ESOP Guy

Not sure if it will help or hurt but here is the IRS' take on this issue. See question 7 https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-loans#7 The one thing the IRS leaves off the end of their example is when they say the person can take $23,000 they leave the math implied that this person just spend $18,000 to pay the old loan off. So the next cash to the person was only $5,000.

We had the 29th vs 31st conversation recently. Here is the tread .

I agree if the size of the assets are large this is one of those times where spending some money on a lawyer who knows QDROs is worth it. A little up front can save you a lot of headache and heartache in the future.

So your employer won't take the deferrals out of your paycheck based on the reported tips plus wages? I ask because my daughter worked her way through nursing school as a waitress. It was in MO not CA where she worked. They either had to or did cash out tips nightly also. But I convinced her to get into the habit of saving for retirement and she agreed to put a few percentage points of pay into the resturant's 401(k) plan. There were times where she got a zero dollar pay check. It was caused by the fact when they got done taking out taxes and everything and applied her 401(k) deferrals to her wages plus tips there was no money left to pay her. In fact as far as we could tell if she had good weeks with tips she should have had a negative paycheck based on the math but obviously they cut off the deferrals at the point her check reached zero. I point this out to see if it is happening or as an idea to take to your employer to see if they can and/or will do it. At least then you are getting a deferral on some of your tips. As pointed out my guess is what they are doing is legal but hard to tell for sure based on the limited facts.

It has been a long time but if memory serves me correctly the TH cont would only apply to the compensation the person was a non-union employee during the year.

I am not sure about your question. But put in the positive way I know the following: A plan fails fail to file both the 5500 and 8955-SSA. If the plan files a DFVCP and pay the fee and follow the IRS instructions for filing the late 8955-SSA they will accept the DFVCP for the 5500. There will be no fine for the 8955-SSA. I have only done that once and we did both forms and followed the IRS' instructions and it was painless. I have never tried to DFVCP the 5500 and ignore a missed 8955-SSA. But given how painless it is add the 8955-SSA to this whole thing to make the IRS happy I would do so. I guess if an 8955-SSA is just not due I will have to prove that if the IRS asks why no such form with the DFVCP.

They don't check for accuracy unless the IRS audits the plan. Every IRS auditor now checks to see we are putting the right people on the 8955-SSA. I have had to read the 8955-SSA instructions to more then one IRS employee to prove we were putting the right people on the form in the correct. year.

Oh sorry I misread your first reply to me. I get it now.

Just curious how would you folks write a plan provision to let people enter after they work 1,000 hours and have no months requirement? That is in effect what this client is saying they have. How could you write that and be clearer?

I didn't think I said not run the plan according to the terms. I said read literally the client is correct. It says if you work 1,000 hours WITHIN the first 12 months. So if six months after someone is hired lets say they worked 1,000 hours. How is that not working 1,000 hours WITHIN the first 12 months? The odd part of that sentence is the word "within". By using that word I don't think the sentence requires me to work 12 months, just 1,000 WITHIN those 12 months. Those 1,000 hours are "in" those 12 months so the requirement has been met. I see that as the literal reading of that sentence. This is why most plans do define it as saying you work a Year of Service. They then define YOS as a 12 month period and you have to word 1,000 hours during that time. By the way I didn't say this is a good definition so yes it has its problems like do they have to be consecutive or what happens if you don't work 1,000 in the first set of 12 months. I do think an amendment would help clear things up.

I am with MIke here isn't the question backwards? As a general rule aren't plans allowed to have any allocation method that can follow the rules and pass the tests? If so, you don't have to find a rule/test that says it is allowed you have to find a rule that says it isn't allowed. If you can't find a rule that says it isn't allowed go for it. I think there are some interesting questions that might say it isn't allowed- is a CODA for example is interesting.

Read literally the client is correct. It is late but do you think there is a legal problem with the client's reading? If not, run it the way they want and in the document. There clearly is no law that say it has to be 12 months and 1,000 hours. The only question is is there a law that say you can't say once you reach 1,000 hours in 12 month you enter? I haven't seen this but I just got a new client whose Year of Service is a plan year where they work 500 hours. Eligibility says you enter upon being 21 and working a Year of Service. You enter on the 1st day of the month following. Everyone seems to agree that means you enter on the 1st day of the month following working 500 hours. That is the oddest way to say that but odd and not right aren't the same thing.

Yes you can expect an assessment. it has been a while since they came out (last 3 or so years) ago guidance on how to file these late if the 5500 has a DFVCP (whatever that acronym is. I file so few 5500s late I have to look it up.) I used it once but the 5500s were late. I would see if that has any guidance on what to do if just the 8955-SSA is late. What I can tell you is when we did that with the 5500 being late there was a $0 assessment for the 8955-SSA. But I have seen once a client who file and get an assessment- we got it waived when we proved timely extension. I have heard of other saying they get hit.

The document will answer this question in my opinion and I would be shocked if it supports the idea of using the rehire date in this case.

I agree with David "freezing" did not mean the amount of money in the account will not change. I would not recommend going to the DOL first if you still think you have an issue. If you think Vanguard was too slow or non-responsive I would talk to the HR department at your spouse's former employer. They are the ones that work with Vanguard and they are the ones who hired Vanguard. Vanguard has an incentive to keep them happy. My condolences on your loss.

Isn't there always an excise tax due on a PT? So not reporting it is a failure to pay a tax due isn't it? https://www.irs.gov/retirement-plans/retirement-plan-investments-faqs

I would start be re-reading the document. Is the definition of hours linked to hours worked AND paid BY the sponsor? A lot of my plans talk about paid at least. If it doesn't clearly say "by the sponsor" I would do the following. I would also make sure your plan has the standard language that says the Plan Administrator (PA) is allowed to make reasonable interpretations of the plan document in a non-discriminatory manner. I would then see if people are comfortable with the PA saying a reasonable interpretation of the document is hours are worked and paid by the sponsor. That does seem like the natural reading of the plan document. I have never researched this specific question but off the top of my head I doubt you will find a clear cite on something like this. This is merely my reaction to the question nothing authoritative.

See Q3 and its answer. https://www.law.cornell.edu/cfr/text/26/1.401(a)(9)-5

I worked for a large firm that had IT people that allowed us to program based on the file specs a FIRE file for 1099-R many years ago. So I am assuming you could do that with the 8955-SSA. I do recall it helped that I had the help of an IT person and I have a degree in Accounting and IT as it would be overwhelming for a novice. I agree if you can find a friendly TPA who has the software you feel comfortable working with you might be easiest.

I am glad you think the DOL is helping. I am still curious do you know who the trustee that made the critical decisions at the time of the sale?

I once had a plan for a lawn service that had a generous PSP and he made people wait 3 years. He wasn't paranoid he could tell you the names of guys who left him in the fall and by the next spring had a new pickup truck, lawnmowers and other equipment competing with him. The problem decreased dramatically after the wait provisions were put into place. I guess it depends on easy of entry into market. You can get into the basic lawn care business for maybe $20k or less depending how much of a loan you can get on the truck.

I agree maybe I was reading the OP wrong but it doesn't say after 12/31/2018 but on 12/31/2018. I recent comment makes it clearer that it is after 12/31/2018. Which yes is a wait until at least one year after the year of termination provision.

Also, I am curious did they really say it would be 12/31/2018 when you would get paid or "no later than" 12/31/2018? I would find the idea of paying you exactly on the last day of the year really odd but saying it will be some time in 2018 more normal. It just could be they aren't 100% sure when in 2018 and so they are giving you the latest date it will be done by.

You are one of several people who has made a version of this point in this thread and I don't get it. I mean how are you qualified to know if this interferes or not in the free exercise of their religion? If this person thinks there is an ethical issue with being a participant in the plan in what way are you qualified to say otherwise? If the plan puts the person into an unethical position that in my mind is an interference in their free exercise of their religion. Let me be clear I am not saying their belief has to be accommodated in this case as it might be unreasonable or for some other reason. If so, then that person can decide if they need to find a new job or not. I merely find it interesting how many people on this board seem to think their qualified to tell another person how their religion works.

As far as I know this hasn't changed regarding escheating. https://www.dol.gov/agencies/ebsa/employers-and-advisers/guidance/advisory-opinions/1994-41a