RatherBeGolfing

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.

Cool. Will be interesting to find out more for sure. The announcement didn't really go into if they feel they have figured out a way around the risk of forfeiture and money laundering issues that have been a concern, or if they have simply decided to do it because they feel they are on solid legal footing and are willing to be a test case if the feds come after assets or proceeds.

FYI for everyone following this topic: I reached out, and Empower Retirement will NOT take on this type of business at this time. To many concerns in regards to how many comes in and goes out. I'm not aware of any major RK who will take it on.

I would argue that the computation period is not over (and the EE has not accrued a YOS) until the last day in the period is over. Entry 1/1/2019.

@ESOP Guy @jpod This was a first for me too. The participants children actually offered up the birth certificate issue. My guess is that they have had an issue with it somewhere else since they brought it up. My dilemma was that since they offered up the information we can't ignore it.

No designation, no will, no direction at all. While I haven't looked at the document myself, I was told the default order in this case is spouse, children per capita, and then estate.

It was considered, but as far as they knew there was no adoption.

We decided to punt to the clients ERISA atty and let them handle it.

Well, Empower isn't really Canadian. Great-West Lifeco is Canadian. Great-West Lifeco US is their US subsidiary. Great-West Life & Annuity falls under Great-West Lifeco US. Empower falls under Great-West Life & Annuity as a wholly owned subsidiary of Great-West Lifeco. So since it is would be a legal operation in Canada, I can see why Great-West wouldn't have a problem with it. I don't know if their US subsidiary would be though. Empower falls under the US subsidiary, but the parent company is Canadian. Our discussion at ASPPA Annual was based on using JH since its "Canadian", but its not directly Canadian either. JH is the US subsidiary of Manulife Financials, which is Canadian. Im sure I skipped tons of steps in the corporate structures of moth GW and Manulife, but this is sort of the birds eye view as I understand it.

Participant "P" dies with no beneficiary designation. There is no spouse. Participant had two children, son "S" and daughter "D". S and D have both been located, but they have added a twist. S and D both acknowledge that P is the father of both children, but D's birth certificate does not name the father. My understanding is that D would not be a beneficiary unless she establishes paternity through the courts. D does not want to go through the trouble for her share of an account that is worth about $10K. If S makes a claim and the plan pays him the full amount of Ps account, the plan should be in the clear right? Even if D decides down the road that she does want to establish paternity, the plan would have paid the benefit to the only beneficiary at the time of the claim. Whats throwing me off a bit is that both S and D acknowledge that P was the father of D, even though its not official. Has anyone dealt with this type of situation before?