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ERISAGal

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  1. There's a lot that could come into play in trying to do this. It's been many moons since I've actually handled a situation like this so, the rules may have changed. I will just add, a lot depends on whether it's an ERISA 403(b) and the language of the contracts with the other custodians/recordkeepers. Some of these insurance contracts may allow the Plan Sponsor the ability to move the assets on behalf of the participant, but if they are individual annuity contracts, you may need the participant to sign off approving the transfer of their assets. I'd also suggest confirming if there are any early surrender charges or market value adjustments that would be charged to the plan participant. If the contract is greater than 10 years old, they have likely met the requirements to be able to transfer the account without penalty. I have also seen the insurance company try to "push" back and find a reason that the contract cannot be cancelled to move the accounts. I've had to engage ERISA council in the past and get ALL ORIGINAL signed contracts/documents. Hopefully, an easier process now exists and you don't have to jump through these hoops with the client.
  2. Not currently, but considering adding this provision to accomplish the above, if possible. I understand that any after-tax contributions have to be considered in the ACP test. Since this client usually fails the ACP test, I'm wondering if this would be helpful at all. I am not sure if there's a way to "recharacterize" the ACP refund to be an after-tax contribution or if it would have to be first distributed to the HCE and then have the HCE redeposit it into the plan as an after-tax contribution. Whether it can be "recharacterized" or if it has to be a 2 step process, would the after-tax contribution be considered in the same testing year as the refund occurred or the year in which it is contributed? Thank you!
  3. Is it possible to take an HCE's ACP testing refund and have it recharacterized to an after-tax "bucket" within a 403b plan? I would imagine the plan would need to issue a 1099R reporting the taxable event for the required distribution amount. Thanks so much for your assistance!
  4. I haven't kept up with this for awhile, but would be very interested in hearing what the DoL and IRS are looking for in their plan audits now. Back in the day (lol) they asked for the documentation supporting the dollar amount of hardship and confirmed whether it met the Safe Harbor reasons. I've wondered what they are asking for in audits today, especially knowing that a lot of Plan Sponsors sign forms allowing the Recordkeeper to issue the hardship distribution without a plan administrator signing off on each separate request. Are the recordkeeper's forms with a self-certification by the participant with no supporting documentation passing government audits of plans?
  5. It's been awhile since I was on the TPA side, but we used to use the code for Contract Administrator. This may have changed though...
  6. There used to be an IRS form the plan sponsor could complete and mail with the check. Although plan sponsors may no longer be able to use this method. I'm completely dating myself!
  7. @MoJo Thanks for the reply...yes, they are considering a negative election approach. I'm trying to find information saying that is not an alternative to getting an actual new election by the new employee.
  8. Have a plan sponsor who is acquiring another business in an Asset Sale. The seller's 401k plan will be terminated. The Buyer's plan has been amended to allow for service with the Seller towards vesting/eligibility in the Buyer's 401k plan. The Buyer also wants to use the seller's Terminating plan participant deferral (pre-tax or roth) elections to immediately allow the seller's plan participants to defer into the Buyer's 401k plan (at least those meeting eligibility in the Buyer's plan). Is this allowable? I would think that one plan participant's deferral election cannot apply to another company's 401k, but I'm grasping.... I'm hoping there is a workaround that I'm not thinking about though or something in the regs that would allow the buyer's plan to use the seller's plan deferral elections. Would the answer change if the seller's plan was merging into the buyer's 401k? All help is greatly appreciated!
  9. Thank you both! Can the loans be rolled over from the terminating plan before the plan is fully funded for all employer contributions through the effective date of termination? Would the decision be required at the participant level or can the plan sponsor make to decision to roll over all loans? Thanks again!!
  10. When an asset sale occurs between two entities both having 401k plans and the seller's plan terminates, what happens to the outstanding loans in the seller's plan? Since it is being terminated rather than merged, is there any way to "transfer" the outstanding loans to the Buyer's plan in order to avoid the loans being defaulted and taxed to the participant? Thanks for your help with this...I can't seem to find a definitive answer...Yes, I know it will depend on the plan documents of both plans, but wondering if the plan's could be amended to allow for the transfers of the outstanding loans. Thanks again!
  11. I believe you can allow in-service withdrawals from 403(b) matching contributions on account of a financial hardship. Of course, the plan document needs to allow for this.
  12. Also extremely disappointed with the position Datair is putting us in with not having these documents ready yet. We have clients needing amendments...response from Datair...well technically the plan sponsor doesn't have to sign it until year end. Um ok...but is that good client service? I'm impressed that Datair gave an estimated date? I've been scouring the forums daily and haven't seen that posted...just "we are in the final stages of testing".
  13. Additional Question..more years later... It appears from the above conversation that a greater than 2% S corp owner's taxable insurance is considered by the industry as a Taxable Fringe Benefit and should be considered in plan compensation...Agreed.. I'm throwing another curve ball in ...what if the plan document's compensation definition EXCLUDES Taxable Fringe Benefits. In this scenario would the taxable S Corp owner's health insurance be excluded for Plan Compensation purposes or because it must be taxable/earned income would it be an exception and stay in their compensation for plan contribution calculations? Apologies if this was mentioned above already...
  14. Thanks to both Luke and RBG. This is along the lines of the situation I actually have with an IRA owner. They took the stock out, took a nose dive and are looking at how to get it back in the plan as the stock is now going back up. Since it's still stock and has not been cashed out, I believe the stock goes right back in, as you both are also indicating. I came across the "same property" rules in searching the regs that led me to believe this would be appropriate. Thanks for helping to also explain the tax side of this. I just hadn't gotten that far in researching it yet.
  15. If a participant took an RMD in 2020 as a stock distribution and was determined to meet the CRD requirements, can that repayment during the 3 year window be made in the form of stock or does it have to be at the cash value of the stock on the date it was distributed. Thanks for your help with this!
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