EPCRSGuru

I work in HR for a large-ish employer (about 40,000 participants but in a total of four plans). I have found the Department of Labor to be an excellent resource for participants with "issues" while at the same time being fair-minded about facts presented by the employer. When my company has been the object of a complaint the DOL representative has keep the process moving without undue delays and so far all the cases have been resolved in our favor. Current events may have left the Department understaffed, but I would not give up on the DOL yet. But the other steps such as requesting the SPD, filing a formal claim for benefits, etc. are very appropriate. There is a financial penalty if the plan administrator does not provide certain documents in a timely fashion--as high as $110 per day.

I have never seen this happen. One of our participants had a contentious divorce. Defendant spouse is filing and appeal of the court order finalizing the divorce. Spouse is claiming that she needs to remain covered under our medical plan until her appeal is heard. Participant is objecting. Has anyone ever had this happen before? I am purposely omitting the state involved and recognize that might make it impossible to answer but I figure it is worth a try.

I am not terribly familiar with this topic but I know that we have a signed agreement agreement with our 457(b) service provider authorizing them to report the distributions on a W-2. The funds are paid from the 457(b) account directly and do not pass through the employer's accounts.

12 weeks?!? My husband died at home (unattended) on July 28 and we had the death certificate on August 4. Maybe I watched too many true crime shows during the pandemic but my spidey senses are tingling--wonder who was driving? Would a so-called "slayer statute" potentially come into play? And it was many months before we started seeing our share of the medical bills after the insurance company did its thing.

It does help; thank you. We have not been successful at asking the recordkeeper to reimburse the participant, which is why we are trying to muddle through ourselves.

I am posting this in several Benefitslink boards as I am not certain where it best belongs. We have a retiree who worked for several years for us (a U.S. company) while living in the US. She is a Canadian citizen and was here on an H-1B visa. She has since returned to Canada and was receiving regular monthly installments from a 401(a) plan until her account was depleted in 2024. When we changed recordkeepers the new recordkeeper did not receive a W-8BEN from the prior recordkeeper so they withheld 20% in Federal taxes. Apparently this was an error and they should have withheld 15%. Now the participant is unhappy and wants the new recordkeeper to refund her the additional 5%. The new recordkeeper has declined to do so. We recommended that she get assistance from a Canadian tax advisor, but she reports that the fees would be higher than the amount she would recover. So we in HR are attempting to help her with the so-it-yourself route. She now has 1040-S forms for the open tax years (2021-2024). Is it as simple as filing a 1040-NR and requesting a refund? I assume the income is "effectively connected with a US Trade or Business" because it was earned while she was a US resident employed by a US employer? Can it really be that simple?

I was always under the impression that we as fiduciaries or sponsors were unable to escheat unclaimed funds to a state unclaimed property fund. Is that still true? We are now looking at companies such as Retirement Clearinghouse and Inspira for our unclaimed small balances. I believe we have a much better chance of finding our missing people than they do, although our state does an excellent job reuniting people with their money. I'd rather give it to the state or keep it ourselves rather than give it to a company which will deplete the balance with fees, but we got dinged by the DOL in our latest audit for not distributing funds to people who were dead with no survivors, left the country with no forwarding address, ignored letters AND phone calls, or were undocumented and used fake names and SSNs, just to name a few of our problems. There are people in my organization who feel we need to absolve ourselves of responsibility and possible DOL action by offloading those accounts, but I am not convinced that is in the best interests of the participants.

My testing is rusty--is there an advantage in testing if the owners are not contributing by choice, vs. non-contributing because they are excluded employees by terms of an amendment?

I have been on both sides of a DOL "intervention" and I have found them to be very helpful to the participant and also reasonable when the employer can explain why its actions were appropriate. You might want to contact the DOL after filing the formal claim, but I would not wait to hear the Plan Administrator's response.

What does the Plan document (or the Loan Policy) say? Does the Plan even allow for loan repayments to be made after termination of employment? I think most plans nowadays say that repayments are only made through payroll deduction and a loan is due and payable upon distribution of the participant's benefit.

TL:DR--Does Fidelity monitor 402(g) limits for individuals who participate in two unrelated plans if both those plans happen to be recordkept at Fidelity? I work in an industry that employs highly-compensated people who are often highly-compensated by two employers and are eligible to contribute to two 403(b) plans. We inform people in a number of ways that the 402(g) limit is a "person" limit as opposed to a separate limit for each plan to which they contribute. Usually our 402(g) refunds are due to new employees who contributed to both their old and new employers' plans, but I have a case now which I have never seen before. We received an email from a participant who has two current employers and contributed the max to both plans for the years 2018-2024. (2018 was the first year she contributed to ours.) Our advice was "get thee to a tax advisor ASAP" but her response was interesting. We had previously had our plan recordkept at Fidelity but changed recordkeepers in 2019. Her other employer's plan is still recordkept at Fidelity and she says that in the past Fidelity had enforced the 402(g) limit because they had access to the salary deferral data for both plans. She blames her overcontribution on our recordkeeping switch--although that does not explain how she was allowed to defer twice the annual limit in 2018. In all my many years in this position I have never seen Fidelity limit any of our participant's salary deferrals based on their deferrals to another plan. They would give us regular monitoring reports and stop our participants' deferrals when they reached the max in our plan, but never, as far as I can tell, based on activity in another employer's plan. Fidelity clients, does this make sense to you or is this participant just trying to deflect the blame from her own lack of attention? I don't imagine this population prepares their own tax returns but I guess it is possible, but it surprises me that a tax preparer or the IRS themselves has not picked up on this before now.

Does the 457(b) plan document allow an Alternate Payee to maintain an account under this circumstance?

The regulations on the Special Tax Notice are in §1.402(f) and require that notice be given no less than 30 days or more than 90 days before a distribution is made, but the participant can waive the notice requirement if they want to receive their distribution earlier than 30 days after receiving it.

I am no longer a record-keeper, thank goodness, but in my previous life we absolutely informed our clients in a way very similar to what MoJo described. Like MoJo, we did not advise or decide, but we did sometimes talk to clients' attorneys at their request and provided links to helpful resources. Smaller clients seldom have attorneys or accountants who are conversant with benefits law!

Our plan document uses the IRS safe-harbor rules for hardship withdrawals. Am I correct that overdue student loan repayments do not count as approved reasons for hardship withdrawals? I don't want to deny the request until I am sure.