Larry Starr

We have few plans that allow loans; this is just one of the many reasons. I always set up loans for payroll deduction repayment, but also tell the client that such a provision is NOT enforceable. An employee can, at any time, tell the employer NOT to take the payments out of his check but that he will remit the payments directly (which is perfectly allowable). It is against the law in (almost?) every state to take money out of an employee's paycheck without their permission (it is an "impermissible garnishment"). If the employee then defaults by not making payment, the plan has to follow the rules about "foreclosing" on the loan (it becomes a distribution).

WHO should change the name of WHAT? Your question has been answered appropriately; what are you saying now and who are you arguing with?

"Gee, that's interesting. What is your citation for that information". You will find that when you ask that question, you will NOT get an answer because there is not any such opinion from DOL and, moreover, DOL will specifically NOT get involved in such a discussion.

Exactly correct.

The real answer is "because that's the law". If you thought your suggestion was a good idea, suggest it to congress or to your organization's government affairs group. I would guess that in our (ASPPA) govt affairs committee (where I am a Senior Advisor), we would not be willing to take that up as a suggestion for myriad reasons, some of which were noted in other responses.

Nice! My kind of answer. Also, agreed that there clearly is no responsibility, but it certainly is not prohibited either.

Please try to make your questions as specific as possible. I'm not sure what you mean by "this method" and what the alternative is that you are referencing. So without trying to answer that confusing question, let me say this: The vested amount is ALWAYS the vested amount without regard to any outstanding loan. The loan is an asset of the plan but the account does have a claim against it IF the loan goes into default. When talking to participants about their balances, it is probably best to show the vested amount AND ALSO show any outstanding loan as a separate entry. For example: "Your vested interest is $40,000; there is an outstanding loan balance at this time of $X."

I believe the funds, if paid to the plan, do not belong to the plan (they are erroneous) and should be returned to the participant.

This is a typical ethical conundrum. What to do; what to do? Each of us has to answer to our own ethics and our own guiding rules and hopefully they will not conflict. What would I do? Let me think.... 1) Resign. Immediately, with a letter and an explanation that I believe they have both disqualified their plan (the 415 issue) which means their rollover IRA is "no good" and subject to the 6% cumulative compounded excise tax which will eventually take 100% of the rollover as an excise tax when the IRS challenges it, and I would also explain that they have actually stolen money from other participants and besides possible criminal penalties, IRS penalties and DOL penalties, their bonding company is also going to go after them since the bonding company will have to make the other participants whole to the extent of the theft. 2) No way we are going to prepare a 5500 at all; see 1 above. We no longer work for this crook. 3) Now the hard one: what do I do about reporting this to someone? I'm pretty sure I don't have a legal obligation under the society ethics rules. Now, what about my moral responsibility? If a participant calls, I'm going to tell them to contact the DOL since I no longer work for the client. Since I have never actually had to deal with this kind of an issue, I'm not sure what I would do. My heart tells me that the crook deserves to be taken to task, which would mean the DOL has to be notified. Is there a John Doe notification to DOL like IRS has John Doe ruling requests? I'm sure a private phone call to the local DOL office will get action. Would I do that? Hmmmmmmm.......

And therefore, the question raised does not appear to be germain to your plan(s) due to your language, which is why we say RTFD! ?

Larry, the question isn't what the participant needs, the question is what the plan language allows. If the language effectively says you can't have a hardship loan UNLESS the hardship is at least $1,000, then no loan is available. That's why the prior answers say "what does the plan language say". I'm frankly not sure what you are trying to say; that the plan HAS to make the loan of $1,000 if the hardship is only $900? That can't be made as a simple statement because plan language may not allow that.

Agreed. You need to ask the simple question. Was it an asset sale or a stock sale? ASK and get back to us when you have the answer.

Sorry I missed you. Maybe next year in Chicago.

Agreed, and the old owners (and you) should be dealing with the termination of the plan and distribution of assets to the participants who no longer are employees of that sponsoring entity.

I'll be in Potomac D at 3PM and Nat'l Harbor 4-5 t 4:20. Come find me!

Given that information, I would say that if you need to have it attributed to the 2018 year, the participant needed to contribute it on the same basis as he would have for an elective deferral (401k). Of course, since it's after tax, do you NEED to have it attributed to 2018? What if he just paid it in 2019 and you attributed it to 2019?

I suggest that's wrong thinking. You need to have clients on YOUR document; the documents you use and understand and are supported by your document folks. Every client we take over automatically gets a restatement onto our volume submitter document. "Controlling costs" is often a bad idea when it comes to doing things right for the client. FWIW.

One of those situations where the answer is most likely "what does the plan say". Hopefully, the language is clear. IF the loans are only available for hardship, and IF the loan language says only FOR THE AMOUNT of the hardship and if the loan language has a $1,000 minimum (or no loan!) and the hardship is LESS than the minimum, then the language probably is read as NO LOAN in this case.

I don't know what all the discussion is about. The asset in question is NOT part of the probate estate since it passes by beneficiary designation. Bird found the info on the specifics of NJ rights (and see my links as well), and it also does not include any rights against the IRA passing outside of probate. My original comments stand, but certainly if the other side is bringing a claim (valid or not) the daughter is probably going to need representation to get this thing resolved. But the resolution, ultimately, will give the daughter all the funds as an IRA beneficiary; I'm willing to bet! ?

Assuming this is all within the plan and currently was done, I see no reason why the trustees should not correct it. If the participant clearly asked for after tax funds to be converted, that should be enough to allow new forms to be signed that includes that designation and the designation of the funds characteristics made as they were requested.

Nope. First, we don't know that he died intestate. Second, intestacy deals with property that has not otherwise been passed by other means, such as joint titling or specific beneficiary designation. Read this (particularly my highlighted last line): If you die without making a will, a court will distribute your property according to the laws of your state. This process is called “intestate succession” or “intestacy.” Who gets what depends on who your closest relatives are. The most likely recipients are your spouse, your children, your parents, or your siblings. Intestate succession probably won’t determine the fate of all your property. Property that passes outside a will is not subject to intestacy rules. For example, property you put in a living trust passes directly to the beneficiaries you named. The same is true for other property -- like life insurance or a retirement account -- for which you directly named a beneficiary. I once wrote training material for the estate planning curriculum of a major life insurance company when I was in the home office marketing department, training division. You can review some issues on specific state intestacy rules here: https://www.nolo.com/legal-encyclopedia/intestate-succession

An IRA owner has the absolute right (barring some court order) to name any beneficiary he/she desires. The bank is interfering with YOUR right as the named beneficiary and they have no right to "freeze" the account unless THEY have a court order that instructs them to do so. You need to tell the bank that they are interfering with your federally protected rights, and that they will hear from your lawyer if they don't follow their legal responsibility under their IRA agreement to make the payment as directed. If that doesn't work, you do need to have a lawyer do the same thing, but this time with a demand letter and a pledge that they will be personally sued for interfering in the IRA contract and wil claim damages for the inability to invest the funds as you desire. Now, just to make sure, was there any prior court order that has any involvement with the IRA? Let us know how it goes....

Any thoughts? YUP! Absolutely NO issue with regard to his personal investments. The liability is only on being a "good fiduciary" as it relates to the investments in the plan without regard to what he does on a personal basis. This of course precludes any self-dealing (where he is getting "special deals" on the outside investments BECAUSE of what he is investing in with the plan assets. But if he is simply buying, for example, the same publicly offered investment items, there is absolutely NO ISSUE.

BG, what is your real name, so we know to say hello to you in DC?

I would suggest that your cooperation is "as soon as we are paid our outstanding fees for work already done, we will be happy to get you whatever we can get you so long as the client also pays the fee for that process (and in advance)". That's cooperation. Occasionally, I have to explain to a client that they do have to pay the outstanding fees to another entity because they have already done the work and we need their cooperation and we can't get that if fees are outstanding. It has (so far) always worked.