RatherBeGolfing

You are correct, I forgot about the substantial presence test which could include an someone who is not here legally as resident alien for tax purposes. I would still avoid the term for plan purposes and use reasonable classification.

John Hancock keeps 2 years of statements on the website. it is possible to get older statements from them but it is like pulling teeth because the rep has to put in a lot of work to get it. Keep pushing when they say they can't get and eventually they will get it for you.

Bird you are correct that the selection is in the loan policy. However, the basic plan document also provides : Section 8.06 (f) Security. All loans shall be secured by no more than one-half of the vested portion of the Participant's Accounts (determined immediately after the origination of the loan) and such additional security as the Plan Administrator may deem necessary. All loans made to Participants under this Section are to be considered Trust Fund investments and shall be segregated as provided in Article 9 hereof unless the Plan Administrator provides otherwise. Section 9.02 (c) Loans. If the Adoption Agreement does not permit Participant self-direction, any assets that are held in the form of a Participant loan made pursuant to Article 8 shall be treated as a segregated investment unless otherwise provided by the Plan Administrator.

I'm going to jump in here and say no. You are coming very close to discriminating based on national origin which is (or could be) a civil rights violation. Find a better way to exclude those people. Also, there is a huge terminology issue here. A resident alien is a lawful US resident who just happens to be a non-citizen. A resident alien would have none of the issues the OP mentioned like SSN, legal status, etc.

I'm not a big fan of loans in the first place, but I see it however it is defined in the document. I have no problem treating it either way. Post EGTRRA, I have not seen a document silent on it so it really isn't a judgment call it is just a matter of following the document. The other participants are probably not seeing decline in their earnings due to the loan since earnings on those assets would have been allocated to the participant with the loan.

Thats my bad, I misinterpreted your first comment as saying loans from pooled assets should be treated as an investment of the trust rather than separate from the trust.

I wouldn't go as far as "should". It is not uncommon to treat a participant loan as a segregated asset (some documents use term participant directed asset) even when you have a pooled trust.

I may or may not have liked this post... We will never know...

I agree.

Might be an issue with how it is coded in the compliance module. I would call FTW support and have them look at why it is bringing the participant in.

Do you use FTW documents? Is eligibility "6 months" or "6 consecutive months"? Here is the difference (from FTW VS document): Specified Months - Elapsed Time - Completes a specified number of months during which the employee completes at least one Hour of Service during the beginning and ending months. Specified Months - Consecutive - Completes a specified number of consecutive-months,during which employee completes at least one Hour of Service in each month.

I don't think the caveat is enough if you believe that your report / calculations will be used to violate or evade the law. You are obligated to inform the client of the consequences but you also have to remove yourself from the violation.

Thanks MoJo. I don't have any clients in CA but this is an interesting development for sure. The most I have seen in Florida where the bulk of my clients are is a subpoena for plan documents and testimony in highly contested divorces. Those cases usually settle with our involvement being limited to document production but they are getting more an more aggressive here as well so who knows...

Very interesting. That is a little too much discretion for me to be comfortable (may impose / reasonable knowledge / may be issued) but thats just me. Im curious about the California cases... Do they present any issues or implications for you as a service provider, other than being enjoined from distributing participant balances?

Even if the TPA is not actually preparing the return, you still have the issue of control of work product. The short answer would be you can't perform professional services if you have reason to believe that your work will be used to violate or evade the law. So you can't do the work but wash your hands of it just because you prepare the return. Circular 230 also includes language regarding errors or omissions from any return, not just the returns prepared by the practitioner.

I agree, I take my client's representation to me at face value and I don't cross that line either. If a client tries to involve me in a tax avoidance scheme or fraud, I would just resign and move on. Also, I don't think any of the CPAs I work with would tell me "oh by the way, Dr. Payne is giving his kids a salary so they can defer but they they never actually work for him". Even if that was the case, why volunteer that information in the first place?

In your example, is the TPA subject to Circular 230 or any professional code of conduct? For example, is the TPA an ERPA, EA, ASPPA or NIPA member etc?

From a professional responsibility point view, Circular 230 and the code of conduct for most professional organizations make it pretty clear that you can't perform services to the client based on information you know to be false or incomplete.

You either have a QDRO or you don't. You either have a situation where the plan's written procedure dictates that the participant's rights are restricted or you don't. There should be no gray area here. The written procedures should spell out exactly what has to happen in order for a participant's rights to be restricted. The law balances the rights of both beneficiaries and participants, and that balance should be upheld. This is not an issue where the PA should consider facts and circumstances. Does anyone in this discussion actually have plan procedures that allow for a participants rights to be restricted solely because the PA has been made aware of a possible or pending divorce?

Mobile appears to work fine now. Thanks!

Thats what I was getting at but you beat me to it. Well said Sir.

First time posting from my phone since the new format was rolled out so here we go :) TPA Bob, Is your firms policy the same as the PLANS written policy? Do they match? If not, that could be a big problem. What does "becoming aware" of a divorce mean? Does it have to be in writing? Can it be an office rumor? I'm not trying to be difficult, but when I hear about policies like this I wonder if the PA understands how much responsibility they are taking on in deciding whether to suspend participant rights without anyone even mentioning the word QDRO...

From the facts in the OP, it does not appear that a the plan has received a QDRO. And a divorce does not necessarily mean there will be a QDRO at all. Without a QDRO the PA does not owe a duty to a current participant's soon to be ex-spouse.

It is working great for me on my laptop but the mobile version isn't pulling up the message boards. Everything else seems to be working on the mobile version (for me at least) I like the new look

I just had this conversation with a CPA client of mine, and he wanted something to back up my opinion that it was ok to include the HCE wife with a $0 deferral. Assuming (like your example) that this person is legitimately eligible to participate, a nominal salary with no deferral can be used as a $0 deferral in the ADP test.