Nate S

Would need the actual document language, but I'm suspecting that the YOS is upon completion of 1000 hours, the computation period is merely a measuring window.

Yes, hire date is a reasonable classification. The employer has no discretion over who is or is not in the group going forward, it's not based on age, and it is definitely determinable.

Well, one IRS memo says you have to consider "intent" but of course 401(a)(4) itself says to adher strictly to the mathematics. So, mathematically, 5% is significant, therefore keep it below 4.99%.

No, just follow the DOL program, no separate action is needed under EPCRS.

Do they share a hire date or are they the only hires within a specific range? Naming the ppts is usually not recommended because it doesn't pass the definitely determinable and employer discretionary conditions.

@austin3515 @Below Ground Nope, still calling the hypochondriac police on this line of thinking. Section 603(b)(1) only references an amendment to the 402(g) limit. 414(v)(2)(A) only addresses the 402(g) dollar limit and the 415 compensation limit. Recharachterization is not a 'contribution', it is phantom classification for excluding an amount for testing purposes only, neither the 402(g) limit nor 415 are impacted by a recharacterization. The only time I can see a retroactive conversion occurring is when an employer allocation pushes the total over the annual additions limit where the HCE did not first exceed 402(g).

Wait, what???? When was it said that recharacterization was going to trigger the ROTH conversion aspect??? I get the conversion as a 402(g)/415 limit issue since that speaks directly to the amount an HCE benefits from, but for anything else, no. This is half the problem, all the hand wringing and jumping at shadows. Instead, focus on the upcoming regulatory comment period, and work to build a unified voice that will result in reasonable governance. You want ASPPA to advocate for the little guys, time to step up and say what the smaller providers need. Otherwise, we all better start figuring out who the 'big 5' will be.

Perhaps if the vested balance is less than $5k and subject to involuntary distribution? Or if you are forfeiting the entire balance under the 'lost/unlocatable' option? What if death doesn't trigger 100% vesting, but only 1 of X bene's takes their cash out, do you then forfeit the entire unvested portion to avoid unfairly enriching the remaining bene's?

Maximum annual addition here is $34,000, assuming they have at least $6,500 in deferrals.

No, they should be able to provide a copy of the offer showing at least the loan value will be paid in cash. If it's financed, then almost assuredly the mortgage company will ask for a letter of explanation as to the source of the funds. And if close to closing, the closing agreement/reconciliation should show the loan as either itself as a source of funding, or the participant bringing at least that much cash. I think the PA still needs to prudently act like a commercial lender; hardship doesn't get repaid, so self-certify made sense since ability to repay is not relevant, and an employee's personal needs are not the business of the sponsor.

What does the intended Plan Doc say you can do? Likely the formula can use the prior service, but as noted not your limits. "Steve" likely still has to work 10 years, and have three decent years compensation-wise. And, if the new firm is a partnership, set the plan as a beginning of the year valuation; that way compensation becomes an assumption and your valuation is not in a circular calculation with the actual compensation and final contribution amounts.

If it's questionable at all then, yes citizenship would be a permissible exclusion, it meets the definitely determinable rules as easily classified and not subject to employer discretion.

I don't think a distribution has occurred in the first place; there has been no transfer of the payable benefit to the participant(beneficiary(s)), another plan, or the PBGC. The recipient does not have use of the funds. The transfer to the court is to protect the value of the benefit and not expose it to undue market risk while the question is settled. I would view the court as another custodian of Plan assets and continued to report it as an asset of the Plan. At most, you could deem it as a payable and report the liability since the amount to be paid is known if its a DC plan. @david rigby what amount would you even transfer for a pension benefit that is nothing more than an IOU until the moment it's actually paid? Would you just grant the court a subordination agreement and then possibly escrow a 'reserve' amount that gets recalculated on each valuation date until actual payment?

The confused was me, like Bird said, I lost your train of thought before it left the station. I'm also the sad face on your reply because you felt the need to follow-up to your first muffed punt. "Solo"'s don't exist, they're just a marketing term so financial advisors don't get confused and try to restart Keoghs

And that's why ever since 2013, every client goes on extension in June. Still doesn't help 100%, but it gets the bulk of these out of the way. Make the IRS earn their keep; a computer may have printed these notices out, but a human has to handle your response. Draft a form letter response and submit for each one your clients recieve.

Yep, that was my initial caveat. Although to be fair, the "victims" are a venture capital firm and their E&O provider who audited an acquisition. It went federal because of SEC/FINRA issues and tax evasion. My client, the Plan Sponsor being served the order, is unrelated except for holding a significant balance for the defendant from their employment many years ago. His major concern is the ERISA protections being stripped away and his own Plans' balances being exposed by a single word.

If found concurrently under audit, then unrelated issues would be treated at the same time under CAP. VCP and SCP are almost always handled independently, although a series of failures can become a single issue dependent upon circumstances and significance. You can also seek a PLR if the significance is in question and you cannot draw a clear distinction under SCP.

I did see that one had been remanded back to the district for a determination on the 10% early withdrawal penalty, but also something about a garnishment cap associated with earnings? Seems like most of the Circuits are rubber stamping the MVRA challenge; has anyone managed to appeal past the Circuit to get an SC ruling on MVRA vs ERISA? Seeing as how these are individuals stripped of all other assets already, doesn't seem like anyone has the means to fight this very far...

Suspend the safe harbor match & let the ADP testing fall where it may.(keep deferrals maxed tho) If considering a DB combo, presumably the tax-advantaged contribution is a driving factor? Consider using a prior service formula to help drive up the first year maximum, but I'm also guessing that the maximum is more than enough to make up an additional $26k...

@MoJo In the following thread from 2017, you noted a DOL position that MVRA should not provide access to qualified retirement plan assets, can you provide a cite for that position?

Background: ERISA provides anti-alienation protection to qualified retirement plans; early Supreme Court cases deferred exemptions back to Congress, 1984 Congress allows QDRO's, 1997 Congress allows reimbursement for fiduciary breaches or criminal activity involving the Plan. Mandatory Victims Restitution Act ("notwithstanding" any other Federal law) has otherwise been used as end-around of anti-alienation for variety of other restitution-based claims against 401(k) accounts. 1. Has a MVRA based appeal been heard by the Supreme Court and what was the result if so? More recently, appeals have sprung up concerning the mandatory 20% withholding and the 10% early withdrawal penalty. Apparently, the IRS has opinioned that the 10% penalty does not apply in instances of forced distributions, easy enough to understand since that's a facts and circumstances determination anyway. However, the caveat with MVRA is that the government is only "standing in the shoes" of the participant, meaning the participant directs the withdrawal to themselves, but the government receives the monies so demanded by the restitution order. In general, the Plan is required to withhold 20% for federal income tax withholding, which shorts the restitution order; and since the participant is still the "recipient" before remanding the funds to the government, they're also stuck holding the bill for the taxable income! So, where the participant is following court-ordered direction, they are then triple-penalized, 1) the restitution payment itself, 2) the restitution order is now short 20%, and 3) the participant now has to recognize taxable income often reaching hundreds of thousands of dollars, at a time when they are incarcerated, or otherwise destitute following liquidation of any available assets before reaching into their 401(k) 2. Is anyone aware of a final resolution to any of the 20% withholding appeal cases? Anything I saw noted them being remanded back to the originating district court by the circuit court to address these deficiencies. (Caveat- Yes, I fully recognize that these are actions to correct a wrong committed by a convicted individual. I'm merely looking for commentary or known resolution to the issues of MVRA abuse to circumvent the sacred anti-alienation provision and basic justification for ERISA; and any procedural establishments for handling the 20% mandatory withholding)

Yep, from your narrative it sounded like payroll didn't know to reduce the net payroll by the 922.50 that was withheld for deposit to the Plan and instead called for it to be paid. So Box 1 should be correct vs the take home payments and income tax withholding; while box 12 is understated by the amount it didn't know was supposed to be withheld.

I mean the amount that actually lands in the Sponsor's bank account

Zero-coupon bonds? Movie theater stock? Brick and mortar retailer stockers? Yes, the excise tax is only 20%, but the reversion amount is also booked as income, so the end tax cost is usually 60-70%. I assume everything was allocated to the 415 max each year? Did that include the ratable earnings each year? Was the suspense monies held in the same account/investments as the participant's, and are you sure about the earnings allocation methodology if so?

The change in status does not create a distributable event.