RatherBeGolfing

$25,000 is reported as deferrals in Box 12 the W-2 The excess deferrals are NOT included as wages in Box 1 of the W-2 2017 Form 1099-R is issued for $1,050 with reporting code 8 (excess deferrals and earnings taxable in 2017) The participant is only taxed on the excess once because it is not included as wages on the W-2 but is included as income on the 1099-R. Tax software should pick this up.

I'm saying no, preemption does not exist so that you can ignore or disregard state law. Preemption exists because federal law is supreme, and conflicts with state law is resolved in favor of the federal law. ERISA also expressly prohibits state law from governing an employee benefit plan. A state law requiring specific coverage under an ERISA health plan is preempted because it sought to govern an employee benefit plan. The issue in our thread is not as clear-cut. There is no ERISA requirement that the loan has to be repaid via payroll deduction. A state law prohibiting an employer from disregarding an employee direction to stop withholding from their pay governs payroll (or possibly employee rights), it does not govern employee benefit plans. Is it possible that a court could apply general or express preemption so broad that it would preempt a state payroll law that does is not in conflict with an ERISA requirement? Sure, it is possible. But absent that, I would not advise a client to disregard state law because of the general principle of preemption.

No.

It adds complexity for sure, but in my opinion, as long as you are competent and capable that is no reason to "not want anything to do with adding a 401(k) plan". Of course there are also times when clients (or the client's CPA/adviser) want to add a plan or plan feature that just does not make sense...

I don't know of any state where you can force an employee to deduct the loan payment from wages if they tell you to stop. If you are going to do it, make sure you have a written opinion from an attorney who is specializes in labor law in your state. Honoring the employees request will not result an operational failure for the plan (only a loan default for the EE), why risk a violation of state labor law just to enforce an administrative option of the plan that is not required by ERISA?

It is very doubtful that it is not specified in the document. That doesn't mean that it will be as simple as "the measuring year for break in service is X". It might refer to something that refers to something else that is dependent on an election in the adoption agreement.

Yep, they are fine.

No. In fact, the IRS notice probably even tells them that they can do DFVCP. Is it a CP 403 or CP 406 notice?

It is clearly not preempted by ERISA since ERISA does not require repayment by payroll deduction. I struggle to justify why an agreement made between employee and employer should carry more weight than state law. To prohibit what choice? Payroll deduction altogether? I guess they could amend the plan to say you can't stop your payroll deductions, but since they can't actually prohibit the participant from doing it, all it would do is create an operational failure for the plan...

Well, that isn't quite how preemption works. Think of it more like if ERISA requires something to be done, it would most likely preempt a state law to the contrary. But every provision in a plan document is not an ERISA requirement. Loans have to be repaid, but ERISA does not require that the loan be repaid by payroll deduction. Drafting a plan document requiring that the loan be repaid by payroll deduction does not preempt state labor law, it just means that it is the only option provided to the participant to repay the loan, and that the participant will default on the loan if payroll deduction is stopped.

Very interesting. I'm not sure what makes a "former employee" eligible for an employer sponsored plan but obviously it can be done. I'm assuming it would need to be a balance in excess of the force-out limit or the plan would have to roll it right back out

So at a birdseye view, it looks like the senate version had pass through at 25% but excludes companies providing professional service. That excludes most of my pass through clients from the QP/pass through dilemma.

I could see where a former employee who is still a participant could be able to roll in, but a former employee who is no longer a participant?

I don't think this referred to the hardship rules per se. Rather, there has been some informal guidance (at least I haven't seen actual guidance address it) in Q&As regarding timing issues and hardships. One such question has been what happens when a hardship is granted based on certain circumstances and those circumstances change. The classic example is a hardship for the purchase of a home and then the purchase falls through for whatever reason. Some people questioned whether the change in circumstances requires repayment of the hardship distribution because the hardship no longer exists. The IRS response has been that the plan could not accept repayment of a hardship even if it wanted to, because the hardship was valid at the time of distribution and there simply are no procedures that would allow the money to return to the plan. If we look at the present question using the same logic, what rule or procedure would allow a plan to accept assets from a person who is neither employee nor participant (assuming the distribution was proper when implemented. Even if there was an incentive to take the assets back, I don't see how it would be permissible. Like you said, that should be the end of the story. But what happens if the recipient of the rollover refuses to accept the assets and the distribution goes "stale"? Is the participants account restored? Any RKs want to chime in?

Could that be paychex perhaps?

I have most of my files in pdf format, and I won't charge for a simple email with attachments. My service agreement is set up to only charge for services actually performed, so the only fees upon termination of services would be for services performed but not yet billed and any services necessary for the transfer to the other TPA.

And you can still recover against a non-fiduciary service provider who is at fault. The good ones will own their mistakes and the bad ones, like you say, aren't in business long. But then again, it wasn't too long ago a "fiduciary" service provider had their offices raided and their files seized as part of a fraud and embezzlement case...

This 100%.

If the plan allowed 2 loans, a new loan could be issued for $20k You have plenty of room on the 50% of balance side so your issue is going to be the $50k limit. With highest outstanding loan in last 12 months of $30k, you could do a new loan for $20k

Ok, not much you can do at that point.

Is there a possibility to refinance the loan?

The most s/he can borrow is $20k due to $50k/12 month limit. If s/he has $20k to repay the current loan, the new loan would simply replace $20k used to repay the old loan.

I have seen plenty of #1 and #2. I see #3 more as a fall back when they don't get any new elections with #1. They would basically move the cash over and default it into TD funds as the DIA. I personally don't care for mapping (#2), I prefer that the adviser put the work in and come up with the best and most appropriate lineup on the new platform rather than trying to squeeze the old platform into the new platform. Now throw in the twist of converting SDBAs and you can have even more "fun"...

They added line 4c to the 2017 forms for plan name changes

DFVC is most likely still an option. The $15,000 proposed penalty letter is their way of funneling people to the DFVC. They really never let you off the hook anymore though, I had a case where the clients CPA/TPA had all the documents signed and ready to file a final 5500 when he suddenly died. The client didn't even find out he was dead until they tried to get an explanation for the penalty notice. The IRS just said the DFVC is there for a reason, pick your poison of the $750 user fee or the proposed penalty.