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EPCRSGuru

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  1. 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!
  2. 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.
  3. I am sure your family law attorney can answer these questions or refer you to someone who can.
  4. My guess--only a guess--is that being communicated timely to participants would also be required.
  5. I am happy to see that there is such a diversity of views here; now I don't feel so bad about not knowing the best way to handle this stuff. Here is the fact pattern which prompted my original question. In May of 2020 we received a draft DRO from the AP's attorney. We placed a hold on the participant's account which lapsed after 6 months and was not renewed. We heard nothing until this week when we received a new draft for review. We have instituted a new freeze which prevents distributions for the time being (RMDs are not an issue), although all other rights and features remain available. We have other DROs that have been pending for years--some drafts have been reviewed three times and we still have not received a final for approval and it surprises me that the parties would let such an important issue drag on for so long.
  6. We freeze when we receive a draft DRO from an attorney, or a request from an attorney for a model DRO stating their intention to draft and submit a DRO. We allow participants to exercise all their rights under the plan except for taking a withdrawal. Is this outside what other employers do?
  7. We as a plan sponsor place a "hold" on a participant's benefits to prevent distributions when we receive notice that a DRO is being drafted. Our record-keeper freezes benefits for a maximum of 6 months, but we have DROs that are submitted and qualified as long as four YEARS after we first receive notice that a DRO is being drafted. How many times can we renew a freeze before we give up? We send model DROs to the parties for their use but we have had changes in recordkeepers and fund lineups and if any of these years-old DROs come in based on obsolete models we are going to have a difficult time complying, not to mention that participants can still manage their investments and may no longer hold the funds they held at the time the DRO was first discussed. Our own DRO procedures do not contain a specific time that a hold will be in place. It just states that the hold will last until the earlier of certain evens occurs--receipt of a DRO, notification that a DRO will not be requested, etc. I am not sure this is compliant. Thoughts would be appreciated.
  8. I think I know the answer to this but please can someone confirm? I have a 403(b) plan funded exclusively by participant contributions. Under universal availability, EVERYONE is eligible but, since there is no match and there is a separate employer-funded plan, we have a large number of eligible employees who elect not to contribute. We report them as participants on the 5500 but without balances. We are a large plan and there is no question that we need an annual audit. New for the 2023 forms, the audit requirement depends on the number of participants with account balances. "Both Form 5500 and Form 5500-SF, and their instructions, are revised to reflect a change in the methodology for counting the number of participants used to determine when a defined contribution pension plan may file as a small plan, including determining eligibility for the conditional waiver of the independent qualified public accountant (IQPA) audit requirement. Beginning with 2023 plan year filings, a defined contribution pension plan counts participants with account balances at the beginning of the plan year, except for new plans which use the number of participants with account balances at the end of the plan year." But the definition of Active Participant remains the same as previous years--Active participants (i.e., any individuals who are currently in employment covered by the plan and who are earning or retaining credited service under the plan). This includes any individuals who are eligible to elect to have the employer make payments under a Code section 401(k) qualified cash or deferred arrangement. Active participants also include any nonvested individuals who are earning or retaining credited service under the plan. This does not include (a) nonvested former employees who have incurred the break in service period specified in the plan or (b) former employees who have received a “cash-out” distribution or deemed distribution of their entire nonforfeitable accrued benefit. So as long as someone is eligible to contribute we count them in this section, whether they contribute or not--right? Just checking to make sure I am not losing it--Secure 2.0 is testing my patience.
  9. We had unlocated participants who were not aware they had benefits--immediate eligibility, immediate vesting, no participant contributions, short service. When we located the participants we provided an explanation on our letterhead to atatched to the 5329 and none of them were assessed the penalty as far as I know.
  10. Thank you, AndyH, and thanks for reminding us all to recognize the amazing resource that Dave and Lois Baker have created for all of us. As I have moved between HR and TDA and back again I have benefitted from BenefitsLink and especially the forums to refresh my memory or to get up-to-speed on a new facet of retirement administration. Best wishes, AndyH, on your retirement, and gratitude to the Dave and Lois!
  11. I work in HR benefits management and just got two odd letters from the Social Security Administration about two of our employees. They were basically performance appraisals. They asked questions such as "did the person show up for work on time?", "did they need extra assistance in performing their jobs?" or "did they need additional time to perform their duties compared to employees in similar positions?" I have never seen anything like this before in my very long career. One person is retirement-age but the other is not anywhere near old enough for OASDI benefits. Does anyone know what on earth this is about? Has SSA potentially "outed" employees who might be applying for or receiving disability benefits?
  12. I feel like I should know the answer to this one but I don't. We sponsor a 403(b) and one of our participants deferred the maximum to both our plan and his former employer's 401(k) plan in 2022. (Yes, 2022.) He is now (December 2023) requesting a refund from us. Can we do it? He is active and under 59 1/2 and we do not consider him to otherwise have had a distributable event. If this were a 401(k) I would say "no" but I am unsure about the 403(b) aspect.
  13. On the old Schedule SSA, reporting terminated participants with unpaid vested benefits was mandatory but reporting them after they had received a distribution was optional. So, we never did it. Now we have a little over 2,000 people who were probably reported as term vesteds with a balance and never removed upon subsequent payment. Their payment dates were from 1994 to 2005. The problem we have now is that these people are receiving letters from the Social Security Administration reporting that they may have a benefit due. It is sometimes difficult to convince people that they were paid. After all, a government agency is telling them to contact us. We have the check number, amount, and payment date, and even in most cases signed distribution election forms, but we no longer have the canceled checks so people don't always believe us. And much of our information is on microfilm which requires in-person research, which is a bit of a hassle. How appropriate would it be, the next time we file the 8955-SSA, to report these people as having been paid out? Is this a huge red flag? Would it trigger unwelcome attention from some agency or another?
  14. An employer of my acquaintance, who uses a well-respected 5500 software product, filed a number of 5500s timely. Upon checking on the government web site they discovered that the auditors' report was missing for one of their many plans--the remaining are fine. On further examination it looks as though it might have been omitted when everything was uploaded to the vendor's web site for filing. Don't know if this is system error or human error but obviously needs to be corrected. Any advice to avoid a penalty for an incomplete filing? Do they file an amended return even though none of the numbers changed? Should they contact the vendor? Other? Thoughts appreciated!
  15. We were audited by the DOL a few years ago. Our document contains the IRS contingent forfeiture language but the DOL forced us to restore ALL those forfeitures to the plan. The people we forfeited were deceased for many years, had minimal service (we had immediate entry and vesting pre-1995), had returned to their home countries after their brief employment with us, and survivors were unlocatable after contacting their places of employment, googling their obituaries, etc. So now we have these funds in our plan being slowly depleted through a quarterly administration fee--after a few decades I guess the problem will solve itself. I was advised that ERISA preempts the state escheatment laws although that would not have helped in our case. For US residents, PBI (for a fee) has a relative search. You can enter demographic data (including SSN) and a list of relatives will be provided.
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