Roth Distributions with no 5-Year Information

We took over a retirement plan last year and never received the Roth basis information to calculate if a distribution was qualified or not.  The plan is now terminating.  I know that a termination does not make the roth distribution qualified, but what do any of you do if you do not have the 5-year information from a prior TPA or client? 

How is it that basic plan records from only 5 years ago have not been retained in any fashion by either the client or TPA (or a third-party RK)? Isn't that gross negligence?

Request copies of his W-2 from 5 and 6 years ago?

21 hours ago, CuseFan said:

How is it that basic plan records from only 5 years ago have not been retained in any fashion by either the client or TPA (or a third-party RK)? Isn't that gross negligence?

Because it came from one of those payroll companies that doesn't send over everything a TPA requests, and the client had been under the impression the payroll company was doing everything it was supposed to.  Then they shut off access as soon as they find out the client is leaving so the client couldn't go get the report. 🤦‍♀️

19 hours ago, Lou S. said:

Request copies of his W-2 from 5 and 6 years ago?

That was the only thing that was coming to mind as well, and we may do that in this case.  If it was a situation where the client had shut its doors just as fast as it gave us notice of the termination, do you think looking back at the census and comparing it to the vesting percentage might allow for an educated guess?  Of course that wouldn't work if the plan had anything less than a 5 year graded vesting schedule.

The conversion data had to have included a separate accounting for the Roth contributions (or you have to deal with an even bigger problem.)

Ask the client for any plan reports from 4 or 5 plan years ago that show a participant's account balance by source (e.g., individual statements, registers, trial balances, vested balances...)  If a Roth account existed as of the beginning of the 4 year ago, then it is reasonable to assume that Roth deferrals were made before then to create a balance in the account and it has been at least 5 years since the start of the plan year in which the first Roth contribution was made.  Applying this method to the plan years since then will allow the plan to determine year in which the first Roth contribution was made. 

Yes, we can come up with some combination of circumstances where this is not perfect, but those circumstances likely will be very rare.

If it is only one participant and he is over 59.5, then yes getting any kind of evidence that the first ROTH contribution was 5 or more years ago should be sufficient to process as a qualified ROTH distribution and you can breath a huge sigh of relief. And old W-2 should ROTH 401(k) or a statement such as Paul suggests should do the trick.

If you have other participants with ROTH, you have bigger issues with determining the ROTH basis and first year of ROTH contribution for all similarly situated participants

I'd suggest a retainer billed in advance if you have to do a massive project to reconstruct that because the prior TPA/Custodian/record keeper, either didn't track it or didn't transmit  it and the Plan Sponsor who is also probably the Plan Administrator seems negligent in it's duties with respect to service provides some how.