classified as a catch up contribution. This makes me wonder what record keepers who require that distinction do when contributions are reclassified as catch up due to testing results.

Are you truly contributing after tax -- or is it Roth? In the retirement plan world they are not the same thing.

I have heard of that being done, but it is the exception rather than the rule for balance forward plans. Typically the plan document will dictate what options are available for things like that.

As the second spouse of a CSRS covered employee, I can definitely confirm this part of the problem. Often they will provide an estimate in advance of the actual commencement of benefits. Why not see what they come up with and then ask questions if it doesn't seem right?

I believe the limit for permissible withdrawals, if allowed by the plan, is 90 days. Six months is clearly too long.

But watch for meeting the Social Security wage base -- you have to consider the W-2 withholding amount in the calculation of SE tax.

Bottom line: employees get W-2s. People who get 1099s are vendors.

I'm safely in Kansas, but finally got word that the only damage to our Orlando area vacation home is no power or water. They are not expected to be back on for a couple of weeks. All things considered, I call that a win!

Does the DB allow people to opt out?

Keep in mind that while the adoption agreement is silent, it may be in the base plan document.

Thanks for confirming what I thought was correct. This is a DC plan. The document requires distribution within 5 years of death. Neither the record keeper nor TPA (me) was aware that the participant had died until 11 years after the fact. Previously we only had a "termination" date for this participant. The record keeper is saying that they will not transfer the balance absent a direction from the beneficiary. We are still working on getting the beneficiary to respond, but will pursue changing the record keeper's plans if necessary.

The participant did, indeed, pass in 2006. I'm waiting for a response from the record keeper about the 5 year rule. I suspect it will be that balances over $5,000 can't be forced out.

We have a terminating plan with one deceased participant. There is a valid beneficiary designation naming the spouse. The account balance is in the 5 figure range. The spouse is not responding to requests for distribution instructions. The plan requires full distribution within 5 years of the death. I'm checking to see if the 2006 termination date in our files is the date of death, or if he actually terminated and passed at a later date. The record keeper claims that IRS regulations prohibit forcing out the account of a death beneficiary and the plan must stay open until she eventually decides to withdraw the balance. I've never heard of such a rule. Is that correct?

Does the plan allow in-kind distributions?

I have worked in situations where I was expected to do it all and where everything was compartmentalized. I firmly believe that the only way to learn the business and understand why things must be done a certain way is to see all aspects of running a plan. Having teams that only focus on one aspect is more efficient. But being able to work on the entire plan is more interesting and rewarding for the staff.

Of course the youngsters reading this have no idea what dBase was!

We're just about 35-40 miles south of the totality path. Our boss hired an ice cream truck and bought us all glasses. There were heavy thunderstorms this morning, with more predicted later in the day. Luckily, we had a clear view at the height of it, with the clouds returning as the sun was returning to view.

You've described almost exactly what the Lord Abbett bundled plans used to look like. At one time there were as many as 8,000 of them. When they quit selling them, the Prime Plan Solutions division of DST Systems continued to offer them with a wider choice of investment options. Sadly, DST sold that division in 2016 and I don't think they are available any longer.

There is an IRS office in Kansas City. The zip code that is exclusive to the IRS is 64999.

I think that is exactly the issue. In this case, we were able to show that it was only for that one year that the record keeper did not provide the information. They did provide it for that year once it was under investigation. And ultimately it was determined to be reasonable. The case was closed with no sanctions.