Doghouse

Does anyone have certainty on the exact timing of the communication to participants? I have seen everything from 60 days before the beginning of the plan year to 60 days after the last contribution for the plan year is funded. I realize different document providers may have different approaches, but it would be nice to know what the actual position of the IRS is.

I remember this was a common provision in a lot of plans in the 80's. It was a way to manipulate the MP or DB contribution levels from year to year. They largely went away when the CODA concern surfaced.

I think QBI does some work in this area: http://qbillc.com/blog/how-do-defined-benefit-and-cash-balance-plans-become-over-funded

I do have plans that permit in-service distributions prior to age 59 1/2, as long as certain criteria (not very stringent) are satisfied. Like the funds have been aged 2 years or more. Are we to assume that your document has no such permissions? Although admittedly the salary deferral part of it is a problem.

I always hesitate to copy and paste from the EOB due to copyright considerations.

I know a guy too. He works on US, PR, and dual qualified plans. Carlos Gonzalez, Esq., CPA Tel. 787-900-9956 Fax 678-379-4111 Email: carlos@benefitspuertorico.com Webpage: www.benefitspuertorico.com

if you have access to EOB, check out Chapter 3A, Section II, Part G, 5.b.

The EOB cite is from Chapter 11, Section XIV, Part I, #3.

You probably saw this but per the EOB. A 4% minimum would, in my mind, not follow the guidance. Minimum deferral rate and minimum increments permitted. Q&A-3 of IRS Notice 2000-3 permits safe harbor 401k plans to require salary reduction elections to be in whole dollar amounts or in whole percentages of compensation. Section V.B.1.c.ii. of IRS Notice 98-52 stated that a safe harbor 401(k) plan could set a maximum limit on elective deferrals, so long as an employee's ability to get the maximum match available under the plan was not compromised, but had to permit the employee to elect to contribute "any lesser amount." The ability to require whole dollar amounts or whole percentages is a reasonable compromise. Thus, a minimum elective deferral rate of 1% of compensation could be required by a safe harbor 401(k) plan. The regulations adopt the Notice 2000-3 approach as well. See Treas. Reg. §§1.401(k)-3(c)(6)(iii) and 1.401(m)-3(d)(6)(iii).

It's definitely reflected in Plan Committee meeting minutes.

This question concerns the timing of a Roth amendment. We are financial advisor for a plan that uses a TPA. A recent restatement of the plan adds the provision to defer on a Roth basis. The restatement has not yet been adopted, but the TPA is telling the sponsor that participants can defer on a Roth basis now because the effective date of the restatement is 1/1/19. Somehow it doesn't seem quite right that they are able to do this before the amendment is executed. Sanity check?

I know this is (or was) discussed in the ERISA Outline Book, and as I recall, it was presented as a risky alternative.

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Following the passage of the Bipartisan Budget Act, plan sponsor agreed to adopt recordkeeper's recommended best practices, which included offering an option to any participant who is on hardship withdrawal suspension to end that suspension early. However, no one ever notified the one participant who fell into this category. Is this a missed deferral opportunity that needs to be corrected? Dog

Thank you Kevin!

One of the plans we oversee had an NHCE who changed their deferral % from 6% to 10% in February. Somehow this got registered as 0% and for two pay periods, nothing was deducted. This should qualify under the "brief exclusion" rules. The participant will end up getting the full match for the year because of her current 10% election and the fact that the sponsor does a true-up. Because this will qualify for "brief exclusion" treatment, the employer is not required to make up the missed deferrals. However, the question has been asked - what if they WANT to make them up, even if not required to do so? Can they do so electively? Thanks, Dog

https://www.relius.net/Products/PPDLibrary.aspx

It relies on the payroll to limit deferrals correctly, but this one is based on 50% of the first 6%... Match.xlsx

As I recall, if he rolls everything but the loan, there is no withholding.

Hi Barbara, This project would be for recordkeeping rather than documents, so maybe not the right fit. Thank you for responding though!

Does anyone know of an individual or a firm that does project/contract work on Relius daily? It would be a 6-12 month project.

Prior thread: https://benefitslink.com/boards/index.php?/topic/50722-avoid-future-audit/

I'm sure that language is the result of the Microsoft case, where contractors were determined to be common law employees and were retroactively eligible for plan benefits.

Need some suggestions about this situation: 1. Participant is on deathbed, calls into provider (recordkeeper) and gives verbal authorization to transfer her account balance (approximately $160K) to an IRA at the same provider (to accommodate a partial distribution request). Provider complies with verbal direction. Prior to the transfer, the participant's beneficiaries are her 2 children. 2. Money moves to IRA. The participant's 2 children, who have power of attorney, request and receive distribution of $60K on the participant's behalf (for medical expenses). 3. Participant dies. The 2 children file claim against IRA for benefits. They are told that they are not set up as the beneficiaries for the IRA. 4. The 2 children approach the provider and state that the correct procedures weren't followed for the transfer to the IRA and want it restored back to the plan. The provider agrees that the transfer was not legitimate, but is not willing to restore the $60K that was taken out by the participant (via power of attorney) during the short time the funds were in the IRA. Any ideas of the best way to unwind this mess? Help!

I tried this once before and got into trouble with 415 limits. Essentially, some of the individuals (not necessarily the high paid ones) had too much accumulated PTO, and together with other plan contributions, it caused an excess problem we hadn't anticipated. Be sure to keep those 415 limits in mind!