chc93

Also, some plans provide for contributions to participants who terminate due to retirement, death, or disability.

We had one plan sponsor who does not allow loans... for the very reason that the plan is a "retirement" account and not a "savings" account. He even didn't allow hardship withdrawals at first, but has since reconsidered and now allows hardship.

Maybe I'm missing this... but why not terminate the plan?

One thought is that the trailing dividends were from investments that were already rolled out of the plan and subsequently became the property of the rollover account. So these dividends should be property of the rollover account, and no additional work for the plan is necessary... (2 cents worth?)

I assume you mean Larry Starr. In any case, his replies to Form 8955-SSA are towards the middle to end of the following thread... https://benefitslink.com/boards/index.php?/topic/63600-form-8955-ssa/&tab=comments#comment-289120

Couple thoughts... Maybe like a 0% vested participant terminates, many plan documents specify the this participant was "deemed" to receive his vested distribution on his termination date. So if the NHCE ADP percentage is zero, then the QNEC correction is 50% of zero, which is zero, and the NHCE's should be "deemed" to receive the 0% QNEC. (I think this one is out to lunch) Or, maybe can use the first year prior year ADP test provision which "deems" the prior year NHCE ADP percentage is 3% (apparently good enough for this purpose). So the NHCE percentage in this case could be 3%, and the 50% QNEC is 1.5%.

So that's the problem... I guess. Electronic filing these 8955-SSA's only started in 2009 (?). But most of these "old" distributions for participants asking now happened years before that... when paper SSA's were filed. We have kept 1099-R's back to 1990, which has helped. But we don't have copies of checks and asset statements, and I'm not sure our clients keep anything after a few years.

I agree with your example. But if the document said the first day of the month coincident with or next following, then wouldn't the entry date be 03/01/2018, since he would have met the 1000 hours by 03/01/2018. In the document I mentioned, the entry date was the day on which the 1 year was satisfied. What I haven't seen is the entry date being the day after the day on which the 1 year was satisfied. Example.... hired 03/10/2018. By the document I mentioned, entry date would be 03/09/2018. But if the day after the day on which the 1 year was satisfied, then entry date would 03/10/2018 (no first day of month provision). Anyway... thanks for the discussion.

I've seen a document that says the entry date is the day on which the 1 year of service requirement is satisfied. With this definition, 12/31/18 would be the entry date. Other documents say the first day of the month next following. Still other documents say first day of the month coincident with or next following. Hopefully the document is very clear on this point. I'm not sure if I ever saw a document with an entry date as the day following the service requirement.

Also counts toward vesting...

If the pay credit does not meet the TH benefit requirement, wouldn't you be obligated to increase the pay credit sufficiently to meet the TH benefit requirement for the plan year?

We have a very similar situation. Curious to know the final resolution...

Belgarath... thanks, no problem... I understand.

Belgarath, can you briefly explain "fraudulent distribution requests"? I'd like to know what that is and how it comes about. I don't think I've experienced this yet (hopefully)...

Also, maybe check to see if the plan can file a 5500-EZ. I think for an EZ filing, no fidelity bond is required for the nonqualifying assets. If the plan is required to file a 5500-SF (or 5500), I think the fidelity bond is required. Doesn't matter that all of the nonqualifying assets are in the owner's name only and in his account only.

I think that if the employer wants the former participant to keep the overpayment, the employer must make the plan whole by paying the overpayment (with earnings) to the plan. Is $900 too much for this?

Maybe ask these over 70.5 participants to take the total of what they want in-service for the year, roll over to IRA, and take their "in-service distributions" from there. Then a single distribution each year. Or even deposit to savings/checking account, but have to withhold 20% taxes for the single distribution at that time... but have to pay taxes anyway. Might minimize administrative work...

Can the unvested money that was distributed be returned to the plan from the company... maybe EPCRS... where the plan is then made whole.

In our case, one of them issued a corrected 1099-R...

This is my problem with the IRS and Form 8955-SSA. The Form 8955-SSA was filed properly noting the Code D for the participants fully paid out to remove them from their system. Then years later, the participant gets the letter from the SSA. Why do they make us go through this if they can't keep their system "straight". The OP is not the first time we've seen this... <sigh>

FYI... FtWilliam has the 2018 Form 5500 and attachments up on their site today.

We recently had a similar situation. Called DOL/EBSA to get their opinion. Using your example, with a spinoff effective date of 1/1/19, they said that 001 had ALL participants and related assets at the beginning of 1/1/19. The spinoff then occurs *in* 1/1/19, when assets and participants are spun off. So your 1/1/19 count for 001 is 130, and needs an audit. As ETA said, if the effective date of the spinoff was 12/31/18, you would not have this issue on 1/1/19 since the 002 participants and assets would have left 001 by 12/31/18 and will not be there in 001 on 1/1/19.

Maybe the only issue is that at this time (now), the 2018 plan year Form 5500 should not use the 2017 Form 5500 with date changes... but wait for the 2018 Form 5500 to be issued. I think this usually comes out in January.

One of the items that we discuss with new clients/plans is the need to periodically completely restate the plan document.... probably costing as much as the first plan document... so no surprises later.

In fact, EFAST2 has an Attachment Type Code "ReasonableCauseAO", Attachment Description "Reasonable Cause for late or missing IQPA Report". My guess of what "AO" is "accountant's opinion".