Larry Starr

You bethca, it's NO!

The key here is that there must be an order obtained that gives a retroactive effective date to the order and the plan administrator must be willing to accept that (which is not guaranteed). The definition of alternate payee in the code provides that a participant's benefits may only be assigned to a spouse, former spouse, child, or other dependent of the participant It does not include an estate or an unnamed beneficiary of the alternate payee. The PA is justified to reject the QDRO on the basis that the estate named as beneficiary is not an allowed party and would violate the QDRO provisions in ERISA and the Code. This is a sticky situation and very well may require lawyers since the PA seems to have taken an impermissible stance as an advocate. Here is what Nunc pro tunc means: it may apply when "a judgment is entered, or document enrolled, so as to have the same legal force and effect as if it had been entered or enrolled on an earlier day". Mozley and Whiteley's Law Dictionary (11th ed.). ISBN 9780406014207. quoted in Emanuele v Australian Securities Commission [1997] HCA 20, (1997) 188 CLR 114 at p. 131. It is very strange/odd that the PLAN has written to the judge. The plan is supposed to be a neutral party in this but is obviously not. You very well may need your own competent ERISA attorney to help you with this.

Good advice from MoJo; I would agree completely.

I don't usually respond to individual participants since these questions raise personal legal issues. However, let me see if I can help (you still should have an atty representing you). You say no QDRO was done. Therefore, your retirement benefit should not be encumbered in any way at this point. It is unlikely the court would approve any QDRO at this point. So that question that arises (that you did not provide information on) is why do you think your retirement benefit is in any way held up? Your plan's QDRO procedures should provide that you are not subject to any restrictions at this point. Maybe you have to provide a death certificate to the plan just so they are comfortable, but this is something you should be taking up with the plan. Best of luck.

Where does it say it has to be "filed" by the plan administrator (whatever "filed" might mean). What it says is that the credentials must be attached and if they are, that is considered filed by the plan administrator. When your accountant electronically files your return (personal, corporate, whatever), do you not think the taxpayer has filed it? Legally, for all court issues, he has. That's good enough for me.

Sure, but should our questioner worry about in this case? Na!

Perhaps we incorrectly assumed they were using the safe harbor definitions of hardship (I haven't ever seen a small business plan that did otherwise). In safe harbor, you don't have to deal with the "other resources" issue, and I would suggest anyone who is trying to use non-safe harbor rules is crazy! All you have to do is have unreimbursed medical expenses (and, if there are loans available, deal with that requirement - another reason why we didn't have loans in our plans historically). Remember, a hardship distribution is DEEMED to be on account of a immediate and heavy financial need if it is for unreimbursed medical expenses for the participant, spouse or dependent of the participant.

I believe I wrote that answer! :-)

In kind distribution is simply not possible with a group annuity contract, by definition. You could have in kind language (we always avoid it), but that doesn't mean that an actual distribution other than cash is possible. Of course, if it is an annuity as a normal form, a distribution of an annuity is still not an in kind distribution.

Which is why we asked if it was hard coded as part of the plan documents, and we were told it was not. So no correction necessary, because there is no actual "should have been charged" rate.

Yup; understood.

The possibility of suing us is for screwing up the information on the return, not for the process of filing the return. Whether we use the favored DOL method of my alternate method, the client can always sue for a screw up that costs them money. There is zero risk for suing us for the methodology of filing the return because there is nothing that allows for any loss to the client in using our method; the DOL has agreed with that (even though they don't like it - at least, some of them at the upper levels didn't like it!). There just is no theoretical or hypertechnical issue where filing in an "unapproved manner" could be raised by the government. Was it filed? Yes. Were the credentials attached? Yes. Was a signed copy of the 5500 obtained and kept? Yes. Roger: all systems go! Trust me; there is nothing improper about this method; it just is not what the DOL contemplated nor what the thought would happen. But until they change the actual rules, it is absolutely not improper, and for one last time I'll say it, THE DOL (reluctantly) AGREES !

Because it doesn't matter if they are paid; when we are talking about medical bills, the bills themselves are a hardship assuming they were not covered by insurance (that's the unreimbursed part). There is no requirement that the bills be still owed (that is, unpaid). There just isn't.

Danny, Just to make it clear: It doesn't matter if the medical bills were paid or not; they only have to be unreimbursed for the rules to apply. The employee might have paid them, but they still are entitled to have the hardship distribution determined with regard to the amount of the unreimbursed medical expenses.

If they are unreimbursed medical expenses and the participant is otherwise eligible for a hardship distribution, then there is no effective time limit, though I'm not sure about accepting expenses for a time prior to participation in the plan. The unreimbursed medical expenses ARE A DEBT until paid. The characterization as medical expenses never changes.

To both CEW and JKW: Bri and Kevin C asked you the most important question: is the interest rate hard coded in the plan document (it generally should not be, but tell us what your plan says). If it is not hard coded, there is no real problem. The trustees set the interest rate at what they felt appropriate for this loan. No real risk here.

You didn't give us enough info. I can't figure out if the new associate is highly compensated or not. So in case it is NOT, your solution could be much easier. Do an -11g amendment to increase his allocation in the PS plan; that would also help with non-discrimination testing if the plans are being aggregated for testing. If he is an HCE, see Tom's response above. BTW, I think he meant minimum coverage in 1.

Bird, Not to get the last word, but NO THEY CAN'T! "But if sh*t hit the fan for some reason, and they investigated, they could say that you followed improper procedures and ultimately hold you responsible for the fraudulent filing (IMO)" No they can't!! What the DOL made clear is that their system contemplated having the individual apply their own credentials. They did not design it to mandate that. Both their methodology (the silly "unique email" rule) and the lack of any penalty means that we can do it "my way" without penalty. BTW, the DOL has agreed that my way works (they just don't like it, and that's why they thought to come up with their additional method that included the PDF attachment and actually asked me what I thought BEFORE they announced it). Yes, if there is something fraudulent, the client will be held responsible by DOL and we agree that is the case . Yes, the client might be able to sue me if we screwed up, but that situation is no different than if we actually did it the DOL way. Remember, the client has actually signed the return and provided us a copy and we do not file UNTIL they have done that. The DOL actually did say that if we attach their credentials, the return will be treated as if the client signed it. They thought that was a "penalty"; I explained that that is exactly what we want! The same as if the client followed their "preferred" system. The DOL has no authority to hold me responsible; none. This has been extremely well thought out and vetted with the DOL at the highest level of responsibility for this program. I will spill the beans: those at DOL who are administering the program (they did not get to write the process or even have much input into it) think it was a gross waste of money and is overly complex and that they should have just adopted the IRS method which is good enough for filling REAL tax returns!!! But you didn't hear it from me (names have been deleted to protect the rational!). And of course the bonding never becomes a real issue. But having to deal with DOL letters when you say you don't have a bond is a headache my clients don't want. If a client were to ever say they are not getting a bond, I would simply say they have to deal with the DOL letters. The cost of the bond is cheaper than paying me to deal with the DOL letters. I also tell all my clients that bonding is stupid. I tell my clients that my clients are smart enough that if they are going to steal the money from the plan, they are going to steal more than 10% of the plan! It's just one (relatively minor) inconsequential cost of maintaining the plan. Sort of like PBGC premiums for the small DB plan which has zero risk to the PBGC. If you think anything I have said is wrong, go ahead and try again; maybe you can get the last word! :-)

The plan language is important and I don't think we know what your plan actually says. My documents define Required Beginning Date and, for a non-owner, that is NOT UNTIL the later of the calendar year in which the participant attains age 70 1/2 or the calendar year in which the Participant retires.There is no option; the rule automatically applies. So, if the plan does not allow inservice distributions, and the individual is not subject to RMDs because he is still working, then he cannot take an in-service distribution which is what it would have to be since it would not be an RMD. So, what is the exact document language? You said the document said he doesn't HAVE to take a distribution, but does it define the RBD the way I said above, or something else. If it says it my way, then he CAN'T take the RMD because there is none. What does the document say? We can't answer Question 1 until we know that. Since (in my plans) he can't arbitrarily start distributions except as in-service distributions, then the answer to your second question (for my plans) is NA because the answer to Q1 is NO. All of the other answers could be right or wrong because we don't know what your plan language says. If it is like mine, then Mike is right, K2Retire is answering a question not asked but might be a solution if your plan has language like mine, duckthing's comments are also true if your language is like mine (and not like what you said in the posting). Mr. Bagwell's response is not in line with my plan documents. The participant has no choice to start RMD (though the RMD suspension that applied for 2009 was subject to participant choice). So I would like to know what the language is in Mr. Bagwell's plan that allows the choice. Maybe that language is what is in your plan? Lots of questions; would be nice if we had all the information from the beginning. Exact plan language is what our world revolves around! :-)

Yup; all agreed.

I'm only going to claim 90% expertise on this and I don't have time right now to check my answers, so if anyone finds a mistake, please feel free to correct. Having made the appropriate warning, I see two questions in your posting. First, his catch up for the plan year ending 6/30/17 is the catch up available for calendar year '17, which is $6,000. Second, I'm not sure what you mean when you say "how would that show up in the failed ADP test". You say you ran the ADP test; so I ask you, how did it show up (not knowing what that really means)? What are you really asking here?

You basically need to live with the "deal". Yes, you are using the wrong interest rate, but you are probably off by a very small amount since the prime rate generally has changed in very small increments of time. Out of curiosity, what was the rate that you used and what should have been used?

You guess wrong. Why would you guess that? Do you think there is no penalty for failure to obtain a bond? We actually take care of getting the bonds for our clients and keeping them up to date. A plan fiduciary who fails to ensure that those persons who handle plan assets are properly bonded may be personally liable for any losses to the plan attributable to the fraud or dishonesty of others. Plus, there is the penalty of having to deal with DOL if you don't have proper bonding (it is disclosed on the 5500 as you well know). And the DOL can actually move to have unbonded trustees legally removed from their trustee role. Just some of the reasons why this is not the same issue.

No, Roth contributions are not a 411(d)(6) right, any more than regular deferrals are a protected right (we can always amend the plan to eliminate deferrals). Of course, you have to make sure you keep all the language and admin associated with the existing accounts even if you eliminate new Roth deferrals (or non-Roth deferrals, for that matter).

My way is even easier; no PDF of the signed form required and no chance that the client's signature will be copies for identity theft.