Bill Presson

http://www.irs.gov/pub/irs-tege/se0509.pdf

But in your scenario, he doesn't want another loan. He wants inservice distributions because he doesn't intend to pay the loan back. Just amend the plan to allow for in-service and have him stop paying the current loan.

Can he not just stop paying the loan and accomplish the same result?

No. It's the lesser of 2% difference or 2X the NHCE amount (I'm ignoring the upper 1.25 limit). So the HCE can defere 2X 0%.

I'm saying that your time involved in typing the message and replies is worth a lot more than $.08 and forfeiting it will be very unlikely to cause any issues with the plan. Is it 100% accurate; probably not. But it's what I would do and I'm usually a real stickler for doing things right.

Why don't you just forfeit it?

Austin, For this very reason, we have the deferral election and investment election as two forms. When completed, the deferral election form goes to the payroll department (or office manager) and the investment election form comes to us. We maintain the investment elections in our recordkeeping system, but the deferral election is irrelevant to us. Also, most of the investment advisors have chosen a QDIA. So, it isn't uncommon for a participant to complete the deferral election form and turn it in at the enrollment meeting. They then take all the investment "stuff" home. If they return it by the due date, we set it up on the system. If they, don't the money goes into the default. They can always then go online and make changes to existing money or future elections. It's worked pretty well for us.

We've assisted clients on several over the years. I would recommend having legal counsel. Remember that technically it isn't an "audit" like the IRS. It is an investigation. They will/can ask you anything about the plan and they will be very specific. The questions won't concern technical design aspects as much as protection of the assets in favor of the participants.

I don't see anything odd about it at all. They are acting on what the PA is telling them and that's perfectly alright. It's up to the PA to make sure they have the appropriate instructions and forms from the participants. We do almost no work with the insurance company type products. Almost everything is open architecture and we use 4 different custodians. Participant instructions are completely irrelevant to them and I think it should stay that way.

This is actually a payroll question, so you need to check with your HR department. And each payroll operates independently of the other, so it will be up to you to monitor and make sure you don't exceed the limit or request the excess back from one of the plans.

Welcome to these boards and message boards in general, the land of no subtle comments and misinterpreted intentions.

If you thought Tom's response wasn't being tolerable and kind, then I would like to welcome you to what has to be the very first message board upon which you have every posted. I actually thought it was quite nice with playful jabs at the quirky nerdy name.

Too funny. The 2004 question was mine that Larry Starr submitted for me.

The two possibilites are stay or go. You've now ruled both of them out, so I'm not sure what else you want.

#1: Yes #2: Yes How an insurance policy is paid isn't really the issue. The issue is the taxation of the amount that is paid for the policy and whether that amount meets the incidental benefit rules. In performing the incidental test, you are correct about what is counted. Rollover amounts are not contributions and cannot be counted in meeting the test. If the premium doesn't meet the incidental test, then the premium is taxable.

Search Davis Bacon plans and you'll see lots of examples like that.

Actually, we charge a maintenance fee to cover a small part of our cost of processing the loan payments each year. Not to try and cover the auditors fee.

Any chance that someone might not like this idea? "Please explain to me again why I get charged more in fees just because That Guy took out a loan and those extra fees I'm paying are because of That Guy's loan." Just sayin'. An annual loan maintenance fee sounds like a workable solution if it's based on some reasonable cost estimates. And I agree with Kevin C that the timing could be an issue. But if you're going to do that what about: 1. the guy that doesn't defer, but only has profit sharing 2. the guy that doesn't take a hardship withdrawal 3. the guy that didn't screw up the payroll files and the auditor has to spend extra time checking deposits (none are late just not clean) 4. the guy that didn't mess up the schedule c etc. etc. I would find it very difficult to start allocating audit fees specifically based on the attibute being audited.

When does the plan schedule the liquidation? Typically the liquidation is within a day or so (just enough to clear pending transactions) of the beginning of the blackout. So in your scenario, the plan will likely be better off because it went to cash at the beginning. But that's how we would do it.

Is the annual fee in addition to a regular loan maintenance fee? If so, I might question that. If not, I would question why you aren't charging a maintenance fee. Also, if the employer is worried about the audit fee, just have the plan pay the audit fee. It can be allocated in different ways (pro rata, per capita); maybe that's what the discussion should be.

We leave it up to the employer, but if we respond (and it is something that wasn't our fault) then we bill our time.

We're using Penchecks for all of our balance forward plan distributions now. We charge the same distribution fee we always have and we pay the Penchecks fee. Works great.

Without looking at the plan document itself, it's almost impossible to tell you.

And maybe the training was a Good Thing for plan sponsors and for TPAs for whom potential mistakes by staff were reduced (reducing the risk of liability for resulting damages), even though in hindsight the training was not required? It's likely the training hasn't happened yet, just the expense.

Happy New Years, everyone! Have a fun & safe holiday and Roll Tide!