Belgarath

Well, there are two issues - taxation and withholding. Since an in-service distribution (as opposed to a hardship withdrawal) is generally an "eligible rollover distribution" then 20% withholding applies. However, if it is rolled over in a valid rollover within the normal 60 day timeframe, then it isn't ultimately a taxable distribution. The plan might not accept rollovers - some don't.

Oh c'mon - you are right behind Bob Dylan in the pantheon of great American song-writers! Greatness is never recognized in its own time. When they dedicate the Poje wing of the ERISA section of the Smithsonian, your grandchildren will be proud of you.

On the other hand: "Democracy is the worst form of government, except for all the others." (Winston Churchill)

I haven't yet studied the actual regulation language to have an opinion on the physician question. I'm hoping it won't apply...

I wouldn't touch this one with a barge pole!

What if the plan says, (as many pension/401(k) plans do) that it will be determined by a licensed physician?

- The problem with political jokes is they get elected. ~Henry Cate, VII - We hang the petty thieves and appoint the great ones to public office. ~Aesop - If we got one-tenth of what was promised to us in these State of the Union speeches, there wouldn't be any inducement to go to heaven. ~Will Rogers - Those who are too smart to engage in politics are punished by being governed by those who are dumber. ~Plato - Politicians are the same all over. They promise to build a bridge even where there is no river. ~Nikita Khrushchev - When I was a boy I was told that anybody could become President; I'm beginning to believe it. ~Clarence Darrow - Why pay money to have your family tree traced; go into politics and your opponents will do it for you. ~Author Unknown - Politicians are people who, when they see light at the end of the tunnel, go out and buy some more tunnel. ~John Quinton - Politics is the gentle art of getting votes from the poor and campaign funds from the rich, by promising to protect each from the other. ~Oscar Ameringer - - I offer my opponents a bargain: if they will stop telling lies about us, I will stop telling the truth about them. ~Adlai Stevenson, campaign speech, 1952 - A politician is a fellow who will lay down your life for his country. ~ Tex Guinan - Any American who is prepared to run for president should automatically, by definition, be disqualified from ever doing so. ~Gore Vidal - I have come to the conclusion that politics is too serious a matter to be left to the politicians. ~Charles de Gaulle - Instead of giving a politician the keys to the city, it might be better to change the locks. ~Doug Larson - Don't vote; it only encourages them. ~Author Unknown - There ought to be one day -- just one -- when there is open season on senators. ~Will Rogers

There are only 3 kinds of people in this world - those who can do math and those who can't. (I fall into the latter category...)

Ain't that the truth!!! Beats me. Jpod, they have been filing 5500 forms every year on the 403(b) plan, so I'm guessing that wasn't necessarily the reason. But the reasons, whether valid or not, lie in the very distant past and will never be known. Players/decision makers either long gone or unknown. Anyway, thanks to all for the discussion. This one is just too strange.

Larry - thanks for taking the time to respond. I will point out just one thing: you will notice that I edited the post as soon as reasonably possible to tell people not to bother, so I don't think it should have been an enormous time waste for anyone. Most of your questions I cannot answer, either for privacy reasons, or that those details are simply unknown. I've traced the document language back through the EGTRRA document, and it has been the same - why, I don't know. I didn't draft it, and have no idea how far back this language goes, or why it was done this way. Following is an applicable paragraph - there is also ACP language in the document in other spots. This particular document appears to be pre-approved Volume Submitter language, although it may well be modified language. No evidence (yet) of any IRS individual determination letter application or approval. P.S. - just a quick edit - I do note that DOL Advisory Opinion 2012-02A addresses, in a completely different context, this precise arrangement. I know this has nothing to do with IRS qualification, but it does indicate that such plan provisions/combinations are not unknown. Doesn't mean they are correct... Also, this is a non-governmental 501(c)(3) employer, subject to ERISA. Nonelective Contribution. For each Plan Year, the Employer shall contribute 9% of the Compensation of each Participant who contributes at least 3% of his or her Compensation as an elective deferral to the “XXXXX Tax Sheltered Annuity Plan” for the Plan Year, and who is otherwise eligible to share in allocations in this Plan for the Plan Year. This Nonelective Contribution shall be considered a matching contribution for ACP testing purposes.

Larry - I think you are right, so I need to retract my statement. As I looked back in my notes from years ago, this was an opinion from an ERISA attorney on a document where the language was somewhat ambiguous, and attorney opined that '"retirement age" in this context only occurred once. Our document doesn't contain any such language that says "once only" - I guess the only way to avoid this problem is not to waive the allocation requirements for people who terminate on or after NRD?

I don't have time to look it up now, but I'm sure that some documents provide that you can only get a "retirement" date allocation once. In other words, you can't terminate employment with less than 1,000 hours/last day,( assuming those are the allocation requirements) receive a contribution for that year, then get rehired the next year, terminate again w/less than 1,000 hours/last day, and get another allocation based on "retiring" again. The provision only works once. But in other plans, it may work an unlimited number of times, although if it is a HC, perhaps that might cause issues. I've never had reason to worry about it, thankfully.

Money purchase plan provides a contribution of "X%" ONLY if you defer at least 3% in 403(b). I'm nearly certain I remember that in such a situation, the MP contribution is treated as a matching contribution subject to ACP testing. Agree/disagree? Thanks. Bah. Don't bother - No HC anyway! Thanks.

So, IN January of 2018, someone sends 2017 data and asks you to do DCAP testing. They pass the "5% owner" test, but fail the "55% DCAP test." Lets us just suppose that the HC average benefit amount was $1,000, and the NHC average was $300. I'm being told that as long as it is "corrected" by the time the W-2's are done, that instead of the entire HC amount being considered taxable income, you can just count the excess over what "would" have passed. So, for example with a $300 NHC average, if the HC average had been $545 (I'm rounding here) then it "would" have passed, and therefore the HC taxation on the DCAP will only be amounts in excess of $545. Is this approach "blessed" anywhere in IRS guidance? I don't find it anywhere, but I'm not a cafeteria plan expert. Do people just do it this way, even if not officially sanctioned by the IRS?

Thanks all.

Any reason DC plan that didn't allow partial distributions at termination date (12/31/2017) can't be amended to allow them now? Final distributions won't be available for quite some time, and they want participants to be able to receive some money currently. I think it is fine, but I seem to recall some post-termination amendment issues with DB plans particularly. Thanks.

Thanks all. This was helpful!

Has anyone else run into this situation/question? Seems like with everyone restating 403(b) plans it may come up more often. P.S. - as I look at it further, I have even less hope that it is allowable. 1.403(b)-6(c) doesn't seem to provide any wiggle room. The fact that everything specifies that the distributions cannot be less stringent also implies that it is ok if they are MORE stringent, although this flies in the face of "protected benefit" issues that we are accustomed to under 401(k) plans. I just saw an insurance company document (an ERISA 403(b) plan) that allowed in-service distributions at ANY time for employer contributions. So participants would certainly need to be adequately informed of this before they transfer their funds from the annuities to the custodial accounts. I wonder if this was intentional, or just an oversight on the part of the IRS. But I've wondered that before...

My worry was that the payment made during the first loan quarter would be less than in subsequent quarters. Let's use a more extreme example to illustrate my concern, and just assume a once-monthly payroll, on the last day of the month. Loan date is January 1. They propose to have first payment due on March 31. Payment amount is $500.00 per payment - and the payments (all made within the 4 year period, calculated from January 1, 2018) work out to, say, $500.00 per month. This amount takes into account the interest accrued from January 1 to March 31. So the first level payment is $500.00 - which represents the total payment being made during the first quarter of the loan. Second quarter has 3 monthly payments - total of $1,500.00. That was my worry.

Nope. Just a question from a client.

Wow, the strange stuff keeps popping up this week! So it has been proposed that a participant loan be granted, with payroll deduction repayments, but with a twist. Let's say loan is granted on, pick any day, January 15th. But the (equal) payroll deduction repayments are not scheduled to begin until March 15th. The repayment schedule would be 4 years - well under the 5 year limit. To me, this violates the "substantially level payments" made at least quarterly requirement of 72(p)(2)(C). During quarter 1 of the loan, the repayment is far less than during subsequent quarters. Since I'm questioning my sanity this week (cold medicine creating more fog than usual) I thought I'd see if it's just me, or if folks agree. Thanks.

Muchas Gracias!!

This is related to an earlier post, but a somewhat more targeted question. I'd love to hear opinions from the DB experts here. The question is this: Prior to Notice 2015-49 (the "de-risking Notice"), the RMD regulations under 1.401(a)(9)-6, Q&A 13 and Q&A-14, provided for certain allowable accelerations/modifications. For example, retirement after the annuity starting date, or plan termination. Within certain limits, a lump sum was allowable. The question is whether these exceptions are still allowable in a situation where someone is taking RMD's but has not yet retired, or for plan termination. It appears from section III of the Notice that the removal of these exceptions is only for situations where there is an AMENDMENT to the plan that previously, under 1.401(a)(9)-6, Q&A-14(a)(4), would have allowed an acceleration. But the exceptions in Q&A-13 still exist for "normal" non-amendment situations. Agree/disagree? Thanks!

Question - do you think IRS Notice 2015-49 precludes an acceleration that was otherwise allowed in the regulations? It appears that an "acceleration" or lump sum option at RETIREMENT, even if otherwise allowed by the plan terms (such plan being drafted before this Notice) isn't allowed if already receiving an RMD? This Notice appears to have been intended to prevent large scale "risk transferring" programs, but also appears to paint with a very broad brush. I don't see a lot of wiggle room in the Notice. (A person much more knowledgeable in this arena brought this up - I had forgotten all about this...) So in the case at hand, assuming no death, if the participant who is receiving the RMD just retires at a later date, he's stuck with the annuity payment - can't change to lump sum? Yuk.

Thanks Effen. Let's see...I think he's looking at the Jt & 100 to receive the smallest possible RMD, as he's still working. He can't (I don't think) take a lump sum, since he hasn't reached Normal Retirement Age yet. I doubt his current accrued benefit is even fully funded on a lump sum basis, as the plan was started only 3 years ago. (I'm probably using the wrong terminology on that...) He could change the election when he retires (basically accelerate the payment, within the allowable 415 limits) but the question here wasn't involving a later RETIREMENT election, but a death benefit question if both he and his spouse die prior to his retirement. I don't have access to the ACOPA board - as you can doubtless tell I'm not a "DB person" but I thank you for the suggestion and your information.