My 2 cents

But people who don't work on Saturdays, Sundays or holidays won't be at work to submit the filing on the normal due date, so it is completely understandable, even with electronic filing, for the due date to be pushed off to the next business day!

First class mail or certified, return receipt requested. Surely nobody sends mandated materials using anything less than first class mail??!

That can't be correct. Just not possible. An "initial return" should be filed for the plan year beginning on the effective date of the plan, even if there are participants who become such as of the effective date.

Not that there is any material distinction between the 10% early distribution tax and an excise tax (it's payable irrespective of income level, deductions, exemptions or credits), but it was recently learned that it is not an excise tax - it is an additional tax or an additional income tax. "Your Rollover Options" calls it an "additional income tax", while IRS Topic 558 refers to it as an "additional tax". It appears on the Form 1040 after the taxable earnings are determined and after the regular income tax is determined (both of which cannot be less than $0) as one of the additional taxes, where no offset is provided for. Just saying. If separation occurred before 55, the tax is due until 59 1/2. If separation occurred on or after 55, the tax is waived. IRAs, of course, key exclusively off of age 59 1/2.

Filing deadlines are generally first business day coincident with or next following. Payment deadlines (at least for defined benefit plan contributions) are generally not extended (so payment, if due on a Saturday, must be made by the Friday before the deadline). Tax payments, on the other hand, would generally be extended.

If they weren't keys on 12/31/2014, then they would not be treated as keys to determine if the plan was top-heavy in 2015 (testing is done as of 12/31/14). If they were keys on 12/31/2015, then they are keys in determining if the plan is top-heavy in 2016 (testing is done as of 12/31/15). Always found that sort of thing a bit confusing!

How do you bring someone back into a 401(k) plan on a retroactive basis? What mechanism would be used to provide the opportunity for salary reduction amounts for the period for which retroactive membership is granted (especially if the person wants to defer maximal amounts and is too young for catch-up payments)?

The QDRO amount would not be subject to immediate taxation, but the amount allocated to the alternate payee might be something that the alternate payee could take an immediate distribution of. I don't work on defined contribution plans - would it be proper for a QDRO under a defined contribution plan to specify that the amount allocated to the alternate payee is to be paid out at once in cash (with or without grossing up for the potential taxes)? As for the second point I made in my earlier post - I have no idea what the status is of the property/mortgage and why the bank is unwilling to loan $30,000 to a participant whose house could be sold for a net profit of at least that amount. I was just noting that it had been stated that the bank would not do so. I have no way of knowing whether that makes any real sense. Actually, post #6 does not actually say that the proceeds of the sale would be as much as $30,000, just that if the participant does not come up with $30,000, the house will have to be sold and the proceeds (whatever they may be) would then be split. Can't get blood from a stone - if the house must be sold, maybe they would each net $5,000 after the mortgage is paid off and the commission is paid. Or maybe it would be $60,000 each. Not made clear, just that the participant, other than through a hardship distribution, has not other way of satisfying the soon-to-be ex-spouse's demand. If the funds have to come from the retirement plan, maybe obtaining a QDRO would be the most appropriate thing to do.

1. Good point - unlike a split of the account with no distributions (which is what would happen under a QDRO), the withdrawal would be a fully taxable event (possibly also subject to the 10% excise tax, depending on the participant's age). 2. If I did not misunderstand the earlier posts, the mortgage holder refused to allow an equity loan on the house (or the equity was already loaned out so that an equity loan was not available). Either way, it was stated that the bank was not willing to loan him that money.

But the law prohibits the plan sponsor from trying to defend against anti-selection (other than not permitting participants to elect lump sums). When those big lump sum windows were offered to retirees a few years ago, significant anti-selection was expected (i.e., the mortality among those who did not take the offer was expected to be unusually low, since those in poor health, who otherwise would have died in the next few years, would have elected the lump sum). I wonder if actual experience has matched that expectation. If not, maybe many of those in poor health were unable to deal with the offer, failed to act and were not cashed out.

I think it would be perfectly acceptable to lower the hours requirement effective only for the current year and future years. It should be OK to leave all prior years as is. Of course, if the intention is to make it retroactive (to give the people who have been working between 500 and 1000 hours credit for those years), that would probably be OK (unlikely to disproportionately benefit highly compensated employees, unless they all work 600 hours per year).

The EIN is not for the plan - it is for the trust or the plan administrator (if not the employer).

Are you asking about the participant count as of the beginning of the 2014 plan year? Presumably, there would have been a number greater than 0, since anyone eligible as of the effective date of the plan would have become a participant as of that date. Of course, the idea of a participant count at all is meaningless prior to the effective date of the plan. So (assuming it's a calendar year plan year), trying to come up with a beginning of year count for 2013 or an end of year count for 2013 is like dividing by 0.

Suppose that a defined benefit plan says that a participant who becomes disabled while an active employee is entitled to monthly payments effective upon being found to be disabled by Social Security. Suppose further that the sponsor/plan administrator did not realize that when a given participant separated from service 12 years ago, it was due to an injury suffered at work which, a few months later, was determined by Social Security to entitle the individual to receipt of Social Security disability benefits. Suppose that the sponsor/plan administrator has only recently become aware of this, having believed all of this time that the participant had merely terminated with full vesting, and that benefit payments were not going to be due for years. Assume that, relative to the plan as a whole, the additional value of the unreduced disability benefits is not material (i.e., less than $50,000 out of $100 million), and that past actuarial valuations will not be revised, but that it is now believed that the participant should have been receiving disability payments from the plan for 10+ years. Now suppose that the plan's AFTAP is currently under 80% and the plan is therefore subject to partial restriction under IRC Section 436. How does one go about making that participant whole? Assume that the size of the back payments with interest (if payable) would exceed 50% of the current value of the participant's entire benefit.

Are 401(k) plans permitted to accept back money removed as a distribution? What does the plan say? A Self Directed 401(k) plan is not at all the same as a personal account and must not be handled as though it were.

Isn't preparation and filing of 1099-R forms the responsibility of whichever financial organization makes the benefit payments (as opposed to such things as preparation of benefit calculations or election materials, which can be contracted out to others)? If the plan has a main trust fund and there are also one or more brokerage accounts, if anything is paid from a brokerage account, it is the responsibility of the brokerage to file an appropriate 1099-R, not yours. Did this not happen?

One big problem is that the participant, on receiving a lump-sum payout of their retirement benefit (probably substantially more money than they ever had at one time) becomes, ipso facto, a money manager (all aspects - investing the money successfully or otherwise and controlling the speed with which the proceeds are spent). Powerball is up to almost $400 million - why not put the lump sum entirely into Powerball tickets? Actuarial types may have the knowledge and self-control to make it work. How easy is that for non-actuarial types? So the question should perhaps not be which option ultimately produces more money but rather which will leave the plan participant better off in 10 years or 20 years or 30 years?

Or at least some of them!

What kind of plan is this, defined benefit or defined contribution? To whom was the loan made, the plan or a party-in-interest? I was under the impression that loans to plan participants are supposed to be limited to 50% of the value of the account or $50,000, whichever is less. Is this not so? First suggestion is to obtain, in writing, clear details concerning this. Second suggestion is to find out what it means to have a negative net surrender value. Does that mean that one must come up with $89,000 in order to surrender the policy? What kind of insurance policy has a surrender charge of more than $100,000? How can that be justified? Was anyone even pretending to be acting in a fiduciary capacity with respect to the selection or maintenance of this "investment"?

This is a plan termination. Surely nobody with a benefit worth less than $5,000 was given the choice of having an annuity purchased!!! Upping the involuntary cashout limit from $1,000 to $5,000 in connection with the plan termination (or any other circumstances) violates no anti-cutback rule. Further, every plan with a $1,000 involuntary cashout limit that I have ever seen explicitly stated that if the benefit is worth less than $5,000, it can only be paid as a lump sum (even if it could not be immediately forced out).

The methodologies followed by plans offering lump sums to participants as they separate from service would generally be followed in the event of a lump sum window. Unless provided otherwise, the lump sum amount would equal the actuarial present value of the accrued benefit, payable commencing as of NRA. Step 1: Determine the expected cash flow, taking into account the applicable mortality rates. Step 2: Discount the portion of the cash flow lying within the first 5 years at the first segment rate, the portion of the cash flow lying beyond the 5th year but not beyond the 20th year using the second segment rate, and the portion of the cash flow lying beyond the 20th year using the third segment rate. Step 3: If the plan calls for paying the larger of the 417(e) lump sum or the present value of the benefits using the plan's regular equivalence basis, recalculate the lump sum using the regular equivalence basis and pick the larger of the answer from step 2 and step 3. Don't forget that if you are offering an immediate lump sum prior to retirement eligibility, you must offer an immediate QJSA as well. I personally cannot imagine a lump sum window that did not involve paying the lump sum now. Also, once the limited period is over, it is not necessary to offer lump sums in the future or immediately payable QJSAs or anything. Special benefits like those, offered as a special limited time offer, are not protected under Section 411. At midnight, the coach can truly turn back into a pumpkin.

Whose decision was it to put some of the assets in the GIC, the sponsor or the individual participants? If the participants chose to go with the GIC, in order to avoid having potential market losses, why would that trade-off constitute a breach by the sponsor? Presumably, the early surrender provisions were made clear to the participants, who chose to use that vehicle anyway. The surrender charges are being incurred because the sponsor decided to terminate the plan (a settlor function, not a fiduciary act) and all plan investments must now be liquidated. Depending on the actual market conditions, perhaps the GIC provider would be willing to waive the surrender charge.

There goes the $12,000!

Assuming that the receiving participant is not actually comatose, for them to take note of money in their account that they know is not theirs and then to use it sounds like fraud or theft to me. If you go to an ATM to take out $20 and the machine gives you $2,000 (that you don't have in your account), wouldn't the bank have a way to get you to give it back or else? I personally thought that court decision was totally wrong, but in this case, a suitable exception might be made.

The wise sponsor whose auditor provides valuable oversight of the 401(k) plan in operation may well choose to have the auditor audit the plan even if not required for the 5500 filing.