RatherBeGolfing

Wishful thinking, but pre-sorting cases before assigning them could lead to complex matters ending up in pile A (requires more experienced personnel to review and takes more time) and simple matters in pile B (less time)

Do you see any correlation between the complexity of the submission and the response time?

If the document does not have a deemed cash-out provision, an argument can be made for 3 above (or 6 c on the form 5500). This is what Janice said on it in the 5500 manual a few years ago.

Of course. You want your audit to tell you where/what the problems are, not just that there are problems. lets say that an audit is supposed to make sure a big report is free of errors and misstatements. Some things have so many details that it is either impossible to go line by line, or it would be incredible inefficient and cost prohibitive. Instead, you use audit sampling to draw a reasonable conclusion. If you find problems in your sample, you get a bigger sample and continue to dig until you find all problems or are reasonably sure that you have found all errors. If you don't find problems in your sample, you can draw a reasonable conclusion from the sample. This all assumes that audit sampling is appropriate for the objective and that the auditor follows proper protocol that includes risk tolerance and all that fun stuff. For example, I wouldn't just check 10 participants and say they are all good so I can conclude that all participant received their contributions.

Yea you are right, if the plan has a deemed cash out provision, a nonvested participant is deemed to have received a distribution as of the termination date Edit: In my document it is in the forfeiture section "For purposes of this Section, if the value of a Participant's vested Account balance is zero upon Termination, the Participant shall be deemed to have received a distribution of such vested Account"

I could be wrong but I thought they counted until forfeited...

Correct. A 0% vested participant is included in the count for 5(b) and 5(c) until the non-vested balance is forfeited.

at a very basic level, you set sample parameters so that that you can expect your sample to be representative of the population. If the sample is representative of the population, you would have a reasonable basis for a conclusion.

Yes. Yes.

It could be reasonable, sure. If audit sampling is appropriate to the objective, you aren't looking for absolutes, you are looking for a certain degree of assurance.

Is it really reasonable to conclude that there are control concerns with +/- 30% just because your random sample had that issue? Wouldn't a reasonable approach be that the discrepancies in the random sample trigger a larger sample?

The employer could have conflicting data in its files, especially if a lot of it is done by manual input. The employer could have given its vendors (TPA or Actuary for example) information with a typo, or the vendor got the correct information but a mistake was made when it went into its records. Now you have plan data and employer data that is different. I don't think the IQPA would have an outside source to confirm that the employers data is indeed accurate data.

Thanks all. At this point they are still doing an audit to see what looks off, but they asked me if the proposed "fix" was normal. I did suggest an attorney as well, but I have a feeling it will depend on the amounts and how far back this issue goes. Its a major benefits company so I was a bit surprised that they wanted to fix it by simply doing double deductions in 2019.

I did, but I assume it was a roman numeral pun on BGs behalf. 4 Cuban coffees might as well be an IV though ha ha

Especially when you prefer Cuban coffee like me :|

I need IV coffee sometimes...

Thank you. They are digging deeper and have found other discrepancies. Some employees who had less deducted last year actually have excess deductions this year (exceeding current and "makeup" deductions). I'm advising them to audit their books until they are comfortable with a timeline for when issues actually started. It will be interesting to see where it goes...

401(k) client has an issue with its welfare benefits and is asking me to point them in the right direction. I don't do welfare benefits at all so I figured id see with you guys if this sounds like "standard practice". I have a feeling there is fault on more than one party here, but it sounds like everyone involved are just pointing fingers at others. Company offers several different welfare options in addition to health insurance, such as FSA, dental, short term disability , etc. Starting in mid 2018 (at least) through March 2019, some payroll deductions were never made. For example, one participant did not have their dental and FSA deducted from their paycheck starting in October 2018. It was discovered in March of 2019. Dental benefits were paid for and participant was credited with the elected FSA amount, so I assume that those were paid with company assets since payments exceed deductions. The proposed solution is to just double up deductions each payroll starting in April 2019 until the participants have "paid" for the benefits they were credited with. Is this a common solution when you are talking about 5-6 months of deductions spread over more than one plan year? It sounds "fair" that the participants should pay for the benefits they received, but the participants also have a higher taxable income in 2018 than they should had everything been done right. Any input would be appreciated. Thanks.

If participants distributions for the year are less than $200, the plan does not have to provide a direct rollover option and is not required to withhold. Just pay out and 1099. Notice 2018-74

If your document is W-2 comp no exclusions, its included. See prior discussion here The ERISA Outline Book has a good explanation on why it is included as plan compensation. CHAPTER 1A: IMPORTANT DEFINITIONS -PART I - Compensation - Part A - Item 1.g.

What is the timeline here? Did AP get a notice that the PA received a DRO or made a determination? Once the court issues the DRO and it is sent to the plan, the plan is required to give you notice that they have received it (and some additional information). The plan then determines if the DRO is qualified (a QDRO), and is required notify you of that determination. If the DRO is a QDRO, it has to pay the AP according to the terms of the QDRO. One QDRO can be very different from another, so it is impossible to say if someone is right or wrong without more information. Can you give us more details of what the DRO required, when this took place, what kind of plan it was, etc?

I disagree. The unreimbursed medical expense itself is deemed to be a hardship under the safe harbor rules. The fact that the participant had to rob Peter to pay Paul in order to actually get the procedure does not make the medical expense ineligible for the hardship distribution. This question has been put before IRS panelists who agree that it is the nature of the expense itself that qualifies for the hardship.

An example of why fiduciary insurance might be a good idea though...

NOTE: My answer assumes that the plan uses the safe harbor definition of hardship. I think it does qualify as a hardship because the nature of the expense is what determines eligibility under the safe harbor hardship rules. In my example that was submitted to the IRS Q&A (answers are the opinions of the panelists not the IRS), hospitals in my are started to require payment before procedures, though I believe it was limited to deductible and co-payments rather than the full expense. If the patient couldn't cover it, they would establish a credit line through a commercial medical financing company like MedMax or CareCredit. So rather than having people pay $10 a month to the hospital forever, they now basically have a credit card debt. Because of timing issues, it would be difficult for the patient to apply for and receive a hardship without causing delays to the procedure. So my question was, is this now simply a commercial debt (still a hardship) rather than a medical debt? Does it no longer fit under the safe harbor hardship rules? The IRS panelists agreed that it didn't matter that the payment was made with other assets (in this case medical credit) because the medical expense created the hardship. In your case, it is a little different because the use of savings rather than credit means that there is no longer a debt for the procedure like you would have with a credit line. I don't think that it should matter. If I have $1,000 in my bank account that Is budgeted for future expenses and I use that $1,000 to pay for a medical procedure, I still have a need for $1,000 that I wouldn't have had were it not for the medical procedure. The hardship was created by the medical need, and the hardship is still there. I'm sure the participant still has a need for his savings. He had to make the payment to get access to the medical procedure, THAT is the hardship. Had the doctor not required payment before the procedure, the participant would have had a debt to the doctor that no one would argue ineligible for a hardship under the safe harbor rules just because the participant has savings. Right? That is because it is the nature of the expense that controls. As the participant, I would appeal. Under Reg. § 1.401(k)-1(d)(3)(iii)(B), This is still an expense for medical care. In my opinion, the Plan Administrator improperly denied the hardship. Since a medical expense is deemed to be to be on account of an immediate and heavy financial need, it would be improper to consider additional facts and circumstances determine immediate and heavy financial need. If the plan does not use the safe harbor definition for hardship distributions, it is a facts and circumstances determination. I would not have a problem approving the hardship under a facts and circumstances test, but I don't think I would go as far as saying that it would be improper to deny it. I would still appeal either way as the participant, and considering the significant amount we are talking about, I would take it to the DOL if my appeal was denied.

As long as it is not covering the same expense twice it should be fine. In other words, I have a medical bill for $10,000. I believe that I have $5,000 available elsewhere so I take a $5,000 hardship to cover the balance. I end up not being able to pay the other $5,000 so I need another hardship. As long as the combined hardship withdrawals do not exceed the documented expense it shouldn't be a problem.