erisa parrot

This change would be to make positions at our company more attractive overall. We don't have a certain employee in mind, and the amendment wouldn't benefit an HCE or anyone we anticipate becoming an HCE in the future. Thank you for the response!

Our company has a safe harbor matching plan. I know that there are few amendments that can be made during a plan year. Is it possible to amend the plan to allow a more generous eligibility/entry? Currently, our provisions are the maximum statute - 21/1 YOS, semiannual entry. I would like to move to 6 months of service, quarterly entry. I figure it can't be done but I thought I would check.

Thank you for the response. I'm not asking about the document per se. I can think of a few ways to write it as far as excluding groups. I'm asking in regards to ERISA. The employee must choose between receiving a match within the plan vs. receiving a loan repayment to his/her student loans outside of the plan. An election must be made within the plan based on factors outside the plan.

I came across a scenario where a company is willing to either provide an employee a matching contribution in the 401k plan, or student loan payoff assistance outside the 401k plan. On the surface, I'm struggling to understand how this wouldn't violate the assignment regulations of 401-13. Any thoughts on how this could be acceptable/written in a plan document? I've asked for a document to see how it's written but haven't received it yet.

The plan I'm referring to has a safe harbor match. The participant can either defer part of their salary and have part of their compensation reduced by the accompanying safe harbor matching contribution, or they can choose to defer nothing. It seems strange to me that this would be allowed. I assume any company could start putting this in employment agreements as a way to bypass a required obligation. For example, I offer a safe harbor match to my employees. If I added this to my employee contracts, I'm certain no one would defer, based on the current participation rates. As the owner, I would be creating a plan where I can indirectly bypass the safe harbor requirements, fund a full match and 401(k) for myself, and my employees would receive nothing.

If a participant works as a physician in a medical office and he/she is not a partner, can the firm require that the ER safe harbor match and profit sharing reduces the W-2 compensation of the participant? Would the answer change if it is a safe harbor non-elective? The firm is not related to any government entity. To be clear, this provision is written in the employment contract, not in the plan document. This seems like a blatant attempt to either: 1. circumvent 402(g) limits, or 2. find a way to make employees pay for ER contributions. Participants would be less likely to make deferrals if they knew the related match would come directly from their paycheck.

I ran across an interesting thread on a financial advice website. The OP is terminating employment on 6/22/2016. However, the administrator will not allow him to take a distribution after this date because he was still receiving severance payments, and therefore is technically active. A couple of proclaimed administrators from "big banks" posted that this was accurate and was standard procedure. If the plan document indicates the termination date is when you stop providing services, and it also provides for immediate distribution, I don't see how treating a participant "active" in this situation is correct. What further surprised me is multiple industry people confirmed it. I am curious of the opinion of the people on this board, in case a similar situation comes up with a client.

Got it. Do you agree if they got married on 11/15, and the effective date were 11/16, they could operate the plan based on individual 401(k) plan provisions, since at that point, no non-spouse had the ability to participate?

I am referring to a one participant 401(k) plan that allows an individual and his spouse to participate. There are some minor differences, including requirements for Form 5500 reporting. Here's a link if you really don't understand the reference. http://www.irs.gov/Retirement-Plans/One-Participant-401%28k%29-Plans

Suppose an owner of a company sets up a individual 401(k) plan in December 2015 after getting married in November 2015. The soon-to-be wife has worked with the company for a few years. Can he still make the effective date of the plan 1/1/2015 and meet the eligibility requirements of an individual 401(k)? Obviously his significant other would not have been his spouse on 1/1/2015.

Yes, I let him know this as well, especially since the sponsor has clean paperwork supporting the purchase. My summary point was yes, there are tiny odds he would ever get caught but what he is doing is likely not allowed, and could cause him a financial issue down the road. If the money isn't needed for an emergency situation, why risk it?

He decided to pay off some debt. To be clear, this is a friend, not a participant of a plan I administer. He said he asked payroll what he should do and they let him decide, which I thought was really strange. If he paid off "some" debt, he should have a substantial amount left from the loan. What if he takes the remaining amount of the loan after paying "some" debt, pay down the loan by that amount, and reamortize the remaining balance for 5 years (or less). Then he is actually financing his "some" debt. He has the ability to pay the loan back even though he spent some. This situation came up when he was asking me if I thought he should invest the remaining loan balance that he didn't use to pay off debt. I've never encountered this situation but I told him it didn't sound right. The problem is he doesn't think it's an issue because his company wasn't worried about it. I'm trying to get him to see that he has created a situation that could cost him down the road, but he keeps going back to the fact that the sponsor wasn't concerned. He thinks I'm making a big deal over a non-issue.

Is it the board's opinion that IF the participant is found out by the IRS about this situation, he could be liable for taxes on the principal amount remaining after 5 years, even though he has paperwork from the plan sponsor indicating a 30 year am schedule?

While I agree with you in theory, he went back to HR to tell them the loan was not used for a primary residence purchase. Does this change your reaction? I'm also looking at it from his perspective. Suppose the IRS found this during an audit. Couldn't they determine that it wasn't for a house and declare any principal paid after 5 years should be taxable? I don't think they would actually find it if the original paperwork were completed, but it's a possibility, correct?

He decided to pay off some debt. To be clear, this is a friend, not a participant of a plan I administer. He said he asked payroll what he should do and they let him decide, which I thought was really strange.