k man

has there been any further interpretation as to whether the Red Flag Rules apply to participant loans.

does this apply to participants in 401(k) accounts? are participant level accounts considered covered accounts that fall within the law?

Beneficiary died and left the account to 3 individual beneficiaries. They did not separate the accounts by December 31 of the year of her death. However, they want to give one beneficiary all his money now. Do you know if its permissible to divide the account into separate subaccounts so that the one can be paid out but the other two can roll the accounts or deal with their interests according to their own desires. I think they can do it but they just have to use the oldest life expectancy. the final regulations dont allow for this but there are some letter rulings and such.

what is the rule with regard to providing prospectuses to the participants that are defaulted into the default investment. i am thinking you need to furnish the prospectus after the fact just like with 404©. can anyone tell me what they are doing?

eprcs has the correction but they say to include earnings. is this actual earnings or is this some rate in the regs?

our clients assets were acquired and its plan terminated. the new employer of the employees will be starting a new plan. there are participants with loans that would prefer if they could roll their loans over to the new plan. i believe they could do this. however, the loan policy of the old plan provides that you have to be a party in interest to have a loan. in this case since they are now terminated they are no longer parties in interest. my question is whether this puts them in default and makes the loans ineligible for rollover or do they have a grace period where the loan would be eligible for rollover?

let’s say an employer lends money to employees so that they can pay moving expenses. When they work with the employer for a certain amount of time the forgive the loan. The employer reflects the cancellation of indebtedness on the employee’s w-2. the plan excludes fringe/moving expenses from compensation. Do you think the cancellation of indebtedness is a fringe benefit? In my view it is not reimbursement of a moving expense because of the fact that it was a loan originally.

in connection with a change of payroll companies the sponsor sent out a notice 3 days advance telling participants deferrals would not be taken. is that permissible? i am concerned it might be a failure to follow deferral instructions and the employer is now liable to make up the contribution. the plan is also automatic enrollment. but on the other hand this is not a blackout as defined by the regs and therefore i am unaware of any 30 day notice requirement.

im note sure any of this prohibits the employer from allocating say 3% to employees and not allocating anything above that if he has a discretionary formula. maybe i am missing something.

it is a discretionary formula. so if it is made during the year it has to be allocated. i would like to see the thread if you remember where it is.

why disqualification? after thinking about this again i am thinking it is a non deductible contribution and therefore subject to a 10% excise tax.

a client makes a contribution in excess of its allocation formula but it is deductible and it is not in excess of 415. is there an excise tax if it is not allocated but left in a suspense account and applied to next years contribution?

maybe this is a stretch but can i refund the unauthorized deferrals to the employee on the basis they are "excess deferrals?"

i tend to agree....failure to follow plan document because no salary deferral agreement but how would you suggest correcting. i would like to give the guy his pay via payroll and forfeit his account balance in the plan.

an employee claims they never authorized deferrals to be deducted from their pay. the employer cant locate the salary deferral agreement. is the employer required to take action here? can they refund the money from the plan or if not can they forfeit his account and refund the money through payroll?

are you saying if they wanted to could they do it? he seems to think it isnt pointless because obviously its easier to put it off until some point in the future.

the plan uses a discretionary matching formula. one of our clients is asking me why he cant contribute the matching contribution to the extent of the vesting percentage. For example if the participant is 20% vested they would only have to contribute 20% of the match. Clearly I know you cant do this but I am having a difficult time explaining to the client the reason other that contributions are allocated according to a formula and the vesting schedule is applied after the fact if and when employees terminate. Is there a regulation or rule that makes this clear?

client was ordered by DOL to pay overtime to employees for prior years. the actual backpay was done in 2008 but was for 2006 and 2007. do you have to open prior years with regard to the plan calculations (i dont think so because the compensation is paid in 2008 not the prior years. Also, what do you do about 2008?

the law firm has employees but the individual partner has no employees.

no employees. it seems as though the partner just wants to opt out of the plan.

it is a true partnership. Can a partner who chooses not to participate in the firm's plan have his own SEP?

In soliciting opinions here. My client had a plan in which they had late and/or non remitted deferrals. they put all the money in the plan plus earnings. is it necessary to go forward with the DOL program? the plan has been terminated and the sponsor is no longer a going concern. this would be the only thing holding up final distributions.

next question - what are the consequences if the employer takes the money back and it was not due to mistake of fact? What about disqualification and ERISA penalties?

next question - what are the consequences if the employer takes the money back and it was not due to mistake of fact?

can the employer use mistake of fact to withdrawal an unallocated contribution they made wrongfully thinking the plan would be top heavy?