Belgarath

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.

Interesting. In my limited experience with DB plans, annual benefit statements are (or were) just sent automatically every year for all participants with a benefit, whether terminated or not. Maybe that has changed, or maybe my limited experience was with plans in the minority.

Just curious - we don't have any plans for "Foster Care Providers" where this would be an issue, so this is simple curiosity on my part. Anyone dealt with this issue on a real plan or plans? Do you specifically question this when gathering annual census data, since it isn't taxable income?

Yes, it is that time of year again – the annual tax lament, to the tune of “Yesterday” by the Beatles. Remember, it is only when the final line is truly sung from the heart that one can appreciate the scope of anguish and angst that the artist is attempting to convey… Yesterday... Income tax was due, I had to pay... All the funds I tried to hide away... I don't believe, I'll eat 'till May. Suddenly... I'm not sure that I am fiscally... Ready for responsibility... Oh yesterday, came suddenly. Why, I Owed so much, I don't know, I couldn't say May be Forms were wrong, how I long, for yesterday. Yesterday... Seemed like prison time was on its way... Now I need a place to hide away... While keeping IRS at bay. Why, I Owed so much, I don't know, I couldn't say May be Forms were wrong, how I long, for yesterday. Yesterday... Taxes due, I filed come what may... Losing all deductions that's my way... Of giving IRS my pay. mm - mm - mm - mm - mm - mm - mm.

https://www.irs.gov/pub/irs-drop/n-22-53.pdf

Any possibility that the 401(k) plan could provide stronger asset protection in the event of lawsuit judgement awards (as opposed to the protection available under an IRA? I'm not referring to bankruptcy, which is a separate issue.) Of course, if there IS stronger protection, and the client is concerned about it, then maybe they shouldn't toll out in the first place.

Thanks! I'll digest this on Monday - after hopefully recharging a few brain cells. Have a great weekend!

It USED to be that once you exceeded the limit, you had to keep filing, even if you dropped below the threshold. However, that changed some number of years ago, although I can't recall off the top of my head. So no, you wouldn't have to file, other than a final when you terminate it. As to your other question, google "401(k) successor plan rules" and you'll doubtless find the information you need.

Perhaps the plan is subject to 5500-EZ requirements if assets aren't rolled out?

Hi Brian - thanks for the response. But, I'm having trouble reconciling the above two statements - and please pardon my lack of understanding on this subject! Does the second statement mean an opt-out credit that is NOT cash - in other words, just used as cafeteria dollars to be used for other benefits under the plan - vision, dental, whatever?

I may be overly optimistic, but with the projected 16 BILLION "government math" revenue estimate for this particular catch-up provision, I find it nearly unimaginable (nearly, I say - Congress works, or doesn't, in mysterious ways their wonders to perform, or not) that these issues won't be addressed in some fashion. In the meantime, I've vowed not to get overly exercised on such an issue over which we have no control at all. Hopefully I can maintain my stalwart resolve. Maybe I'm just suffering from PTSSB (Post Traumatic SECURE Syndrome Burnout).

Curious as to how many Plans you either service, or see, that use the option to INCLUDE Deemed 125 Compensation. I remember discussing this with a noted ERISA attorney many years ago, - I think it was in regard to restating for PPA - and to paraphrase what he said, was that if you include it you'll probably live to regret it. Very complicated for clients and TPA's alike. I've seen some old discussions on this, but I wondered how people felt about it now, years later.