Belgarath

Interesting. Thanks for the info.

This is in fact a purely academic question for the attorneys out there, not related to anything, but merely idle curiosity on my part, so please don't waste any time on it. Suppose a client comes to you for a legal opinion - I don't have any specific subject in mind. Further suppose that in your best judgment, it is a coin flip - 50/50 either way. Do you say that you can't give an opinion? Or do you present both sides, with the potential advantages/disadvantages/consequences for either choice? Or is the answer to this question purely facts and circumstances, so there's no "general" method? I've often wondered about this, but such a situation has never come up - fortunately. I'd love to hear any opinions, but again, please don't waste your valuable time if it isn't a quick and easy response. Thanks.

Thanks.

So, it is my understanding that the IRS, when calculating the "turnover" rate, considers all employees ELIGIBLE to defer as participants for purposes of calculating the participant numbers. The fact that the DOL has altered the definition of "participant" for purposes of 5500 counting does not affect this IRS stance. Anyone disagree, or have other thoughts? Thanks.

This was updated/reviewed by the IRS in 2023. Just informational. https://www.irs.gov/retirement-plans/issue-snapshot-qualification-requirements-for-non-electing-church-plans-under-irc-section-401a

Thanks Luke.

The legal eagles here can tell you if this suggestion is proper or valid, but what about filing an interpleader - let the court determine when it can be paid out, and get the Plan Administrator off the hook?

I'm finding one aspect of this a bit confusing, and I've been chasing my tail a bit. Original loan to purchase a home had a 10 year term. 6 years has gone by, and participant now wants to refinance, (plan doesn't allow multiple loans, and won't be amended to allow multiple loans) taking out additional cash, NOT to purchase the home. The question is - is the loan amortization period eligible for 5 years without falling afoul of the "double counting" - or, must the amortization period end no later than the end of the original 10-year period - that is, over the remaining 4 years? I incline toward the latter...

The QACA safe harbor contributions themselves cannot use 6-year graded vesting. But, there could be other employer contributions such as profit sharing that could use that vesting schedule.

FWIW - FT William, while observing that the EBSA electronic filing system will "accept" these filings even if the fields aren't completed, had this to say: However, the DOL did not have additional edit checks, warnings/ errors, or additional guidance pertaining to these fields other than the formatting of the opinion serial number. We have discussed this internally and added a warning when the fields have not been completed.

Yes, as they would say in Good Will Hunting, he's wicked smaht!

Yeah, that guy is good!!!

"Infinite are the arguments of the mages." This discourse has been fascinating and educational, and reinforces my opinion (not that it needed reinforcing) that plan sponsors should seek competent ERISA counsel for so many things(and they rarely do)! I've seen a couple live to regret it.

Other than asking a good CPA... Perhaps this will help a bit? And I believe you can maybe deduct a theft loss on a Form 4684? But this is way out of my area of knowledge. My deepest sympathy to the poor lady with a loser of a Son. Theft losses A theft is the taking and removal of money or property with the intent to deprive the owner of it. The taking must be illegal under the law of the state where it occurred and must have been done with criminal intent. The amount of your theft loss is generally the adjusted basis of your property because the fair market value of your property immediately after the theft is considered to be zero.

Yes.

So, for the new compliance questions, 14a, 14b, 15. (5500-SF) The DOL instructions seem a bit ambiguous to me. Is a 403(b) plan required to input the opinion letter # on line 15? For 14a, as unlikely as it probably is, a 403(b) plan may use a qualified plan to pass 410(b), although the reverse is not true. So this could be checked "no." 14b - seems like it shouldn't need to be checked at all, but perhaps "N/A" would be appropriate, even if unnecessary. 15 - the instructions seem to exclude an opinion letter on a 403(b) plan. What are y'all doing on these? P.S. the EBSA electronic filing system "accepts" the 5500 on a 403(b) whether you fill these out or not... don't know whether there will be a kickback/inquiry at some future date depending upon how you complete it, or not...

I didn't know Mike, but always respected and benefited from his knowledge and opinions. The Enrolled Actuary at my former place of employment was a PIX member, and Mike's opinions came up in discussion frequently. He'll be missed.

Separate penalties for each plan filed under the DFVCP program.

Agreed.

I'm not sure it is AUTOMATICALLY too late. If the participant satisfies one of the options in 401(k)(2)(B), then a current distribution should be allowable.

Check the QDRO procedure in your plan document. Many of them say something to the effect that the Plan Administrator "may" put a temporary hold on distributions/loans if they have reason to know that a divorce/QDRO is pending. This can be a tricky area - you may need to check with ERISA counsel depending upon facts and circumstances, timing, etc. Example: Suspension of Participant distributions or loans. If the Administrator is on notice (verbal or written) regarding a pending domestic relations action (e.g., a divorce) and has a reasonable belief the Participant's account may become subject to a QDRO, the Administrator may suspend processing the Participant's distribution or loan requests pending resolution.

Wouldn't you just file a 1040-X, reduce your AGI, and explain the change in Part II (or III if electronic filing)? I've never done this, so I'm not certain, but it seems logical to me. I'm a little grumpy about IRS tax filings about now...

But since this is MY daydream, I can choose to have it apply only to the items WE tell them to do. 😁 It never rains on my parade in my daydreams...

Since there is no official guidance on the effective availability requirement under 1.404(a)(4)-4(c), I'm not sure what degree of confidence there is - depends on how aggressive you are (or more to the point, how aggressive your client is willing to be). Your proposed parameters seem pretty safe to me, although the minimum value to have a SDBA could be an issue. If, for example, the minimum is say, $5,000, and 90% of the NHCE's have $5,000 or more in their accounts, then it seems "reasonable" that this would qualify. I would tell them, if they wish to pursue this, that they need ERISA counsel opinion, etc. - the usual CYA stuff. And of course, the plan fiduciary must determine that the fees are prudent and reasonable, etc., etc., and a flat fee for small brokerage accounts might not qualify. As you said, potentially a bad idea on many levels.

I'm sure Nike has this trademarked or something, but it would be fun to have this on our client engagement letters - the endless amounts of time we spend because the client is trying to "get around" something they have to do, or won't do what we tell them to, etc., etc. - wouldn't it be great if we could contractually point to "JUST DO IT!" Just one of those pleasant daydreams...