katie58

I am curious how others are assisting their clients during these difficult times. Are you providing them with advice related to Partial Plan Terms or other topics? Thanks!

I assume with all the lay offs and business downsizing, clients will want to know if they can stop making their Discretionary Matches. In the back of my mind, I seem to remember there can be issues changing the discretionary match mid year. Can anyone provide guidance? Thanks in advance!

Yes - the salary of $170K was a typo =-) I did mean 270k

Unfortunately, this has been going on for several years. You are correct about the R/K. They are responsible for compliance testing, but do not vet the data. The payroll vendor states that they never track this, but could do a manual cap. The payroll vendor is blaming the R/K. It just seems like it would be a payroll function. I can not understand why you set the plan up for a failure every year. The R/K is a major player and the payroll vendor is a small start up company. Thanks very much!

A client recently changed payroll vendors. The payroll vendor calculates their match and notifies the client of the funding amount. During the client's recent audit, it was determined that the Compensation Limit was not capped at $170,000 when determining the match. The payroll vendor said it was not something they track. They indicated that the recordkeeper would catch that during the testing process. So basically the payroll vendor knows that the match is incorrect, but does not feel it is their responsibility to monitor this. The recordkeeper states that they assume that the match calculation is correct, unless they have been told differently. They indicated they do not test for match accuracy. I am curious what your thoughts are on this situation. I always assumed that the party calculating the match would take into consideration the annual compensation limits. Thanks!

Apparently, a 5 wheeler camper has the capabilities of being towed by a truck. (I am learning a lot. )

I am curious is anyone has had this question. Would you consider a 5 Wheeler a primary residence under the Safe Harbor Withdrawal guidelines? The vendor is stating it would be a primary residence. I always thought a primary home had to have a physical address. Thanks!

This would be offered to both NCHEs and HCEs so I guess it would not be considered discrimination. I wonder if the amendment should be worded to specify the specific division name that will receive this benefit. I am concerned that they will set a expectation with their current employees. I appreciate your help. Thanks!

Would they need to amend their plan to permit this? Would they always need to vest terminating employees at 100%? Thanks very much.

I need some help from the experts. I have a group that offers Safe Harbor Automatic Enrollment. They currently have a 2 year vesting schedule. They will be terminating 100 employees, due to the fact they are selling off a division. As part of the termination package to these 100 employees, they want to offer 100% vesting. They currently have 2500 employees, so this would not be considered a partial plan termination. They have never offered any other terminating group 100% vesting. The 100 terminating employees are a combination of HCEs and NCHEs. Is this permitted?? If so, under what circumstances? Thanks very much!

Thanks for your speedy answers. It is a flat reimbursement. The employees do not need to submit mileage. The doc does exclude fringe benefits. So based, on your answers, the car allowance should not be considered 401(k) compensation. Unfortunately, they have been considered it compensation! Thanks again!

Should car allowances be included in the definition of compensation? The doc only says that a bonus and items included in Treasury reg. 1.414(s) 1©(3) should be excluded. I could not really find a car allowance definition. Would it be based on whether or not the car allowances is included in W-2 income? Thanks!

Can anyone please clarify this for me. For a 457(b) plan - non governmental - are distributions reported an a w-2 or 1099. I always thought it was a w-2. The record keeper is saying a 1099. Thanks!

What is the correction method when an employee elects ROTH contributions and the employer deducts the deferals as pre+tax? Apparently, this has gone on for several years. The employee now wants his account corrected. Has this happened to anyone else??? Thanks!

I have a client that has a number of employees with unused vacation. They questioned whether or not this unused vacation could be deferred into the 401(k) Plan. They want to get this obligation off their books and thought perhaps they could avoid payroll taxes with this option. Their plan does not currently permit this type of contribution. Has anyone had experience with this? Would it be considered an employee contribution and require employer match? Or would it be a QNEC? Any insight would be appreciated! Thanks

We have a client that merged their plan. The merger was to take place on 9-30. However assets were not transferred until 10-1. What would be the correct date used to consider the filing deadline? 9-30 or 10-1? The old vendor is stating they were not aware that the plan experienced a merger and did not file the extension. They clearly received a letter indicating it was a merger from the successor trustee. Thanks!

Thank you all very much!!!

Yes - they are past their cure periods. Thanks again!

8 missed payments - they pay biweekly.

Six of them are 8 payments behind. one is 23 payments behind. Thanks!

We have a client that for some unknown reason, stopped taking loan payments from paychecks for several participants. The client wants to avoid defaulting the loans. We understand the options would be to reamotize the loans if they are within the 5 year time period. However, one of the partiicpant's loans is outside the 5 year time period, so we believe it has to be defaulted??? In one of the IRS publications it indicated that if the error is due to employer error , the employer may be required to repay the interest on the unpaid amount. Does anyone know if this is required? I am concerned as it says "may" have to repay. It does not say it is "required".

The plan sponsor had an employee making loan payments - For some reason, they stopped withdrawing loan payments from his check. (No one knows why) At some point the loan was defaulted and deemed. No notice was give to the employee. The employee apparently, never noticed that payments were no longer being deducted from his paycheck. He is asking that the plan sposor reimburse him for the taxes and penalties he suffered at tax time. I have never had such a request. Any thoughts or concerns???? Thanks!

Thank you so much for your responses.

Thank you so much for your quick responses. I don't believe their document has any mention of this situation. Thanks again!

I have an employer with an employee planning on terminating service so that he can default on his loan and potentially withdraw additional dollars from his 401(k) Plan. The company then plans on rehring the employee. The employee is aware of the penalties and taxes associated with this type of withdrawal. The company has an internal policy that states employees termed and rehired within 30 days are reinstated for all benefits and senority. This just doesn't seem right. Any thoughts? I appreciate any insight you may share!