commingle SHNEC and SHMAC

[Jim Chad]

The old TPA of a Plan I am taking over badly mixed up the records when they took over a Plan a few years ago. For many people, they have some or all of the SHNEC (Safe Harbor NoneElective Contribution)money mixed in with the SHMAC (Safe Harbor Match Contribution) money.

I think it may be possible for me to straighten this out. But maybe not, I am trying to get records now. I am sure it will be a heaache.

In the future the Employer does not expect to ever put in a match, again.

I would like opinions:

What do people think about just having both types of money in the SHNEC account from now on?

[buckaroo]

Jim,

This is what I would recommend:

1) If they are not already aware of it, I would inform the client of the issue. Explain to them that the funds are comingled and that you will not take any responsibility for any issue that arises from the previous record keeping. I would probably get something in writing from the Plan Sponsor to this affect. I would also have them tell you exactly how the funds are to be used (loans, withdrawals, etc...)

2) I would leave that money in a source by itself and never add to it.

3) I would establish a new source for the SHNEC going forward. This is the new source I would use for all future SHNEC conts.

4) If the sponsor ever decided to the SHMAC, I would establish another source for that as well.

Hope this helps.

[Bill Presson]

Jim,

This is what I would recommend:

1) If they are not already aware of it, I would inform the client of the issue. Explain to them that the funds are comingled and that you will not take any responsibility for any issue that arises from the previous record keeping. I would probably get something in writing from the Plan Sponsor to this affect. I would also have them tell you exactly how the funds are to be used (loans, withdrawals, etc...)

2) I would leave that money in a source by itself and never add to it.

3) I would establish a new source for the SHNEC going forward. This is the new source I would use for all future SHNEC conts.

4) If the sponsor ever decided to the SHMAC, I would establish another source for that as well.

Hope this helps.

I agree with buckaroo.