EPCRSGuru

Has anyone encountered unusual results when using this calculator for multiple missed contributions?

That is the interesting part of the question. (Fortunately it is not my decision, as it is with the sponsor's legal people.) If the participant was not eligible for a distribution, does that mean it is not an eligible rollover distribution and therefor not eligible for rollover?

My understanding is that the IRS takes the position that the compensation limit in Code section 401(a)(17) does not require that salary deferral contributions be stopped when a participant’s compensation hits the limit for the year. The clearest formal articulation of the basis for this position appears in the preamble to the final 415 regulations that were issued in 2007 [TD 9319]: "As noted above, the final regulations provide that a plan cannot take into account compensation in excess of the section 401(a)(17) limit. In addition, the final regulations provide that elective deferrals can only be made from compensation as defined in section 415©(3). However, in applying these two rules, a plan is not required to determine a participant's compensation on the basis of the earliest payments of compensation during a year." The IRS illustrates how this applies on the following page: http://www.irs.gov/Retirement-Plans/401k-Plans-Deferrals-and-matching-when-compensation-exceeds-the-annual-limit And in the following IRS newsletters from 2009 and 2012: http://www.irs.gov/pub/irs-tege/fall09.pdf (see the top of page 4) http://www.irs.gov/pub/irs-tege/epn_2012_1.pdf (See We’re Glad You Asked #2 on page 7) Those IRS pieces acknowledge that a plan’s terms can provide otherwise – e.g., that “a plan can specifically require that salary deferrals cease once a participant’s compensation reaches the annual limit. If your plan specifies that salary deferrals be based on a participant’s first $260,000 of compensation, then you must stop allowing” deferrals once an individual’s year-to-date compensation reaches the 401(a)(17) limit (emphasis in original).

Glad your daughter is fine. You are fortunate to have discovered this sponsor's attitude before she became a client! Those of us who work in the small plan market all have horror stories involving clients who don't understand the difference between "plan" money and "their" money, or the trade-offs one has to make in return for the favorable tax treatment of qualified plan funds. Some clients are just funny; others are infuriating. And don't get me started on accountants OR investment advisors! I am fond of an expression sometimes known as Hanlon's Razor. "Never attribute to malice that which is adequately explained by stupidity." Best wishes.

This is an interesting situation. A 403(b) plan sponsor has three vendors and no central record-keeping. Transfers among vendors are processed by accessing the vendors' web sites. One participant who believed he had an immediate right to "his" money (salary deferrals only) applied for a direct transfer, but directed the check to his IRA instead of to the plan. He then transferred the funds out of the IRA, much of it after he was notified that he was not entitled to a distribution and asked to restore the funds. He is adamant that he is within his rights and that his attorney has told him that he is in the clear. (He is actively employed, under age 59 1/2 and did not request a hardship withdrawal.) Sponsor has consulted ERISA attorney. Both the plan sponsor and the receiving vendor have explained the distribution rules and requested in writing that the funds be restored to the plan. They do not expect he will comply. So, this is what I think happens. 1. Plan sponsor takes a good look at their processes for handling transfers! 2. Paying vendor reports this as a premature distribution since the instructions on the transfer request included the IRA account number and the plan never received the funds. 10% excise tax and income tax results. 3. Receiving vendor reports this as a premature distribution from the IRA, also resulting in a 10% excise tax and income taxation. 20% total excise tax AND income tax on the same money twice? Technically, funds were probably not eligible for rollover--does that make yet another penalty? I'd enjoy talking to the lawyer who [allegedly] told participant this was OK.

I have the same question! We are a not-for-profit 457(b) plan receiving pressure from some employees to add a brokerage option to our menu of selected mutual funds.

We are a large not-for-profit sponsoring 4 retirement plans. We have three vendors, 50+ funds, and no central recordkeeping system. We are currently using TIAA-CREF's Disclosure Assist product and are not satisfied. It is cumbersome to work with, unable to be customized for our needs, and results in a disclosure document in which is very hard for participants to find the information they need. Can anyone recommend another product which would allow us to consolidate the information from three vendors into one document, and mail or email over 52,000 disclosures?

We have had "issues" with our existing 5500 preparation software, hampered by Tech Support at the vendor which was unavailable on the evening of October 15, so we are in the market for a new software package. We have multiple plans (4 retirement, 5 H&W) and the 5500s for the retirement plans have complex assets and schedules. Our 8955-SSA has been a particular problem because there are many hundreds of terminated vested participants in each plan and our current software could not upload the participant data, requiring it to be manually entered. If anyone has any thoughts on their experience with FT William, I'd love to hear them!

You might have to have an "opt-out" provision in your plan document--talk to your attorneys.

We have thousands of participants invested in TIAA contracts. They are starting to receive checks from TIAA as a result of the settlement in Bauer-Ramazani v TIAA-CREF. We were not aware that this had been settled and the participant questions are taking us by surprise. TIAA clients, were you aware of the settlement? In cases where asset transfers were made from one account to another in the same 403(b) plan, or rolled over into an IRA, who is the check payable to? The participant or the plan? How are the amounts being calculated--based on the actual damages incurred by the participant or some arbitrary amount? Are there any financial reporting implications for plan financials or the 5500? Maybe I should have been bugging my relationship manager for status updates but I am annoyed that I am being told about this by my Faculty and not by TIAA.

During my career transition to the not-for-profit world I discovered that 403(b) loans are not necessarily like the 401(k) loans I was used to. My experience with TIAA-CREF loans is that the loans are NOT coming out of the participant's account or even the plan assets, but are coming from TIAA general assets. The participant account is used as collateral but is not otherwise affected. Loans are repaid to TIAA, not the plan, and TIAA earns the interest. THe participant account continues to earn interest based on how it is invested. Is this the type of loan you are dealing with? If so, it has implications both for the participant recordkeeping and the 5500.

My employer sponsors a 403(b) plan with multiple vendors and no central recordkeeper, which sometimes causes issues for us. While reviewing the asset transfers processed in 2013, one of our vendors discovered an account for a terminated participant that was transferred to another vendor and reported as an asset transfer within the same plan. However, the participant was moving money to a 403(b) plan of a new employer, and the receiving vendor accepted as an external rollover and deposited it to the new employer's plan. Unfortunately, the paying vendor did not obtain spousal consent for the transfer/distribution. What are our options? Attempt to reclaim the assets? Have the participant complete termination distribution forms which include spousal consent, and then adjust the transaction to a termination distribution and direct rollover instead of a transfer? Report the distribution as taxable and ineligible for ollover treatment? (That should get someone's attention.) We know we have a compliance problem on our end but is there any potential issue for the receiving employer? We have attempted to contact the participant several times without success.

I am inquiring about a possible contribution problem with a 403(b) tax-deferred annuity plan that is exclusively employee-funded. The sponsoring employer has employees who have multiple "jobs"--you might be half-time in Department A and half-time in Department B and therefore be a full-time employee, but the accounting is separate by job. The employer-funded plan calculates its contributions based on the eligible compensation of all the participants' jobs. But due to a programming error the employer withheld percentage salary deferral elections based on only one job--usually but not always the one with the most pay. (People who elected a specific dollar amount per paycheck are not affected, just the nes who said they want X% of pay withheld.) This has been going on for several years. When the participant signs on to the employer's benefits web site and starts to enroll the site tells him the estimated dollar amount of the deferral so the participant knows ahread of time what the amount will be, but no one has questioned the deferral amounts. It was discovered by the employer during a routine plan review. The definition of compensation does not provide for consideration of only one job. There is also the question of whether the participants are given an effective opportunity to defer, especially for the small number of people whose job on the system was the lower-paid one. Systems changes are in process to correct the problem for the future, but they are wondering what needs to be retroactively, IF ANYTHING. Needless to say, the employer is not really pleased at the thought of doing a retroactive contribution, which would including having to track down terminated participants who have already received their distributions. My belief is that the participants knew the effect of what they were electing based on seeing it on the web site during the enrollment process and they could have "corrected" their deferral election before hitting "submit" if they wanted a higher dollar amount withheld. Is there any wiggle room for the employer here?

My company considers participants on long-term disability to be active employees who continue to accrue service credit and receive employer contributions to the DC plan based on salary before disability commenced. If a participant applies for disability with our carrier and the claim is denied, the participant is terminated if he does not return to work. This happened to one participant early last year, but he appealed his claim denial and won. So now he is being retroactively placed on LTD and his termination of employment is being retroactively cancelled--over a year after his termination. We are retroactively calculating the employer contributions he would have received had he not been terminated. But of course nothing is ever easy--when he terminated he requested and received a lump sum distribution. Clearly this is not a sham termination, but are there any potential legal/tax ramifications to either the Plan or the participant? He was already vested regardless of his disability status and we do not require repayment to have service restored to him. I think we are all in the clear but can anyone see any issues that I should discuss with outside counsel?

We use ATX and it does not allow for electronic uploads.

Can anyone recommend software that would enable us to import participant data into Form 8955-SSA from an Excel spreadsheet? We are a large employer with multiple plans and many hundreds of terminated vesteds each year, and the mecahnics of filing these forms are very burdensome. if anyone has any advice to offer I'd be grateful.

Thank you very much!

See Austin's post above. "....are you aware that the TIAA loans are structured such that TIAA is lending the money - not the Plan? The participant is simply required to put money in the TIAA traditional account as collateral." My understanding based on my own research agrees with Austin's. The funds for the loan are coming from TIAA's general assets and the contract is collateral. So does that mean that tehnically is is not a "plan" loan? If it is not a plan loan does that mean there is a problem that the plan assets are used as collateral? Is it a PT? I can't find any PTEs issued. I realize these loans have been around forever and a there are probably hundreds of thousands outstanding, but I am still not getting why they are OK.

I would love to resurrect this topic because it recently arose in connection with my employer's 403(b) plan and I am struggling. Can someone explain how this is not a prohibited transaction and that using the participant's annuity balance as collateral for loan made outside the Plan between TIAA and the participant does not violate the anti-assignment rules? I realize that this is widely done, and TIAA is surprised that I am raising the issue, but I can't get my head around it.

Yes. The Notice must contain a description of the QDIA, including a description of the investment objectives, risk and return characteristics (if applicable), and fees and expenses attendant to the investment alternative;

I'd love to hear some thoughts on this situation involving an employer-funded 403(b) plan in a multi-vendor environment. Participant wants to transfer assets from his retirement plan account with Vendor A into his retirement plan account with Vendor B. When completing the transfer form he inexplicably includes his retail IRA account number with Vendor B. Vendor A receives the transfer form and processes it as a transfer, BUT includes the retail IRA account number on the check. Vendor B receives the check, sees the retail account number, routes it to their IRA department, and deposits it to the Participant's retail IRA. This is not discovered for almost 11 months, well into the next plan year. By the way, Participant is actively employed and ineligible for any kind of in-service distribution. We know that the transferred amount needs to come out of the IRA and back to the Plan. We believe that the earnings must also come out of the IRA and into the Plan. Question--how to treat the earnings on the impermissible deposit? Are they transferred tax-deferred into the Plan? Or do they come out as taxable income to the Participant, generate a 1099, then go into the Plan as post-tax money? (The Plan does not currently provide for post-tax sources.) Vendor B and the Plan Administrator disagree.

We are a large company with several mutual fund vendors who offer financial advice to participants in our plan. The intent is to comply with the final regs under 408(g). Does anyone have any thoughts about whether investment advice, if available, must be communicated to all participants, or whether it can be limited to active participants or those who meet certain account balance thresholds?

Q:What do you get when you take the sun and divide its circumference by its diameter? A: Pi in the sky.

I emailed Dave Baker directly this morning and it was fixed almost instantly.

Is it true that you are not obligated to offer COBRA to the ex-spouse?