RatherBeGolfing

It generally isn't an issue for a 3% SHNEC. With match you have more variables that can cause significant differences between payroll calculations and annual calculations. If you take 3% on a payroll basis, it should add up to 3% on an annual basis. You might have penny adjustments for rounding, but that's about it. The bigger problem when doing it on a payroll basis is making sure you have a backstop for the comp limit. In other words, if they are simply doing 3% of payroll comp, make sure you have measures in place to cap it at $8,400 (3% of $280,000).

No need to debate it again, the premise of OPs question was not whether or not you could prevent the participant from stopping payroll deductions for loan payments. The question was if you cant prevent them from stopping payroll deductions, do you have to provide them with another option for repayment. I think we can agree that the plan is under no obligation to provide an alternative repayment option.

The plan/employer CANNOT withhold voluntary payroll deductions without authorization or after authorization has been withdrawn. The plan CAN dictate how loan payments are made, for example, only through payroll deduction.

@Luke Bailey, doesn't that raise the question of whether a plan fiduciary who approves an "invest in the world" self directed plan has met the requirements of 404(a)(1)(B)? The plan fiduciaries still have to responsibilities to approve (at least in some sense), monitor, designate DIAs, and make disclosures related to the participant's investment direction.

Unless it's one of those "limited to deferrals plus 6% in K plan" deals...

I've done quite a few over the last 10 years and I have not seen a direct link between late contributions on the 5500 and a DOL investigation. I always recommend VFCP as well, but even the clients that opt against it have been (mostly) investigation free. That's not to say that it can't lead to an investigation, but I think it's more likely that they look for more than just "[X] yes...". If there is a pattern, significant amounts, which regional office the client falls under, and even who the service provider is all matters more than an answer on the 5500.

My issue with this is that the participant wants to prepay loan payments rather than make a prepayment on the loan itself. It might sound like a distinction without a difference but it seems like it should matter... Most loan programs I have looked at allow for prepayment. some only allow for full prepayment, but most allow for full and partial prepayment. But prepayment usually means that you pay off the loan earlier than the original maturity date of the loan. Basically its applied on the back end of the loan. In this instance, the participant wants to make a prepayment, keep the original maturity date, but skip the next 5 payments. While I haven't seen a policy that actually allows for that situation, I don't think I have seen one that specifically prohibits it either. If a change to the policy is made, or an interpretation of the existing policy made, I don't think im comfortable skipping the regularly scheduled payments and just applying the pre payment. Maybe if there was a good reason for it, like someone is going on leave or having surgery or dealing with a sick relative for a period time...

Correct. it basically means that the participant will not need to take action to receive payment of any funds in the account because it has been paid or reserved for scheduled payment.

Not ideal but depending on RK, personal check to RK or employer to deposit for existing loans and then terminate loans going forward. Could be an issue if existing loan is an HCE though...

PLR 201901005 (attached above) has the spouse as designated beneficiary after all other beneficiaries of the estate disclaimed. OPs situation appears to be a non-spouse beneficiary (since it is going to the estate by document default), but I'm not sure that it would change the outcome.

Doesn't the ownership flow from the Master LLC?

Would it even be necessary?

And their people are awesome. Highly recommend them.

After the original QDRO was executed and payment to AP completed?

Absolutely. It wasn't filed, there is no perception issue here. This is not what the IRS will consider reasonable cause, and they will tell you that this is the reason Rev Proc 2015-32 provides relief for a small user fee. Before we had the penalty relief program, the IRS pretty much rubber stamped any mea culpa letter, but that is not the case anymore. I know of one case where a CPA who, prepared 5500-EZs for his clients, passed away in close to the filing deadline, and whoever took over the clients did not know about the 5500-EZ's until about a year later. One of those clients contacted the IRS and were told it would most likely not be considered reasonable cause. My understanding is that the few instances where reasonable cause will be considered (post penalty relief program) is when something that is out of your hands make it impossible to meet your obligation, or if you do not qualify for the penalty relief program.

Attached PLR is from January 2019 which I think is pretty close to what we are talking about here. Beneficiary of Decedent's IRA was a trust. The trust, children, and grandchildren of Decedent disclaimed any interest in the IRA. IRS agreed that Decedent's spouse is treated as having acquired the IRA directly from Decedent and is eligible to do a 60 day rollover. 201901005.pdf

Correct. We have had a variation of this issue come up where a substantial amount could only be paid to the estate rather than the widow of the participant. I posed the question at a local ERISA round table luncheon, and one of the attorneys in our group knew of a PLR that was close enough. In that case, the IRS ruled that something to the effect of a benefit payable to an estate in which the spouse is the only beneficiary is treated as if going directly to the spouse, and is therefore eligible for rollover. I don't have access to the PLR at this moment but I can post it or a link tomorrow if anyone would like to read it or add it to their "research file".

I wouldnt worry about it. While the bond is technically low, I really dont see the IRS or DOL giving you a hard time over the bond being $500 short.

Generally?

I can't think of anything that would prohibit it off the top of my head

I was never part of the "old public accounting days", though I am old enough that I still learned accounting on green sheets in under grad... Do green sheets even exist anymore? Anyways, I still use "note to file" quite frequently. As in, practitioners note that in the old days would transfer from one year end to the next rather than being part of the clients permanent file. The question is "during the plan year:" It is reasonable to interpret that as anytime during the plan year, not strictly on day one. It would not be reasonable to interpret "during the the plan year" to include the period after the close of the year up until the filing of the 5500. So if the bond was acquired or increased after the end of the year but before you file the 5500, the answer should still be "NO" That said, I know at least one bond provider who will issue retroactive bonds. If a a bond is purchased that retroactively covers a prior plan year, I would check "YES"

I don't think I have seen it before. I agree that from administrative point of view its likely to be a headache and create problems. Not sure about the legality. What is the reasoning for waiting a year for the auto-enroll? Generally speaking, the idea behind auto-enroll is to encourage savings by combating participant passivity and apathy. Do they just want to make sure they are lazy for 12 months rather than 90 days?

Yep. Each state has wealth written in as a requirement.

Was the amount reported as 401(k) on the W-2?

Once divorce is final, a Judge will usually only reopen if there is a compelling reason. That the both parties agree will probably go a long way but its not a guarantee. I'm sure there are judges out there who will say no my docket is full enough as it is. IF the settlement is changed, can the first QDRO be revised? Probably not, because the benefits have already commenced. (29 CFR § 2530.206 clearly states that a subsequent order can revise a prior order, but in their example payments have not yet commenced) IF the settlement is changed, can a new DRO be issued to cover the change in the settlement? Sure. A DRO does not fail to be a QDRO just because it is issued after benefits have been paid pursuant to another QDRO. It all really comes down to: will the court reopen and revise the settlement.