RatherBeGolfing

I just came back to say the same thing.

The date in the file name should not be necessary for chronological sorting, but there are other reasons why you might want to include a date in some of the file names. I wouldn't put a date in every file name though. A good naming convention should not make the file name so long and cluttered that it takes more time than a quick scan to pick your file out out of a folder.

If he has the cashflow or can come up with the funds to do it, couldn't he just make one loan payment now to pay the loan in full and then CRD the account balance? The requirement to make loan payments may be suspended, but nothing prohibits a participant from making loan payments voluntarily to avoid additional interest to accrue. It may be worth it for him to borrow funds now and repay the loan after the distribution, just to get the CRD tax treatment rather than having the loan become taxable in 2021.

I have had many auditors ask for, but I'm not sure if it has been every single one. Might depend on region as well, different training maybe? FWIW, I have had situations where a copy cannot be located, and as long as contributions have been made on time and in the correct amounts, they haven't made it into a major issue.

What Lou S said, but we also request a signed copy for our records. IRS will ask for it in an audit.

Agreed, but I also think the mandatory withholding on a termination distribution vs voluntary withholding on a CRD is relevant.

I would be 100% confident that there is plenty of fiduciary liability associated with offering just one fund and no investment choice in a defined contribution retirement plan.

Pretty sure PenChecks does one-offs at a set $ per search type of thing

How do you account for the distribution after it is rolled over? Ignore it because you already reported it once? Only report earnings on the "rollover"? report it again? Not trying to shoot you down, just trying to work out what the practical implications of the workaround would be, assuming you don't want amend any prior reporting (5500, 8955, 1099,945) From a reporting perspective, Im not sure you can apply constructive receipt to every situation, so you may need to amend 1099s at least.

Amend prior filing?

Wait, you think a pooled plan that is properly diversified would have problems in court because it is pooled?? Yep, participant direction takes away all the risk... Im just gonna leave this here...

How big of an issue is it?

It matters. But if they deferred the comp, you really don't have an option to not make the contribution. You need to correct now by making the deposit, calculating and contributing lost earnings, paying the associated excise taxes, filing VFCP, and possibly amending prior year Form 5500s. As Bill said above, it is really not different from an employee deferring from W-2 comp without the contribution being made to the plan.

Agreed

Im hopeful the participant count issue will be "fixed" prior to implementation. Since we are able to exclude them from testing and employer contributions, it would make sense to exclude for participant count OR only include LTPT participants with an account balance.

Two plans will almost certainly be cheaper. If the audit is the cheaper alternative, it is probably not worth whatever the price is.

This is what comment periods are for... Also, having to include them in the participant count for audit purposes is a bigger issue than vesting in my opinion.

Agreed. But you still think the recipient is the one who has to prove that there is a benefit even though the plan sponsor is required to keep those records?

Absolutely not. Thats kind of a chicken or egg question, no? The sponsor is required to provide statement, notices, and disclosures to the participant. The fact that employee never received anything doesn't mean that they were never a participant, it could be a failure by the sponsor to provide them with statements and notices. I don't think that you can require the employee to produce a document that the employer was required to provide to the employee, and then treat the lack of such document on the part of the employee as an indication that he/she was never a participant. I think that the the SSA notice is enough to put the document or research burden on the plan, not the participant. If the sponsor can't put their hands on those documents, its on them to try harder and spend more in order to get an answer. Again, Im not saying pay out, Im saying we keep sloppy records is not an answer. I think most of them are people who got paid out but never removed from the SSA list as a code D, rather than employees who were never entitled to a benefit at all. An answer like we went through our records and you were never vested or you were paid in 19XX is sufficient, but "prove it!" isnt.

Correct. No reputable auditor would. In fact, if you find an IQPA who is willing to ignore prior years, run the other way. Almost guaranteed that you will get caught. Might take a few years, but they will come knocking. Their position will probably be that the 5500s for past years have never been timely filed because they were incomplete. And you might not be eligible for DFVCP. As a service provider, I think you have take the hard line approach and tell them to do it right, or find someone else to help them. If they agree to do it right, get paid up front.

I have had similar experiences.

Absolutely! Just because you contract some of your duties and responsibilities out to others, you need a fail safe. In the event of catastrophic failure, there might not be anyone left to compensate you for the contractual breach.

I think the point was that you are asking the participant to prove that he/she did not receive a distribution, which would be "proving a negative". If participant says they dont have a record of getting a distribution, I think it is on the plan to show that they did. The plan sponsors failure to keep records could be an issue. I would not simply pay out, but I dont think the plan can say "sorry, due to our poor record retention we dont know if you got paid, so we cant pay you out unless you prove that you didn't paid" Sponsor/TPA is going to have to do the heavy lifting to come up with the answer.

Did they do their own admin and 5500, as in no TPA? If there was a service provider involved, what did the service agreement look like? I find it hard to believe that a 50 participant plan didn't have a service provider who found it strange that they had 100% participation or compared reported payroll to a W-3 or something along those lines...

NAPA site is also a little easier to navigate for stuff like this. From the home page, go to Industry Intel --> Hot Topics https://araadvocacy.org/ is a good if you are looking for comment letters and such