Help With Egttra Irs Rules For Hce's - Especially Where Account Holder

[Guest Mike350]

Who at the IRS can provide an explanation of the HCE test.

(Highly Compensated Employee test for 401K plans so they can keep operating).

An article on the web defines a process but does not say where the process was defined. Article name: "Highly Compensated Employee Rules Aim to Make 401K's Equitable". author: Clifton Linton, Senior Writer, mPower; note: I emailed Clifton but received no response.

ISSUE:

My wife left an employer Nov 2001. And on Oct 17, 2002 the PLAN (not the brokerage) removed $900 company contribution and $3,500 employee contribution from the account. The notes from the brokerage say this was for an IRS TEST. To date we have not received:

1. a return of the $4,400 total deducted from the account

2. a check for the $3,500 employee contribution deducted from the account

ASSUMPTION

Either the PLAN is performing theft on the account or the PLAN is making a mistake. If the PLAN is making a mistake, who can describe the correct way for the HCE TEST to be applied?

[BFree]

Although your question and assumption imply that the testing for the plan was done incorrectly, it seems that your issue is more likely that you haven't received the money back.

I suggest that your first inquiry be made of the employer. Ask why the refund/distribution was made and note that you have not received it. Ask for a timeframe for receipt.

Any employee deferrals will be refunded to your wife. As you note, you may or may not receive the employer money that was taken out of the account, it depends on the test. You should be able to get clarification about that if you persist in your questioning.

If your true concern is that you believe that the actual tests were done incorrectly, you will need to find out which specific test the brokerage account is referencing.

[david rigby]

When you contact the Plan Administrator, remember that the inquiry should come from your wife, not you, and you should identify her Social Security Number, current address, prior address (if applicable). There are lots of these types of complaints that boil down to "unknown address".

[Kirk Maldonado]

Mike350:

You win the prize for longest description of a thread possibly ever recorded on BenefitsLink!

(That isn't a criticism; it is helpful for the readers to know precisely what the thread is about. Generic titles like "401(k)" aren't terribly helpful.)

[Guest Mike350]

I have sent a certified letter requesting either refund:

1. missing 401K rollover amount

2. employee contribution removed

I have yet to receive a reply.

I was not directly informed by the PLAN which appears to also be a violation of EGTTRA.

The money was removed almost a month ago with no pre or post notification by the PLAN or the BROKER.

REQUEST

Where to I file the criminal complaint for the theft of either the rollover or the employee contribution.

What specific organization will "file the police report".

What specific proof document will they require?

If this takes too long this company may fold and I'll be OUT OF LUCK.

I want to get this resolved quickly.

:eek:

[Blinky the 3-eyed Fish]

Call the Department of Labor. Actually, calm down first, then call the Department of Labor.

[RCK]

Actually, calm down, and then have your wife call the Department of Labor. And if she can find someone else in the same situation, who is also willing to call, that would help.

As a spouse you have no standing. A plan sponsor has to be very careful to protect the rights of the participant, and I assume that the DOL would do the same.

[Guest Mike350]

The department of labor says the have no knowledge of IRS HCE tests or EGTTRA rules.

One guy said: 'you'll have to sue them'

The other guy said ' send a certified letter'.

Who will enforce IRS EGTTRA rules? You say Depart of Labor. But if they do not know about these rules how can they enforce them?

:confused:

[austin3515]

I think if you work the phones a bit at the DOL you will get some results. Many times the first nit wit that answers the phones doesn't know much about retirement plans as evidenced by your phone conversation. It's imperative that you get past the first line of defense on the phones.

Find other people in the same boat and get an attorney. For $4K, you can afford a few hundred bucks for a nasty letter from a lawyer...

[E as in ERISA]

Do they have an independent TRUSTEE? Did you try to contact the trustee? The trustee should have cut the check for the $3,500 to your wife. They may have an incorrect address for you. And it may be sitting in its accounts.

[RCK]

Sorry--we should have provided more detail. Go to www.askpwba.dol.gov. In the lower right corner of that page, click "contact us". Click on PWBA offices, and find the PWBA office in your state.

Script the highlights of the situation, and then have your wife call (see my prior post). She should be able to get to someone who can understand the problem, and help her pursue a solution.

As a plan sponsor, I inherited a plan through acquisition that had some administrative problems getting distributions processed in a timely manner (a problem similar but not identical to the one you are having). I dealt with several people in the Kansas City office who were technically sound, followed up when they said that they would, and who were reasonable in pursuit of a solution.

It will take some time to get a fix this way, so maybe the fastest is still to go to the plan sponsor. Your wife should have a Summary Plan Description (SPD), which should include rules on how to apply for benefits, and how to appeal any decision or response that you get from the sponsor. If you don't go through the benefit appeal process, you can't sue, so it is always a wise choice to pursue.

RCK