JPIngold

To hr for me --- No QDRO has been discussed. To rcline46 ---- there is a letter from the attorney that describes the situation and states that the $30,000 is necessary or they will have to sell the house and split the proceeds. The bank has refused to loan him the money. Pretty sad deal for the guy.

I was somewhat linking it to that argument as well. The bottom line is that if the guy doesn't come up with $30,000 somewhere (and the bank isn't willing to loan it to him), he's going to lose his house.

A participant says he needs $30,000 in order to "settle" his divorce. If he doesn't come up with the $30,000, he will lose his house. Could this be considered an eligible hardship to "purchase" a home --- in essence, he is purchasing his wife's interest in the home for $30,000.

Couldn't agree more. Thanks for your input.

That is a great point, too. I feel bad for the person, but I just don't see how I can suggest they approve it.

A participant is asking for a hardship of $20,000 although the recent tuition and related costs are being paid by Sallie Mae draws. The document says hardships are allowed for costs for the upcoming 12 months. She is needing help keeping up with the existing payments (and apparently other things would be my guess). If she can document that she will be needing $20,000 of tuition and costs in the next 12 months (even though they will be covered by new loans) can the employer authorize the distribution? My thought is no, but if she has $20,000 in costs in the next 12 months, does what she actually does with the money matter to the employer sponsor? I hate hardship distributions!!! Thanks.

I agree that I don't think it meets the qualifications, but I was thinking I heard a speaker at ASPPA or somewhere say they thought it was reasonable. Maybe I was daydreaming.

I think I have heard the answer to this before, but is it acceptable for a participant to request a hardship AFTER the closing on a residence when he finds he put himself in a financial bind by using available money for a down payment? Closed in December, 2015.

Their assertion is that this is a "restatement" and not an "amendment", so a retroactive restatement is allowable.

Believe it or not ... it is the ABA (American Bar Association). Go figure.

BG5150 - Thanks, that was what I was using as my support. I certainly don't see anything telling us we have any deadline other than 4/30/2016.

I have a client who is being told they have to execute the PPA restatement of their safe harbor 401(k) amendment by the end of this calendar year with a 1/1/2015 effective date because the original effective date of the plan was 1/1/2009 and that plans must be restated every six years. I am telling the client that the IRS is none too keen on retroactive safe harbor plan amendments and their deadline to adopt the PPA restatement is 4/30/2016, so they should just make their amendment effective 1/1/2016. [We are actually recommending they make some changes to the plan's design anyway, so 1/1/2016 makes sense.] I am trying to convince them that the six year clock is only in reference to the restatement deadlines and not the date of your last restatement (or in this case, the original adoption of the plan.] The provider is insistent that they have to adopt BOTH the 1/1/2015 plan and then they will do the 1/1/2016 amendment. The safe harbor notice timing issues aside ... has anyone heard a stance like this on the "six year clock"???

I agree ---- one year isn't worth jeopardizing a $10 million trust.

Yes, the language in the document says: "If a Participant shifts from one classification to another during a Plan Year, then the Participant's Group will be determined on the last day of the Plan Year, or if earlier, the date of termination of employment." My concern is the same as yours .. plus the fact the agent could say that until now, that other classification wasn't there, so there was nothing to "shift" to until November's amendment.

While it is well documented that you can't amend the profit-sharing allocation methodology retroactive to the beginning of the year if a person has accrued a benefit (e.g. no last day requirement), does anyone have a problem with changing the allocation group definitions in a cross-tested plan if the language in the plan states that the determination of the appropriate group takes place on the last day of the plan year. Example: Since it is a partnership, we aren't using the "everyone in his or her own rate group" method. There is no last day requirement to receive an allocation. We want to add a couple more allocation groups to allow more flexibility. Group determination is as of the last day of the plan year. Can we make this amendment effective January 1, 2015 or do we need to make it effective January 1, 2016? To me, the language that says your group determination is as of the last day is critical, but my concern would be that adding a group would cast some doubt as to whether a person has already accrued a benefit based on the groups that were in place prior to the amendment. Thanks.

Thanks Lou. Therefore, since the plan provides for immediate entry for all eligible employees, then we have 365 potential entry dates. However, since the document says that the "year of service" is credited at the end of the computation period, we don't have to worry about watching for the exact day they hit 1,000 hours. They would enter either on the day after their first anniversary date if they work 1,000 hours in that 12-month period or they would enter on January 1st of the first calendar year in which they work 1,000 hours if they don't do so in their first 12-month period. Sound right?

The client really likes immediate entry for recruiting purposes, but doesn't like it for the interns and other part-timers (even though I tell them these are exactly the employees that help our (a)(4) testing). Has anyone used the exclusion that is part of the Relius documents that allow the plan to exclude those employees who are not regularly scheduled to work 1,000 hours in a year? I can think of a couple of pitfalls on this, like: 1) What if they end up working 1,000 hours and you didn't allow them to defer. 2) If you do like them and they don't work 1,000 hours in that first year, but you hire them later ... would they need to wait until the year after they work 1,000 hours or do we say they are now "regularly scheduled" to work 1,000 hours and let them enter immediately??? That doesn't seem to be the way it reads. It sounds like we would need to wait until they work the 1,000 hours and then let them in the next entry date. Just wondering if anyone has other pros and cons to using that language.