RatherBeGolfing

The participant cannot make an election to pay taxes out of assets that are not his. It doesn't matter whether he wants to withhold 10% or 100%. The plan does not have a responsibility pay it just because the participant does not have the assets left to use. Participant has $10,000 in his account. QDRO assigns $9,500 for back child support. Participant now has $500. The plan distributes $9,500 as directed by the QDRO, creating a tax liability to the participant since its a non-spouse AP. Participant wants to withhold the default 10% of the distribution, or $950. Participant only has $500 to withhold. The plan is only liable for depositing what can actually be withheld. Can the QDRO itself order less than the default? Maybe, but in my opinion it doesn't have to since the participant can only withhold from assets that are actually his.

Good question. Does it matter that there isn't enough left over for voluntary withholding? I don't think so. The QDRO orders you to pay 95% of the participant's account to a non-spouse alternate payee, leaving only 5% for the participant. The participant wants to pay 10% in taxes, but there aren't enough assets for a 10% payment. The participant is short, and will have to settle for the 5%. It is not the responsibility of the non-spouse alternate payee to make sure that the participant can satisfy tax payments with account assets.

I actually agree with your argument, but I'm not 100% that the IRS would. There is no missed deferral opportunity because the participants were not improperly excluded from making deferrals. They had just as much opportunity to defer as anyone else, they just weren't provided with the proper incentive to defer. They were improperly excluded from the match, so a missed match correction is appropriate. I can see the IRS arguing that a participant was not afforded full opportunity because they were told they would not get a match. If the correction isn't too expensive, I would consider correcting for the deferrals just to be safe.

No worries, makes sense if that is how you read the question. Maybe they will open it back up in 10-15 years when there is enough demand again.

It isn't a moot issue since current ERPAs are still ERPAs...

Form 2848. You are still limited in practice areas but getting a POA to speak to the IRS directly is a big plus for practitioners who are not an attorney, CPA/EA, or enrolled actuary.

No problem. If you are an ASPPA member there are some good asap's on 404a-5, 408b-2, and the DOL electronic disclosure policy. Just look at the archives for 2012 & 2013

Thats what I meant by the punchline. You have to meet all the requirements for electronic disclosure before you even think of directing the participant to a website. Platforms are pretty easy to work with for the notices since they put it (the annual notice) together for you. We download both the plan information part and the comparative chart and make it one pdf. We send the pdf with instructions to the clients. They deliver it to the participant either on paper or email the pdf if the electronic delivery requirements have been satisfied. The quarterly notice requirements are usually met by the platform since they add that information to their statements. We are a non-producing TPA as well.

Unless you are leaving out a bunch of steps and just giving us the punchline "A plan administrator may also send, via electronic or paper mail, a link to the required information on a website", that is not going to satisfy the requirements for electronic disclosure.

Obviously you need to do what you feel is right. But before you do that, take a step back and consider your sources / understanding of what is going on. I would not want to make a career decision based on information I found in a blog, it is just not good practice. As for what an ERISA attorney thinks, understand that just because something is alleged, that does not make it a fact. What "side" is this ERISA attorney on? Is s/he truly neutral? is s/he counsel for the plaintiff? Counsel for the defendant? You also looked at some "similar lawsuits". Do you have the training and experience to pick apart case law? The vast majority of practitioners in our field do not. I'm not telling you to not "blow the whistle". Im just saying you need to make sure you are right and that you understand the consequences of doing so.

http://www.asppa.org/Portals/2/PDFs/GAC/ASAPs/07-09.pdf

I think it is ASPPA asap 07-09, but still brilliantly written

That is pretty bad reason for denying it. I could defiantly see them argue that just because it actually takes you 8 days doesn't mean that 8 days is reasonable. In other words, if your process causes undue delay, change the process. But to say that 8 days is unreasonable because you never approve anything beyond 7 days is just lazy

I use the pay date as the loss date. It really is the only thing that makes sense IMHO. Every auditor (large plan audits) I have ever dealt with has used pay date.

Hancock is one of the easiest to work with for sure, and they wont nickel and dime you to death like some other platforms. They have some quirks in the system but so do all the others.

There are so many circumstances that factor in that three weeks could very well be reasonable. Without knowing all the facts, we just cant tell. The Plan Admin may not look at and sign off on the form the same day it comes in. It may come in on a Thursday and not be signed until Monday. The the TPA needs to sign off on vesting etc, then off to JH for processing. Since we know this wasnt a direct deposit, we can easily add another 5 days or so for the pony express. It adds up.

I agree with Bird. It is not going to be in the SPD, it is simply an administrative procedure. John Hancock did it this way because of how the plan is setup in their system. I have run into this issue a couple of times when doing rollovers to plans on the Fidelity platform. Fidelity wants the rollover check made out to them but sent to the participant. Unless you mess around with the JH settings, JH will send the check to the employer rather than the participant.

Bingo.

While I'm sure it wasn't the answer you wanted, your ex really isn't getting more than if the amount was transferred on the day the decree was signed since he/she is only getting earnings on that amount.

The anguish should be minimal if done correctly. Lets say that the EE (not catch-up eligible) deferred $20,000 in 2017, resulting in excess deferrals of $2,000. The W-2 should reflect $20,000 deferrals but only reduce income by $18,000. No 1099-R is needed to let the participant know to include it in income since the W-2 (should have) already included the $2,000 excess in as income in 2017. In 2018, the plan distributes the $2,000 excess plus earnings on the excess, lets use $200 for earnings. The plan issues two 1099-Rs for 2018 1099-R for $2,000 with code P (taxable in the deferral year) 1099-R for $200 with code 8 (taxable in current/distribution year) The W-2 signaled to the IRS that there was an excess of $2,000 and the 1099-R for $2,000 with code P has now signaled that the excess was distributed.

2007 or 2017?

I haven't looked at this one yet, but this mornings NAPA NET did point out some issues with the Small Business Employees Retirement Enhancement Act (S. 3219) and the Automatic Retirement Plan Act of 2017 (H.R. 4523).

One argument is that the deferrals can be distributed after the April 15 deadline if the excess deferrals would cause the plan to violate 401(a)(30).

This 100%. I had to argue with a DOL "investigator" in response to a participant complaint last year. She was troubled by the fact that the participant was not afforded an opportunity to direct her 401(k) contributions... In a trustee directed plan. Yea that was an interesting conversation

Yep, "fair" is just another four-letter word...