12AX7 Posted December 11, 2012 Posted December 11, 2012 There's a terminated employee in one of my plans that has a vested account balance that flucuates above/below $5,000. If I'm reading the regs properly, and please correct me if I'm wrong, I cannot autoroll the participant account unless it's below $5,000, even if the vested value was below $5,000 at the time the participant terminated employment.
Bird Posted December 11, 2012 Posted December 11, 2012 What I remember is that if it ever goes over $5,000, then it can't be forced out, even if it decreases simply through investment losses. Amount at time of termination of employment doesn't matter. Ed Snyder
BG5150 Posted December 11, 2012 Posted December 11, 2012 ^^ I thought that changed somewhere. In a daily-valued plan, how would you know if the account was ever over $5,000? If I have someone with $4,870 in the account today, would I have to go back, day-to-day to see if it was ever over $5,000? How far back to do I go? QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
12AX7 Posted December 12, 2012 Author Posted December 12, 2012 BG, you're question is right on target. When I first looked at the account balance it was under $5k, then when I starting preparing the distribution paperwork to autoroll, it bounced up over $5k. When I looked at recent account history, I saw that it fluctuated above or below the threshold required for consent. It seems that now it is over $5,000, this amount stays in the plan because the participant did not make a distribution election.
david rigby Posted December 12, 2012 Posted December 12, 2012 Does the plan answer your question? BTW, the regulatory rule for "can't distribute if ever over $5K" no longer applies, unless your plan still uses it. I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
BG5150 Posted December 12, 2012 Posted December 12, 2012 I believe you can distribute the account once it goes below $5k again. But to what lengths to do go to accomplish that? As TPA, I don't think it's part of my job to check it every day. David, when did the "if ever over $5,000" rule change? I remember hearing about it, but it was at a time when I was doing (pretty much) customer service work, and wasn't much in tune with the regs. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
Lou S. Posted December 13, 2012 Posted December 13, 2012 I believe you can distribute the account once it goes below $5k again. But to what lengths to do go to accomplish that?As TPA, I don't think it's part of my job to check it every day. David, when did the "if ever over $5,000" rule change? I remember hearing about it, but it was at a time when I was doing (pretty much) customer service work, and wasn't much in tune with the regs. I could be wrong but I thought that rule changed when $3,500 went to $5,000. I recall reading a bunch of articles about cashout sweeps when the market had a big downturn in was it 2008 maybe so I think that's been around for a while.
masteff Posted December 13, 2012 Posted December 13, 2012 David, when did the "if ever over $5,000" rule change? I remember hearing about it, but it was at a time when I was doing (pretty much) customer service work, and wasn't much in tune with the regs. "Final regulations issued on July 19, 2000, eliminated the lookback rule." http://www.irs.gov/irm/part4/irm_04-072-009.html And here is the reg change: http://www.gpo.gov/fdsys/pkg/FR-2000-07-19/html/00-18119.htm Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra
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