Belgarath

Our clients are so wildly diverse in their employee populations/employment patterns, human resources/payroll competencies, HCE "greed factor" etc., that I haven't been able to formulate a "general standard" - although to be truthful, I haven't expended excessive thought on it. These conversations are helpful in that regard, so thank you for your observations!

I know nothing about finding records, etc., but I pulled this write-up off the internet. I can't vouch for its accuracy, but if true, perhaps the regulatory authorities might be able to provide you with some insight. https://www.fa-mag.com/news/ex-lpl-advisor-pleads-guilty-to-robbing-clients-of-more-than--2-8m-69610.html

Hi BG - with the editorial comment that the "less than 20 hour" exclusion is administratively hateful, I think this link will answer your questions. For the first year, as long as the employer "reasonably expects" the employee to work less than 20 hours per week then even if that employee goes over the 1,000 hour mark, the first year exclusion is still valid. Thereafter, if the employee has ever worked 1,000 hours in a prior year, that exclusion is no longer valid. Hope this helps. Also there's the usual caveat re specific document language. https://www.irs.gov/retirement-plans/issue-snapshot-403b-plan-the-universal-availability-requirement

Hi Paul - that's exactly the discussion I was just having with a co-worker about 10 minutes ago! Truth is stranger than fiction...

Hey Bill, I submitted mine on April 4th, and they mailed it on April 28th. Maybe they were giving me special Senior treatment...

And just to give credit where it is due, I submitted for this new cycle in April, and received my updated certificate in LESS than 4 weeks. Fastest turnaround I've had for this.

When you say "no issue" I assume you are asking/meaning if it is PERMISSIBLE to have different requirements, and you are correct, there is no prohibition against it. A lot of plans aren't top heavy anyway, so the loss of the automatic top heavy exemption is meaningless in many cases. Although we prefer same eligibility requirements for administrative reasons, we have a fair number of plans that have different eligibility requirements.

Thank you. That's precisely the answer I came up with, but I was questioning myself... nice to have greater minds than mine agree!

Starting with the applicable plan language: Rehired Eligible Employee who had not satisfied eligibility. If any Eligible Employee who had not satisfied the Plan's eligibility requirements is rehired after severance from employment, then such Eligible Employee shall become a Participant in the Plan in accordance with the eligibility requirements set forth in the Adoption Agreement and the Plan. However, in applying any shift in an eligibility computation period, the Eligible Employee is not treated as a new hire unless prior service is disregarded in accordance with Section 3.5(d) or (e) below. Ok. The underlined language does NOT apply (that is, 3.5 (d() or (e) don't apply) in the following scenario, so we can ignore the underlined clause. This is concerned with entry date. Plan uses age 21, 6 consecutive months with at least 500 hours for eligibility, entry date quarterly. If eligibility requirements not met in the initial specified time period (6 consecutive months with at least 500 hours) then the employee is subject to the 1 Year of Service requirement. After the initial 12 month eligibility computation period, the computation shifts to Plan year, which is calendar. Original date of hire, 6/6/2017 - Date of termination 8/20/2017. Had 200 hours of service. Rehire date of 8/2/2021 - had 833 hours in 2021, over 2,000 hours in 2022. So, since the employee had not met eligibility prior to termination, then what is the entry date? Is it 4/1/2022? 1/1/2023? Other? It appears that since the employee is not treated as a new hire for the eligibility computation period shift, then the eligibility computation period shift has already occurred, and is now Plan Year 2021, then 2022, etc. Thoughts?

Paul's suggestion to first check the plan document is excellent. I personally haven't noticed (but I haven't really looked) a document that specifically defines what constitutes a "complete discontinuance" - ours merely says that if there is a complete discontinuance, then any affected participant will become 100% vested. Which still leaves it up to Administrator discretion to determine what constitutes a complete discontinuance. Unless there is a whole lot of money at stake, I say discretion is the better part of valor in these determinations.

Yes. You always have to fila a final form.

Yes!!! But sadly, for some fiduciaries, only the threat of PERSONAL liability for a fiduciary breach keeps them in line. This is one of the things we emphasize when a plan fiduciary seem disinclined to follow the rules, and it is usually the one thing that finally moves them to comply - seems to work far better than the possibility of IRS penalties.

IMHO, if the plan accepts self-certification, where's the problem? As a Plan Administrator, I'd accept the self-certification with no questions asked. There might ultimately be some repercussions to the participant if the IRS audits and finds the "hardship" was pure BS, but not the plan's problem.

Yes, it was 26 years ago today that Austin (one of our message boards luminaries) burst upon the scene with the release of the first movie in the series.

Sigh... Thanks to all for the responses. This isn't a high-volume item, at least for us, but the hassle is all out of proportion to the number of cases. The procedures for "lost or missing" participants, and setting up automatic rollover, etc. are reasonably clear. But the uncashed checks remain a problem for which there's no "good" solution that will apply across the board in all situations with all vendors. Que sera sera. Paul, can you give me the name of the commercial search service you mentioned? That might be very helpful. Thanks again to all!

At the moment - and I certainly could be convinced otherwise - I lean toward the following: 1. Do a free internet search only. Amounts are small - doesn't justify time and expense to go through additional steps. 2. If address is found, send them one more notification that if they don't respond in 30 days, it WILL be rolled over. Consider them a "missing participant" (but this doesn't solve the question of if/how to report). 3. If no address is found, consider a "missing participant" and proceed as in #2 above. 4. Alternatively, if considered a "missing participant" as in #'s 2 & 3, forfeit. This might be particularly desirable for REALLY small accounts. If the accounts ever have to be reestablished, reestablished contribution amount will be basis, and not taxed upon distribution. Thoughts? Thanks in advance. Agree!!! But when they do, they might make it so onerous to actually get the funds transferred that we'll be thoroughly disgusted with that option as well.

Thanks. Not sure if many vendors would do this?

I'm having a hard time finding what I would call "clear" guidance on this, so just looking for opinions. This NOT a plan termination. Participants terminate employment, get their 402(f) notice, and notification that if they don't respond within 30 days, they will receive a lump sum cash payment. (This would be for accounts less than $1,000.) Some of these accounts could be Roth. Some amount of time passes. Let's say at least until the following calendar year. I'm not at all sure proper steps have been taken (internet search, etc., etc. as outlined in DOL FAB 2014-01) to determine if these people qualify as "missing participants." "Missing participants" where the amount is less than $1,000 have a specific procedure in the plan language - basically, roll to an IRA or treat as a forfeiture. So, these are "unresponsive" participants - they just have never cashed the the checks. Now the Plan Administrator decides to have these amounts rolled to an IRA. My question is twofold - first, is this allowable? Second, if so, or at least defensible, how to report? The distribution has already been reported, and if taxable, has been taxed. Interested in what people perceive as a "best solution" where it appears that no solution is perfect. Thanks.

Thanks! Yes, hopefully Corp B will be cooperative. As far as I know, there's no bad blood, but we'll see... As an aside - suppose it was a controlled group situation - while it would be allowable for the employees of the withdrawing employer to leave funds in the "lead employer's" plan, why in the world would the lead employer want to allow it?

Corp A sponsors Plan A. Corporation B, while partially owned by Corp. A, is not part of a Controlled Group/Affiliated Service Group. Corp. B is a participating employer in Corp A's plan, so it is a Multiple Employer Plan. Corp B. is buying out the ownership that Corp A currently has in Corp B, and is withdrawing from the Corp A plan. Suppose Corp B does NOT want to maintain a plan. Is there any alternative to Corp A invoking the involuntary spinoff provisions (establishing a new plan in Corp B's name, which Corp B can then terminate)? I'm confused as to the alternatives in terms of the accounts of the Corp B employees who have been participating. They haven't terminated employment with Corp B. I feel like I'm missing something obvious.

Thanks Cuse. I assumed that was the case, but wanted to make sure. If it had been otherwise, I'd probably have had palpitations.

Agree with C.B.

Cuse - just to make sure I understand what you are saying - you are saying that if the employee receives the 3% SH, but is excluded for purposes of "regular" PS, the compensation is INCLUDED for purposes of the 404 deduction? Or are you saying something different?

Well, it is generally considered un-American to accept any personal responsibility for your own actions. Now, in a reasonable world, of course the participant should share responsibility for ensuring that their election was implemented. I've seen deferral election forms that specifically state that the participant is responsible to ensure that deferrals are withheld according to their election, but the validity of this approach is questionable, even when it is specifically stated. The question is, will the IRS/DOL agree that the employer can skip the correction for the deferral piece, when it comes up upon audit or complaint? I don't believe there is any statutory or regulatory basis for denying this participant the make-up for deferrals. IMHO, the employer needs to swallow the poison pill and make the QNEC. I don't see this as a fight worth having.

Don't forget Ned Ryerson! We haven't heard from Ned for a while.