CuseFan

Great questions - welcome to the facts and circumstances nebula, also known as the Twilight Zone. We often have these arguments with clients. It would be nice if IRS and/or DOL would just draw a line in the sand that everyone could see and abide by. But, if you need facts and circumstances, we usually suggest looking at how the employee is treated (retired vs. employed/not retired) with respect to all the other employer's plans and benefits - life, health, etc. (still covered, offered COBRA). If the person is treated as retired (or not) for all other purposes by the employer, chances are you can justify same for retirement plan(s) - consistency over accuracy - that's what the actuaries kept telling me for years!

so you are a partner but not an HCE? interesting. yes, your contributions come out of your earned income - but then you also get to deduct this directly on your tax return.

i usually use first day of current PY. Retroactive reaching provisions usually have their specific effective dates. And document language usually says effective as of X or as otherwise provided.

Why not? In a non-insured DBP termination you can simply buy annuity contracts for everyone (that have all the options, including a lump sum if applicable), there's no requirement to offer immediate lump sums. Of course no one does that because of the expense. No difference here.

That is the case. The document should say what happens when someone goes from an eligible class to ineligible class of employee and vice versa. Think about the union exclusion. A long time union employee moves into a nonunion position, do they have to work a YOS nonunion before entering the plan? Absolutely not. I wouldn't look for "guidance", it's just application of the rules. You are required to count all service with the employer (or control group) for eligibility and vesting.

This is the more recent discussion I remember - allowing hardship to prevent eviction or foreclosure where the participant was a resident of the dwelling but not the owner or named on the lease. I don't think your current case is any different, except maybe some additional proof that the participant will indeed be living there. I would think the girlfriend would have to disclose this source in her mortgage application. Of course, if the participant's spouse has to sign off on this hardship distribution the whole transaction falls apart!

ditto

180 days - if the plan language was updated for that.

i thought something similar to this came up late last year in this forum and consensus was that this is OK because it will be the participant's principal residence - that is the deciding factor, not ultimate ownership.

Thanks

Have sole proprietor who started business at age 73 and started pension plan at age 74. Is this person a 5% owner required to start RMDs when vested? A prior thread in BL seemed to indicate no, and page 5 of the recent EA conference session on RMDs (attached) backs that up, but does anyone have definitive reg cite or IRS guidance to confirm? All other research I've done does not support this nuance. Thanks 303 - Required Minimum Distributions.pdf

I don't know which is worse - this joke or the movie - did anyone else cheer when Leonardo Dicaprio died?

I would assume the same. The plan sponsor is responsible for maintaining sufficient records - payroll, HR, etc. - to determine whether a participant is entitled to a benefit. Failure to do so should always be resolved in the participant's favor and there have been court cases that have ruled as such. This is also clearly a fiduciary duty on which they have fallen woefully short.

Larry is dead-on here, just because a d-letter was received does not mean the IRS didn't make a mistake in not catching it, and they can subsequently reverse that oversight and make the plan sponsor correct.

The IC question, I think, depends on who has control over this person's work activity? Even if doing the "same job" as when he was an owner, that by itself wouldn't necessarily mean he is an employee now. As an owner, did he come an go as he pleased, have the freedom to complete various tasks according to his own schedule, and from wherever he wanted (home, office, road, etc.)? If he has autonomy in providing services to the business, I think he is a contractor. Certainly wouldn't hurt to get the opinion of accountant (if qualified) or legal counsel.

I fully agree - but to require someone to liquidate their meager retirement savings seems a bit draconian to me - unless maybe the person was deferring pay into the plan when they should not have been because they were getting SSI payments. I think this just highlights a huge dilemma we face in this country, how do you help people in poverty in a fair manner that enables them to escape poverty rather than ensuring they stay there? If I had the answer I probably wouldn't be ranting on BL would I?

By "matched with a SEP" in your title you mean paired with a SEP, not that matching contributions on 403(b) deferrals are made to the SEP, which would violate the uniform contribution requirement, right? Haven't seen that before, interesting strategy to avoid government filings.

So a person caring for a disabled child who is receiving SSI for such cannot save for retirement and have a meager 401(k) balance? What is wrong with this government? Give them enough to survive with public assistance and ensure that they will always remain on public assistance in retirement and, of course, these poor souls have no choice but to continue to vote those politicians into office or risk their primary means of survival. Those are my thoughts. Suggestions - there should be sufficient medical expenses to substantiate a hardship withdrawal.

It depends - if neither has any involvement in the other's business and there isn't a minor child, then my understanding is there is not a control group. If there is minor child, if I remember correctly (other posters can confirm or correct me), then there is attribution and a control group. Whether or not CG, you can have one DBP covering both - it's a matter of whether it would be a single or multiple employer plan. The bigger concern with a CG is if either of the businesses has non-excludable employees.

Exactly, it's like a DB plan - the normal form of distribution is an annuity - life (single) or joint (married - which must be waived with spousal consent, if applicable, in order to elect a lump sum, which may be rolled or taken as cash as previously noted. Merging, shifts that responsibility to the 401k plan for transferred balances.

yes, absent any specific plan language that would exclude the taxable portion of medical premiums.

Certainly and, as you note, that would make the issue moot. However, not everyone is so diligent about making/updating beneficiary designations, in which case the default death benefit payment to a spouse becomes problematic unless the plan clearly defines, either contrary to or in agreement with Federal law/Windsor decision. And there may be other spousal rights in the plan, likely more than legally necessary for a church plan because of the pre-approved plan language.

My FTW contact said they would update their AA format VSP first then their IDP format, with a 3Q release.

I believe IRS guidance is strictly facts and circumstances, but i also think they are quite clear there must be a true separation from service. In this case that may have happened at the time of retirement but clearly the employment relationship is no longer severed. If the governmental 457 rules will allow, I would suggest amending the plan for post-NRA in-service distributions, then this becomes moot. I see clients and their employees all the time having someone "retire" so they can get their pension but it's really just a disguised reduction in hours, and IRS is clear that is not a severance. If IRS came out with workable phased retirement rules, this wouldn't be an issue. In your case, I think the client's position and the IRS's position are different. Good luck.

Thanks