401king

I dont' know the answer, but I've referred to 1.401(a)(9)-4 for most beneficiary questions.

Our document system (DATAIR) restricts in-service withdrawals for Deferrals, QNEC, QMAC and SH contributions, requiring that the employee be at least age 59 1/2 for an in-service withdrawal. Is that not a mandatory requirement for those sources? I've been under the assumption that only the discretionary sources & rollovers are eligible at any age.

Is the goal is to lower the cost of employer contributions? Couldn't they exclude the doctors (HCEs) from receiving SH contributions?

The only place in our documents that we can exclude prior service is vesting. Sounds like everyone agrees that any service by an employee should count towards eligibility, but only if the service satisfied eligibility. It was hard for me to believe the service would be counted because, taking it further, it would be tough for an employer hiring someone that worked with the company 20 years ago to track if that employee is eligible for a new plan (and vesting to go along with it).

Individual was employed from 1997-2003. Plan became effective 1/1/2009. Employee is now being re-hired. Does the fact that the employee was never a participant remove the credit for the prior service? Or, should the employee be eligible immediately upon rehire because they completed the eligibility requirements (albeit, over 10 years ago).

The 2012 Safe Harbor deposit deadline is 12/31/2013; the 2013 deadline will be 12/31/2014 (assuming the Plan is on a calendar year). You should receive Safe Harbor contributions for both years (assuming that if it is a Match you made salary deferrals).

Isn't this not considered a refinance, though? Just a separate loan that the participant may or may not use to pay down a first loan.

If a plan allows for two loans there is no reason the participant couldn't take a second and use part of the proceeds to pay the first. Just so long as the 2nd loan amount complies with the limits. FWIW - I've found people have had the high hopes of paying off the first loan in these arrangements, but tend to keep the funds.

Are these two separate issues for the client, or is he trying to setup two plans due to the Top Heavy issue? One doesn't seem to help the other. The Top Heavy is moot due to the 5% company contribution. As BG5150 mentions, if the owner has his own plan then his account balance will be even more on display. The 5500 is public record and can be found by anyone with a computer.

Assuming this is a mid-year change, what is the effect on people who already made their full 2013 contributions under the assumption that there would be a true-up?

There is no firm due date if it is a non-safe harbor match, correct?

A recently deceased participant has a beneficiary on file from years ago that lists an old boyfriend as the sole beneficiary of the account. The family of the participant is looking for any out to prevent that individual from being the actual beneficiary. Is there any way that a named beneficiary cannot be the actual beneficiary following the death of a participant? A way to prove that a beneficiary election is outdated?

Assuming the participant has exhausted all resources, and the bill must be paid, the sponsor isn't really doing anything to discourage the withdrawal. Seems more like a backdoor way of trying to save 50% of the profit sharing expense for employees that have a hardship. If it's a sticking point for the sponsor, replace the profit sharing with a match and the problem is solved.

Can't remove that option - protected benefit. (Saves people from signing up for a 401k where they can receive a lump-sum payment, only to find when they want to withdraw the money that the plan was amended, preventing them from receiving their full benefits).

We ran into this issue with several audited plans for the 2011 plan year. The auditors found the exact issue with group term life insurance (probably not coincidental). The plans then had to make a QNEC for 50% of the missed deferral amounts. ppadx's post sure explains why all these auditors finally noticed it in the year following the IRS response. Just another policy instituted with no thought of how to implement it.

Essentially, you're trying to find out if age does (or does not) supersede service; they are exclusive requirements. You must satisfy a service requirement, and satisfy an age requirement - in any order. Age is not more important than service, so your service prior to an age requirement still counts. Otherwise, if a plan had the most strict requirements no one could be a participant before age 22 (Age 21 + 1 year of service). Vesting should be clarified in the document, but I don't believe you can exclude years "Prior to participation.

http://benefitslink.com/boards/index.php?/topic/43177-sep-and-401k-in-same-year/

I wasn't aware you could exclude employees by class, other than excluding HCE & Key employees. But, what would you do with an "executive" hired late in the year and his initial year comp is less than the HCE limit (making him an NHCE for the following year)?

I'd ask them for their citation. The only time "months" is referred to here is regarding the 6 month deferral suspension: http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-Hardship-Distributions .

Sunk.

This is kind of way the "no changes" rule is in place. The majority of changes sponsors want to make, in general, will only benefits HCEs/Owners (of course, not always). In this case, those who can afford to contribute early in the year are probably HCEs; an amendment like this would definitely benefit those HCEs. An easy solution would have been to recommend that the participant spread their deferrals throughout the year, but it may be too late for that now. Now you'll just have to point out the section in the SPD where it informed the employees of when the match is calculated. Adding a True-Up provision mid-year to a Safe Harbor plan is a no-go, if you want to truly go by the book.

IIRC, regardless of a true-up provision, if it is found that there was an error in calculating the Match, the plan administrator must "true-up" all participants. In these cases, though, it's a correction as opposed to a true-up, although the process is the same.

Lou S. is correct - the penalty & taxes will only apply to the earnings. Roth portion: $500 * 30% taxes = $150 $500 * 10% penalty = $50 Net proceeds: $4300 Of course, if you don't withdraw it you would have an extra $52,000 tax-free at retirement (6% growth over 42 years). You're not really costing yourself $200 in taxes & penalties; more like $47,000 in earnings.

We (a TPA) automatically close account balances less than our distribution fee, and send a letter to the participant notifying them of the distribution and explaining why no check is being issued (because it was all withdrawn as a fee), and we take whatever the balance was as a fee. Being that they have no net (after-fee) claim to the funds, it should not raise any flags if the plan is audited, assuming the same practice is applied to all accounts with a balance of less than the distribution fee. The distribution fee should have been disclosed to the participant at some point throughout their participation; hopefully in the SPD. Of course, that's just our practice. I guess you don't have to charge a fee for this distribution, but why not charge a fee to the $70 account when you will charge the $80 account? Or, is the TPA expecting the Sponsor to make up the $5 difference in the fee?

FWIW, we do about the same thing you do, dlando1. After the end of each year, part of our review process is to check all employee contributions to see if they were deposited into the trust (not necessarily allocated to individuals) within 7 business days of the paycheck. If there is only one or two payrolls deposited one or two days late, we usually forget about it. If there are many, we will calculate the lost earnings for each payroll and each participant. Better safe than sorry.