Mike Preston

np

While your description of the IRS citation is correct, the numerical representation includes comparisons that needn't be made. If I get time later today I'll post an example. In the meantime just leave it with: ignore 417(e) lump sum (whether it is higher or lower) when testing the fact that QJSA must be most valuable.

Most docs have it as an option in a pre-approved plan. Yes, it must be authorized in the plan, even if it is done so indirectly with a provision that says something like: "ADP test may be run on any basis allowed by regulations."

Egads, if partial distributions were precluded then 436 itself would be a violation of the Code. If the doc allows, it can be done. 401a9 precludes partial distributions, but that is only mandatory for 5% owners at 70 and 1/2.

Hie thee to a tax attorney familiar with retirement plan rules!!!!

interestedparty, thanks for the giggles. I guess you didn't get the part about things that can go wrong, huh? But you'll have to pay for the book, when and if it comes out, to educate yourself. I can feel your frustration and am sorry things aren't going the way you think they should. But I'm intrigued by your assertion that a check for a measly 10 grand or even 20 grand written on a financial institution's check stock (so the ABA routing number and account number aren't related to you in the slightest) somehow constitutes an invitation to identity theft. You say you work for a tech company, so feel free to cite chapter and verse, as any self-respecting techie might, as to how one can invite identity theft in this scenario. BTW, I totally agree with you that, in a perfect world, the check would go directly from the financial institution to you. It isn't a perfect world. For that to happen, the financial institution would have to take procedural control over the disbursement. Most won't do that. Most won't confirm that the amount requested satisfies the plan's provisions [multiple loans, blackout rules, correct source, etc.], or the IRS limits. They won't confirm that the participant's spouse hasn't filed a Domestic Relations Order with the plan that could get the employee requesting the loan in trouble with the court. There are other things, but I'm sure you will just pooh-pooh them all as not being relevant to your situation and, in fact, you may be right. But unless the financial institution is willing to take responsibility for confirming those things (and others), it is quite logical that the non-financial administrative firm would provide those services. I do understand your position that it would be better for the procedural requirements to be certified by the non-financial administrative firm (to the financial institution) and the financial institution then mailing the check directly to the participant. As I said, it many cases it isn't a perfect world. There are good reasons for things happening the way they are, but your stream-of-consciousness diatribe doesn't really make me want to go into a lot of detail. And I do hope you understand how far off the mark your retort regarding the information on 401(k) loans having no impact on governmental filings was. I was saying that non-financial administrative firms routinely collect information that would make identity theft quite easy. I was saying that in the context of NOT NEEDING ANYTHING WITH RESPECT TO THE LOAN. That is, they already have that information on hand. So, any information they would get from receiving the check has nothing to do with one of their employees having the ability to engage in identity theft. As hr for me asked: why are you here? If it is to engage in a civilized discussion I'm afraid you have missed the mark by a wide margin.

All I can tell you is that it is SOP. Typically, the non-financial administrative firm is responsible for keeping track of all things administrative and procedural. We (yes, my firm is a non-financial administrative firm) have learned through bitter experience to insert ourselves at every step to ensure that things are done properly. What can go wrong? Gosh, I could write a book (and I may just do that someday). As far as identity theft goes, the non-financial administrative firm already knows just about everything about you. It needs to in order to accurately prepare governmental filings. You should, if you had a peek at all the things that could and do go wrong, be thankful that the non-financial administrative firm is being pro-active and inserting themselves at a point in time where a correction, if it needs to be made, can be done before a problem develops. I admit my opinion is biased, so I welcome others offering you a different viewpoint.

Well, if you get the chance to look at it, I'd greatly appreciate some feedback (from you or anybody): useful? overkill? somewhere in between? Thanks

I'm not worried about the permanency issue after 5 years. It is hard for me to imagine that a competent representative wouldn't be able to successfully argue that enough circumstances have changed in the five year period so as to render that issue moot. Especially if the 12/31/2013 termination was submitted to the IRS. I'm more concerned with an end run to the in-service distribution restrictions.

No.

I think the plan is not qualified if expenses related to rollover assets (whether life insurance or real estate or anything else you can think of) are paid and attributable to non-rollover monies.

Let's try again.ideal salary from Tom Poje updated by Mike Preston v1.00.xls

OK, a week is up. Attached is the spreadsheet that Tom posted, with a gazillion changes made by me. I think it is kind of spiffy. Note: it doesn't do everything and since I have only been stress testing it for a couple of days, it wouldn't surprise me if there are bugs. So, if you use it and find any bugs, please report them to me. Thanks

No.

Ah, the omnipresent "others". Gotta love 'em.

How does that impact the question posed if true? Or, if not true?

The agency needs to make the employee whole (where have I heard that before?). It seems like the employee can be made whole by treating 2014 and 2015 as follows. FICA has already been paid and reported for both years on the erroneously withheld monies. That makes things a bit messy. The payroll manager is correct in that a pure correction for 2014 pays the employee for the withheld amounts and changes the W-2 to reflect taxable income that wasn't previously reflected, followed by the employee revising his/her 2014 tax return if it has already been filed. In this case the employer should pay whatever accounting fees the employee is stuck with. In addition, the employer should increase the refund to reflect interest lost in the interim. A spreadsheet will make this task relatively easy, but your payroll manager sounds like any effort is too much effort. You do the same thing for 2015 as far as the employee is concerned, but the correction is made before the end of the year so the W-2 for 2015 will be correct when issued. Fixing a screw up is never painless.

mbozek, what part of "ineligible employee" in the title is consistent with your musings? I agree that, as with many posts to this forum of late, the question is not fully baked.

Cap it. The reg you cite says that you don't need to cap it based on pro-rata 265000. $265000 / 12 *.03 = $662.50 would be the pro-rata limit *if* it applied, but it doesn't. So $1,250 is ok as a match in the first six months with the balance of the annual limit of $450 as a match in the seventh month.

Listen to Carol. The employer withheld monies from employee that shouldn't have been withheld. The employer needs to make the employee whole. Did the employer violate minimum wage laws? Did the employer fail to pay a union worker what they were entitled to? Are there contractual obligations or remedies that would apply? Whatever is required, they must do. Payroll manager should listen to attorney and do what Carol said (make employee whole, including contractual penalties, if any). If temporary employees are not eligible for the plan, then the plan is not involved. It never received monies attributable to employee and, even if it had, since employee not entitled to have money in the plan, the plan's obligation would be to repay the plan sponsor (or to use the funds to settle up with the plan sponsor vis-a-vis other funds that are due). I have no words to describe the payroll manager. Essentially, because of the payroll manager's incompetence an employee had a portion of their paycheck stolen by the agency and now the agency's representative is refusing to allow the agency to recognize its error and make things right! This is the sort of governmental misconduct that makes for a great story in a national magazine. Maybe the payroll manager isn't cooperating because this is a systemic issue affecting a lot of employees. Maybe no cooperation because the funds have been embezzled by the payroll manager? Obviously, not terribly likely, but why else would the payroll manager not budge?

Nope.

It is all annuitants. You need to read your bolded section again. 13 and 14 work together. 13 says "here are the reasons you can accelerate". Clearly, plan termination is one of them. Another is a "benefit increase" as defined in 14. The "benefit increase" in 14 is being amended out and the reference in 13 will be changed so that it no longer references a benefit increase as defined in 14. There is nothing in anything that says the other reasons allowed for acceleration in 13 are being removed. But to walk back from this just a little bit, the ability to accelerate a true increase remains. So, if somebody is receiving $1,000/month and the plan terminates then they can be offered an accelerated form. Further, if somebody is receiving $1,000/month and a benefit increase increases this amount to $1,100 then they can be offered an accelerated form only on the increased amount of $100/month unless the plan is being terminated.

I believe the IRS position is that if a sole proprietor ever exists it continues to exist until the individual dies.

Read this whole thread. Aren't you confusing A-13 with A-14?

Reed, you may have a plan that keys the options available under A-13 to whether or not an affirmative election has previously been made. But I doubt it.