Lou S.

I seem to recall that eligibility is NOT a protected benefit and you are correct in you analysis. Though as a practical matter it could be a potential PR nightmare to axe half the employees from the plan. Especially when you tell them, "by the way you aren't eligible for distributions either because you are still employed." edit - In cases like this the employer often (but not always) grandfathers those who met the prior eligibility into the plan.

This is what we've been hearing lately. In one case, it looks like the broker is not getting paid, but that's because his fee is shifted to another "category" (I really don't understand all of these kinds of fees). I think that's the point. And austin is spot on with his post. The more the expenses can now be "hid" in the exense ratios of the funds, the more it probably will be.

You have to disclose if you are getting direct or indirect compensation, assuming you'll meet the minimum requirement ($1,000?). So if they are paying your fees from the trust that has to be disclosed. If the client is paying 100% of the fees outside plan assets (or from forfeitures - which I thought was an odd exception), then you don't need a disclosure. If the client "can" pay expenses from the trust but doesn't do so, then you don't need to disclose as the DOL said that would be confusing but if they later decided to actuially charge then a disclosure would be required at that time. That's my uderstanding but if I'm wrong I'd like to know.

You have to be working for the sponsor of the 401(k) plan for the expection to apply.

Yes but what do you do when SSA sends a notice to a particiant who was reported in 1991. You take over as TPA in 1998 and there is no record of this participant on any takeover reports and you didn't get 7 years worth of 5500s and SSAs to see they had been reported but not been removed. The client terminates the plan in 2002, disolves the partnership and pays everyone out. Former TPA pre-1998 no longer exists. SSA notifies they particicant that they have deferred vested benefit in 2012. Both the ex-participant and ex-client are attorneys. Who is responsible for keeping the records 10 years after plan termination? At the time of termination the plan is required to pay out all accrued benefits. In many cases some benefits cannot be paid such as missing participants for whom there is no address or for whom the plan does not have a SS #. In this case the plan pays out all benefits to participants that the plan can locate and liquidates. ( DB plans transfer the benefits of missing participants to the PBGC) I dont know what liability there would be if a participant trys to claim benefits in 2012 since the s/l for a breach of fiduciary duty would go only back 6 years and no plan existed in 2006. I have never heard of a plan participant filing a claim for benefits against the plan admin of a plan that has terminated and paid out all benefits. All benefits were paid out, there were no missing participants. It was a participant directed DC Plan. At the time of plan termination there was no record of the particiant having any account in the plan, very likely because he/she had been paid out in the early 90s under the prior TPA. Not sure where this will go or if the participant will try to persue legal action over this, but if they do I'll be sure and let you know. Usually when we get these letters we either have the records to show payout or just tell them we have no record of them and they must have been paid out and that usually ends it. In this case with the ex-participant doesn't seem to want to let it go even though there is no longer any plan or sponsor for her to make a claim against.

Yes but what do you do when SSA sends a notice to a particiant who was reported in 1991. You take over as TPA in 1998 and there is no record of this participant on any takeover reports and you didn't get 7 years worth of 5500s and SSAs to see they had been reported but not been removed. The client terminates the plan in 2002, disolves the partnership and pays everyone out. Former TPA pre-1998 no longer exists. SSA notifies they particicant that they have deferred vested benefit in 2012. Both the ex-participant and ex-client are attorneys. Who is responsible for keeping the records 10 years after plan termination?

Assuming that the notice was delivered late (and I dont know if it was) what relief is the client seeking? It seems that no one has prevented him from receiving his distribution which he has not requested. Seems weird. Like the guy is just trying to get a wind fall. Assuming he has an SPD, receieved his quarterly statements and had the ablity to direct his funds, I'm having a hard time seeing how he was damagaed in anyway. He clealry has some form of toxic relationship with his past employer so I'm not sure why he doesn't request the withdrawal now and cut ties.

That wouldn't apply in this case as he's been gone for 850 days, more than 2 years. I suppose it could apply to plans that don't allow a distribution until NRA but those are quite uncommon in a 401(k) plan. That's much more likely in DB plan with no lump sum option. At any rate I'm curious why the OP's friend didn't request a distribution when he left? I know it cracks me up when a participant who has been gone for years, ignored the original distribution package (apparently not the case here), calls up and says they need the money by Friday or something like that and want to know why that's a problem.

I'm not sure I agree with that. If you don't pay your property taxes, states will start forclosure proceedings. If you don't have any other means to pay the property taxes, why do they need to be past due with associated penalties and interest for you to qualify for a hardship?

I think it is problematic in a safe harbor matching plan for a couple of reasons. 1st the prohibition on amending the plan durring the year. While there are some expections for merger/acquisition, I do not believe the exceptions allow a change in plan benefit formula. 2nd the "extra" match on top of the safe harbor would esentially be 0% of the first 5% + 50% of the next 3% for some participants which would violate the non-inreasing rate of match to keep the safe harbor status. If this wasn't a safe harbor plan I don't see a problem with what you want to do as long as you pass ACP and BRF.

Well when it is created as an honest to god retirement plan for the employees and/or owner of the business it can make a whole lot of sense. When it is done because "we have some extra cash this year and we don't want to pay taxes on" it usually does not. For what it is worth, defined benefit plans were once the norm in retirement plans. Unfortuantely many factor too long for this thread have conspired to make them something of a dinosaur. Sorry you had to learn this hard way but it sounds like you've done some good work educating yourself on the issues involved. Good luck with whatever you decide to do.

Of course sometimes you can't talk a client out of that huge tax deduction their CPA says they just absoluetly need. Until the next year when you tell them the contribution is $X and they say "How come you never told me about these required contributions." and when you reply "you did and they acknowledged they understood that contributions would be substantial and recurring" then point to the 5 year projection you did for them when you set up the plan, they look at you like you're from Mars or something.

We are having a husband & wife plan currently under audit and the agent is challenging the the allocations for owner and spouse both with comp over the 401(a)(17) limit. Company made $98K PS - $49K each Participants elected and deposited $5,500. My understanding is that since the deferals force the allocation over the $49,000 415© limit for the year in question they are recharaterized under 414(v) as catch-up contributions. Auditor is stating there is a 415© violation for exceeding the limit. I'm sure I've seen nearly this exact question asked before here but could not find it with a search on this "Retirement Plans in General" or "401(k)" sub-forum so I guess my seach skills just aren't very good. edit - to add final treasury reg It ssems to me clear under --- 1.414(v)-1)b)(1)(i) A statutory limit is a limit on elective deferrals or annual additions permitted to be made (without regard to section 414(v) and this section) with respect to an employee for a year provided in section 401(a)(30), 402(h), 403(b), 408, 415©, or 457(b)(2) (without regard to section 457(b)(3)), as applicable. that this leads to recharaterization. Has anyone had a problem with auditors when pointing this out? Do they continue to challege uder 415©?

I am not sure about prior years but I am unaware of any restriction in the code on using currently available forfietures to fund some/all of the top-heavy minimum. 416 referes to alloaction which inculdes allocation of forfeitures. My guess however is that you can't use the forfietures to fund the back (or missed) contributions as the IRS would likely deem that a cutback to current partictiants who in theory would be entitled to a potion of them.

Let us know what you find out. To me this was the most disturbing part of the ASAP Somehow I was under the impression that ASPPA was on our side.

What I'd like to say is inappropriate for a professional forum. So I'll just say, I agree with you whne you say this is flat out incorrect.

What I think QDROphile is trying to say is you might be able to roll to an IRA if you get your company to terminate the Plan before the merger. Many times the company is reluctant to to do this for variuos reasons. And often times the question is asked too late, like after the merger has happened.

It varies quite a bit. And depends on a number of factors including but not limited to: if you have a smaller local auditing firm or one of the bigger shops do it, if you qualify for what is known as a "limited scope audit" or if you need a full scope audit, if you have non-traditional assets, if the auditors find "issues", etc.

If they are eligible to make elective deferrals they are a participant in the Plan. Whether or not they have an account balance because they chose not to make elective deferrals is irrelevent. You still count them as a participant for purposes of Form 5500.

You mean beyond 5 years of phantom tax deductions? If you are taking them through EPCRS the Plan should be fine assuming the IRS is happy with your correction methods. But they will probably need to file amended tax returns for the company for each of the last 5 years where they took deductions for contributins not made.

That's awesome. I'm going to have to remember this one. Agree on all your other points.

Your understanding is correct. see, IRC §416

Doesn't VCP imply some correction will be done? In this case it sounds like no correction will be forth coming as the sponsor appears to have no ability or intention of funding the required contribution. Maybe Walk-in cap where you negotiate a penalty and then try to have it discharged in bankrupcy? Posibly as part of the CAP agreement? I suppose the IRS could disqualify the plan, especially with respect to HCEs so they can't rollover the distributions. I have heard of anlogous cases where top-heavy plans went out of business and the IRS allowed them not to fund but I believe that was under audit and not some formal program and i don't have all the facts as I did not directly work on it. I do agree that ADP testing should be done for the year no SH is being made. Presumably we are talking about the 2011 year? At any rate, good luck.

I'm pretty sure your HCE and Key-EE are determined at the employer level. The QSOLB rules just lets you ignore the other other lines of the employer (by treating the EEs as excludable) when doing your descrimination testing. But the plans I work with are generally to small to consider using the QSLOB rules.

...and most of asppa too! Hey just because I don't like the tax code and the basic structure of US retirement policy planning, doesn't mean I don't understand it and try give my clients the best advice I can within that framework, and that includes the deferral only clients too.