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I have notified all of my clients that I am retiring and closing my TPA business by the end of this year. However, I have one client, with a 401k Safe Harbor plan who is also retiring and closing his practice as of January or February next year. I do not want to have to restate his plan for only two months of operation in 2016 because of the cost to him and the time/effort by me. Is there a tack-on amendment I can use for my EGTRRA prototype plan that will pass if the plan assets do not get 100% distributed before the April 2016 restatement deadline. Or is this cutting it too close for comfort?

Thank you all very much for your responses. I received the corrected address through the USPS by requesting an address correction on the package when it was sent Certified/Return Receipt. Several years ago this participant was terminated by the company with cause and she left all of her personal belongings at the company and never returned to claim them. Over 5 years have passed now and she has never responded to any of the distribution packages mailed or hand delivered to her employer one year. She has since left the known other employer and her distribution paperwork/RMD Notice has been returned as unsigned after two attempts by the USPS. Though her account value is only $20,000, the company is concerned 1) of the potential consequences they may suffer if someone other than her signs the RMD check(s) or 2) if she refuses to cash the check and it is then credited back to her plan account after 6 months.

A terminated plan participant must receive an RMD from the 401k plan by April 1, 2016. Each year the plan has mailed the terminated plan participant distribution paperwork. Because we were aware that the terminated participant must receive a minimum required distribution, we mailed the RMD notice to the participant Certified/Return Receipt with Address Correction Requested. We received notice from the post office that the participant had moved to another state and our RMD notice package has been returned to us because the participant would not sign for the package after two delivery attempts. We are concerned about our liability if we just go ahead and issue the RMD payment from the plan to the participant and someone other than the participant cashes it. Are there any other precautions that we can take before we issue the check to her at her new address? We have researched her name online and all the online people search services still show her old address. Any recommendations?

Their document is an adoption of a Sungard/Corbel EGTRRA 401(k) Prototype Plan. I do not see an option in the AA to allow the employer to true-up the safe harbor match contribution. I also am not finding anything in the plan document regarding a "true-up" option. Maybe I am just not looking in the right plan document section. I either need the plan documentation or a regulation site to explain to the employer that they cannot "true-up" their safe harbor match contribution without violating the plan provisions or the regulations regarding all plan match contributions determined on a per payroll period basis.

I am a little confused. It is my understanding that the match can be determined per payroll period according to their plan specifications however it does not have to be deposited the same as deferral contributions, i.e. the employer can wait until the end of the quarter to deposit the match. If that is not allowable can you refer me to the regulation that specifies the date the match is due to the plan?

A 401(k) Safe Harbor Plan has a Basic Safe Harbor Match to be calculated each payroll period and the plan compensation to be considered is wages, tips and other compensation on Form W-2 including salary deferrals. The employer contributes the match to the plan on a quarterly basis. At year end the employer uses each participant's W-2 Box 5 annual compensation to compute the safe harbor match amount for the plan year then he contributes the final quarter safe harbor match based on the W-2 box 5 compensation for the year. Is there anything in this scenario that would be in conflict with the plan's match and/or compensation specifications?

The participant is only 52 but the partial distribution will be a direct rollover so I am assuming that there will be no 10% excise tax. I would like confirmation from someone more experienced than me that this in-service distribution as a direct rollover by a participant who is under 59 1/2 will not have the 10% early distribution penalty. Also I am checking with SunGard now to see if they have a more updated in-service distribution form that has a direct rollover option.

The plan sponsor does not want to allow all participants who have rollovers inside the plan to have access to them at any time which is the only rollover distribution option available with this plan. According to what I read in the document, the participant can take an in-service distribution if he/she is age 55 OR has 10 years of service. However, there is no where on the In-Service distribution form to specify that this is to be a direct rollover to an IRA. The Plan and hence the Distribution Election form only allows lump sum distributions. Do they need to amend the plan to allow for partial withdrawals since there is an In-Service distribution option? Also I would like to confirm that the participant who is under age 59 1/2 but has 10 years of service can take an in-service distribution as a direct rollover to an IRA (NOT a Roth) and avoid the 10% early distribution penalty. Sorry for all the confusion but I am confused and concerned because the amount to be distributed is a lot of money and I do not want to make a mistake on this. Thanks.

A client with a Sungard Prototype Profit Sharing Plan wishes to allow a participant (age 52) to receive a partial distribution from the plan. The participant has a rollover account in the plan that was an unrelated rollover into the plan several years ago. According to what I read in the plan document and in the ERISA book a participant can receive distribution of his/her rollover account in a PS plan at any time regardless of age or service. I have not read anything to the contrary in the plan document. This partial distribution would be a direct rollover into an IRA so that he can invest in a partnership holding real property. The plan does not allow this type of investment and the employer wants to keep it that way. The participant is under the plan's early retirement age of 55 but has over 10 years of service and is one of the company owners and is an HCE. The company also has a 401k plan but the participant does not have a rollover in that plan. Is this rollover direct to an IRA possible? If so, does the plan that currently only allows lump sum distributions need to be amended to allow partial withdrawals? Are there any other issues to consider?

My client has a 401(k) Corbel Prototype Plan that allows for hardships only under the safe harbor hardship rules. A Plan participant has mold damage from her residence. She is the renter (not owner) of her principal residence. Her residence was flooded last spring and now has a considerable amount of mold, etc. plus her personal possessions were damaged by the flood. She has no renters insurance and neither does the lessor (owner of the residence). The owner of her residence refuses to make any repairs. She sent the Plan trustee pictures of her damage in her residence requesting all of her plan balance to make repairs. My problem with this request is the hardship reason as quoted in the plan document is for "Expenses for the repair of damage to your principal residence that would qualify for the casualty deduction under the Internal Revenue Code." When I read the IRC Section 165 it specifically states that only an owner of the damaged property can claim a casualty deduction. The Plan participant states that the distribution request is to replace the molding drywall, clean the carpets and replace her furniture. She works in a law firm and has given her employer a copy of an IRS 401(k) document that states that the definition of "principal residence" includes a residence that is rented but does not designate that it only applies for the eviction clause. Is she eligible for a hardship distribution to make repairs to the home she rents and to replace her furnishings, or only to replace her furnishings? I am only the TPA, not a plan trustee but they have asked me for a better explanation of whether she is eligible for a distribution to pay for these items and for this hardship "casualty" reason. Does "damage to your principal residence" include replacing her furnishings and making repairs to her rented house?

5% Owner turned 70 by June2008, retired in July 2008. Wants to rollover all assets before the end of this plan year. The Prototype Document only states RMD must be done by RBD which is April 1 2009. Plan is a calendar year plan. Can owner roll 100% of his money out of the plan before he actually turns age 70 1/2 in December of this plan year without the plan doing his RMD? Annuity company that holds his plan assets says that he does not have to take RMD since he is removing his assets prior to age 70 1/2. As the TPA, I don't want to be on the hook for possible plan disqualification in not forcing the RMD.

This is the rest of the story: The owner of this company passed away suddenly 5 years ago and his wife has kept his corporation open since then. Though no more contributions were being made to the plan, she did not want to terminate the retirement plan. She now wishes to close down the corporation and terminate the plan. That is how this property issue came to light. The attorney who did the property transfer stated that he just put the amount of $10 on the deed transfer document, no money was paid for the transfer of property. Also only the tax valuation was inserted each year on the 5500 because that is all she provided to our firm. I assume that she signed and has filed each 5500 report that we sent to her without any corrections. This is my worst nightmare coming true! Is there a website that lists ERISA attorneys and their practice locations? Or does anyone have any referral ideas?

I am a TPA that has a client with a one participant/owner only plan that I have filed 5500EZ forms on for all years since the plan assets were over $100,000. The plan has had undeveloped property as an asset for which the tax valuation has been recorded in the plan each year. No contributions have been made to the plan in over five years so I called the client to discuss the process of terminating the plan and rolling the assets to an IRA. In discussing this process with her, I mentioned that she must make a decision on the property, whether to establish a separate IRA for it or to sell it to a disinterested third party and put the proceeds back into the plan, then roll all to an IRA. The client then notified me that she had transferred the property to herself from the plan back in 2003 through a deed transfer for a grand sum of $10. The tax valuation is 27,000. What is the best way to handle this? Do I go back and amend the prior years 5500s back to 2003. What penalties/interest will there be on the non filing of the 1099-R and the taxes due for the distribution to her? I asked her real estate attorney to refer her to an ERISA attorney because I really did not want to have to deal with this problem. The ERISA attorney said he could not help her. Thank you for any assistance you can provide.

Thank you all very much for your responses! I appreciated your comments and the idea on an equal deferral and match. They have all been very helpful. I have asked the empoyer if they wish to amend the plan and the recently issued Safe Harbor Notice to discontinue the next year's safe harbor contribution to the HCEs. If so, all will be done before the beginning of their next plan year.

A Clinic 401k plan uses the Safe Harbor Basic Match. However, pursuant to severe cash flow problems wishes to only provide the safe harbor match to NHCEs but still allow HCEs to defer only not receive the SH Match for the next year until their cash flow problems subside. This year HCEs had to stop deferring because employer could not afford their match payment and still provide the match to the staff (3 Doctors with 11 staff - all deferring). Doctors still want to defer but are willing to forgo the SH match for next plan year. My understanding is that the Safe Harbor Basic Match (and/or the SH Non-Elective) cannot be restricted to just NHCEs. Is there a way around this so that they can keep the plan a safe harbor? Also, this would be a top heavy plan without the SH Match so they would be required to provide the minimum 3% to NHCEs if the plan were not a Safe Harbor, but Drs still couldn't defer as much as they could under a Safe Harbor. Any suggestions?