TPAJake

Larry used your exact situation above...If he says it is allowable, I don't think the sponsor needs to get very detailed with their inquiries.

You're either using incorrect terminology or talking about bundled arrangements--neither of those will get you much of a response around here

I agree with you, but interpretation is not always reality. I also agree that 100% of the blame goes to the fiduciary, but 100% of the consequences usually end up on the Participant in my experience. As you said earlier, the DOL won't be too sympathetic but it's worth a shot.

As mentioned earlier, checks were probably sent with no identifying information or the wrong information. If the 1099 was issued for 2014, the loan may never have had any payments credited. I agree it's a fiduciary issue, but you won't have much traction with that. The good news is that you have until 2019 to get it repaid now that it has been re-amortized for you. It sounds like you have some refund checks coming your way, that should help you get caught up...

I have been told that any repayments made after the deemed distribution are acceptable without a time limit & that those repayments go to the Participant's tax basis since they (presumably) already received a 1099-R for it. It's a sticky subject & I wish there was some better guidance out there.

I'm currently repairing a suite of 27 loans on the AXA platform (it's terrible) & just finished explaining the horrors of a "too late to fix it" loan situation to a group that converted out of Paychex. These 2 providers are right up there with Ascensus as the worst of the worst & their model clients are companies that have incompetent or negligent payroll departments. Consider yourself lucky that you handled your taxation issues back when you did!

We were diving into this a few weeks ago in my office--We had a brewery client that was purchased by one of the mega-food corps & the old plan was terminated mid-2016. We didn't get all the cash out until early 2017, so all of those Employees had to receive 2 year's worth of SAR for Plans that hadn't existed for over a year. The Plan Sponsor was non-plussed, but better safe than sorry.

Can you amend the plan? Higher invoice for you, more flexibility for forfeiture use in the future. I'm guessing you did not restate this Plan onto your own Document when you took it over?

We just dealt with this exact scenario & distributed with earnings, forfeiting match. It wasn't bundled, so the recordkeeper complied with the Trustee's instructions, but it took some doing to find the right forms & explain the situation to the right person. The recordkeeper had the same knee-jerk reaction as most though--Said it was too late, pointing to the 90-day rule.

The portability of stable value funds has become an issue recently on some of my plans during conversions between recordkeepers. In my fantasy world, that inhibits my ability to select a new service provider for the Plan & places undue burdens on me as a hypothetical Fiduciary if I have to maintain that old stable value fund at the old recordkeeper after the rest of the assets have moved. I realize this isn't really the question we're addressing here, but it does add depth to the Chevron conversation--Can you imagine how many people would have had money locked up in a stable value on a plan that size?

That's the way it should happen, but unfortunately the reality is that it does not. It falls on the receiving spouse/participant to defend themselves to the IRS for faulty reporting most of the time. I have several such cases going on right now where the 1099-R was issued without a code G simply because it was a death benefit. I was shocked to find out this is actually Merrill Lynch's stated policy! The major pitfalls are: Errors on the death benefit claim form (depending on provider) cause lots of delays & correspondence. Surviving spouse is already distraught & fails to complete the process. This can be due to incorrect SS#'s, or correct SS#'s on the wrong lines, checking the wrong payment type, incorrect check styling instructions, bad addresses for the FBO check, death certificate discrepancies, etc. etc. Surviving spouse gets help from TPA/CPA/CFP & the forms are perfect, but the issuing bank gets the coding wrong. IRS correspondence ensues & the first time the distraught spouse misses a deadline or signs the wrong line, IRS calls it taxable. Just my experience over the last few years... And to answer your last question, most of the IRS inquiries I've been dragged into have asked for form 5498's from the receiving account, so even though there is no 1099-R reported for the receiving account, they still want their documentation & you would not believe some of the answers I've seen to a request for 5498 copy.

Absolutely agree & if an auditor actually asked about it I would probably laugh at them

It gets messy when you start filling out the forms, but it can be done. The real mess happens after the fact during the 1099-R reporting at year end

It still fails the needs test for me. The AP has other funds available to satisfy the need, namely a partial withdrawal from said Plan... I'd deny it as a hardship, but certainly approve it as a QDRO withdrawal.

Totally agree with RatherBeGolfing, the AP has funds available for unrestricted distribution & therefore cannot qualify for a hardship.

To be very clear, you do not really have 2 plans, you have 2 plan documents & that is not the same thing, so be sure they match down to the punctuation. You are playing around in some very deep waters with nobody on the lifeguard stand. There's a reason an entire compliance industry has been built around 401k. If I were in your shoes, I would get serious about this thing & hire a local TPA to write you a real plan document that meets all of your needs & has no investment restrictions (we've seen everything from land to jewels to coins to fine art). You can take that one document to schwab, fidelity, vanguard, or billy bob's house of bad investments & buy any investment product you like with it, then file a single 5500-SF for everything. Your TPA will coordinate all of those moving parts & prep most of the forms for you. And if I was really smart, I'd hire a local Certified Financial Planner to coordinate it all for me.

Smith & Kaufman, free is never free--Get a real Plan Document & invest the money wherever you want. Filing multiple 5500's & "accidentally" exceeding contribution limits in multiple plans is EXACTLY how you'll end up paying one of us thousands of dollars to fix it for you. Kudos to you both for being savvy savers, but we've seen this movie & we know how it ends.

I would echo most of the warnings above regarding solo plans & advise you to go with a real 401k plan from day one, using a real professional TPA. It will save you money in the long run I promise--I too have made plenty of money cleaning up solo plans that went sideways. Since you're a small biz owner, I would encourage you to support another local/small biz...Not use some cheapo prototype from vanguard or fidelity.

Absolutely agree with that ESOP. I should have quoted, but I was directing it more at Serenity who suggested a slightly premature solution that involved some rash decisions--Go to zero, quit, then tattle is a long way away in my mind

MAYBE--It is just as likely (if not more so) that Bill's money is sitting in Bob's account on accident. I've seen that 1000 times over the years, but blatant theft of EE deferrals I've seen only once. It's possible, but it's not the most likely scenario.

We have a documents team, a team of census collector/testing specialists, a loan & distribution team, and an account management team that reviews all of their admin work. Sales, automation, IT & implementation are all separate teams. A second company handles 3(16) fiduciary duties. The partner team oversees the whole orchestra & keeps us all on track.

In all seriousness, we have used a company called Aspire in the past for plans of this size because of the flexibility that's built into their system, but their fees may have changed drastically since I was in the micro plan business. It's not quite as clean & sorted as the other platforms out there, but it's sufficient for a TPA's purposes & their customer service is pretty good.

DST will sell you the same backbone that RKD, AXA, Mass/Hartford & others have purchased to run their platforms--Can you imagine "Austin Powers 401(k) Systems"? You would have some serious name recognition & the ad slogans just write themselves!

Another overzealous Auditor, not too surprising but there's no failure. No way it's worth the expense of a VCP filing.

Oh wow, that's a really good point! I think we touched on a similar situation a while back in a different thread relating to a hardship for eviction in a domestic partnership situation, where the wrong party was on the lease. I won't be approving any residential loans for John using Bill's GFE though, I promise.