TPAJake

I agree with shERPA--The tail (payroll co) does not have the power to wag the dog (plan). Getting to the right person & getting it actually fixed is another issue entirely. Personally, for $500 I would forget about 2016 & make sure the payroll company system is updated for the proper plan provisions for 2017 so it does not happen again. But of course the biz owner probably disagrees.

The Document may allow it, but some providers do not allow direct bill, only payroll deduct. I don't like direct bill anyway, the loan is a plan asset & I don't trust Participants that much.

Of course it needs to be corrected, but good luck getting the HCE's to agree with that!

Thanks for all the info, you all gave me plenty of ammo! I told him no based on BRF & the employee/contractor issue is his to figure out. The plan is huge, audited, blue collar with way too many loans--No way I'm allowing term'd participants to keep paying. The recordkeeper doesn't allow direct bill on loans anyway.

Its a takeover & nobody has been able to find a copy of the loan policy/program. Other loans would become due & payable upon termination, but in this case the company is still in control of his pay going forward. I agree with the CFO that this is a distinction, but it still smells funny to me

CFO has been W2 for years & has a loan outstanding, now he's switching to 1099. Company wants to withhold & keep making his repayments, but 1099 Employees aren't eligible for the Plan. What would your answer be?

I would send it to everyone, but that may not be required

Exactly--If the doc requires a safe harbor match calculated & deposited per payroll very specifically, then maybe you have an issue. That's a big IF, because if I write a doc that matches calculated on a per payroll basis, I'm not adding language to specify when that deposit is to be made. That's Employer money, not a reportable late deposit & is only subject to statutory time limits.

We require HR certification & annual signatures on our triple-stack match plans, but that's just because we want definitive proof that we gave everyone notice & opportunity in case the DOL or IRS comes calling. In your situation is definitely sounds counter-productive.

We don't currently have any such language, but it's a fantastic idea & I hope someone posts something good!

Yes. For my stacked match plans I calculate the exact percentage for the fixed match and simply amend year by year as needed. Amending each year is just one of the many challenges/costs associated with maxing-out owners under a match arrangement. You avoid the costs of a profit sharing approach, but you certainly pay for it with complexity. Risky too. You should see what happens when the new guy down in shipping & receiving actually reads the safe harbor notice, raises his deferrals & convinces the other NHCE's in the break room to follow suit on Dec 15--That gets expensive real quick.

THIS: "12 months after the final distribution is made"

Seriously, I would never use that 100% withholding method--If I can't send a check to nowhere then I can't send a 1099-R there either. Our plan language describes the automatic rollover as a contingency when Participants are lost or unresponsive & the current IRA vendor includes "we will find them" language in the Trustee agreement. Any vendor recommendations other than Millennium Trust?

Situation is you send out the notices & get nothing back in 30 days. You review the terminated Participant account & it's under $1000. You can't send a check to nowhere & most providers won't build IRA's under $1k. Does anybody have a go-to provider that CAN build an IRA under $1000 & get these people out of the Plan with a Trustee to Trustee rollover? Full disclosure--We have one such provider now, but I'd like options...

My wife is a payroll director on a multi-state payroll & this is a continual source of questions, especially when there are garnishments involved.

I can't believe I actually agree after that exercise...MIND BLOWN

Unless the document says otherwise, sounds like immediate entry. Maybe admin delay of one payroll period for paperwork, but I'm not sure you could keep them out until the next entry date because you're honoring his original date of hire & original entry date when you credit past service for eligibility. I'll definitely be watching for follow-ups on this one!

I'm not sure I could defend that particular calculation either... I'm not saying ETA is wrong, but I would be afraid of that coming back to haunt me later.

Ascensus got something right?!

That accountant is talking out of the wrong end if you know what I mean

That would be a problem if you were only contributing the discretionary portion, but in this case they were matching 100% of the first 3%, so the escalating rate of match issue wouldn't really apply...Right? As long as the document allows it, the safe harbor notice says it & there's a deferral election on file for everyone proving they knew about it, I think it's solid. But hey, I've been wrong before.

We can discuss legality all day, but the reality is that auto enrollment is complicated enough for Sponsors. No way I'd have 2 sets of criteria--I say pick one & let them make their elections.

I agree with John, that's pathetic. I saw an auto provision from a major (top 5) bundled provider's prototype the other day & it was a 6% initial enrollment, auto-escalating to 16%. The big boys are not following the logic that 6% is "too much", they're not stopping at the arbitrary 10% & my faith in humanity is still somewhat intact.

I can't see how you would reasonably justify stopping the distribution once decisions were made & signed paperwork was sent. You can't "un-ring the bell" as they say.

I saw this happen on a large scale with a group of merger participants rolling from one provider to another--$50k worth of loans. The old provider said they would default them if they weren't paid back before the rollover & the Employees obviously couldn't pay. The new owners paid the old provider the $50k to "pay off" the loans & complete the rollovers. The Participants borrowed their own money & the loans are still being repaid, so in my opinion that $50k was either a donation to the old provider's bottom line or an unlawful Employer contribution to the Participant's account. Luckily, neither was my plan or client. It was a major provider holding the loans hostage too, so I imagine they're doing this 100 times a year... In this OP's case, if that money wasn't a payroll deduction from the owner/employee's check, it smells like an Employer contribution. What kind of contribution is the question