Looking for comments on this so-called "strategy." Plan participant has an account balance of $200,000 which consists of $20,000 after-tax contributions and $180,000 of pre-tax contributions plus interest earned. Participant requests a loan of $10,000 from the $20,000 after-tax portion. Participant receives the $10,000 and begins to payback the loan via payroll deduction. A month later, participant cancels the loan and plan administrator pays off the loan using the participant's pre-tax contributions. Two months later, the participant again requests a loan of $10,000 from after-tax funds, begins to pay back loan, cancels loan, and plan administrator pays off the loan using pre-tax funds. Ultimately, the participant was able to remove the $20,000 after-tax by itself. 1099-Rs will not be issued. Any thoughts on this?

Adult child is disabled (since birth) and lives with me. I am not, and have never been covered, under the health insurance contract of child's father. We've been divorced for over 20 years. Over one year ago employer provided me with an Overage Dependent Due to Disability form. It has to be completed by child's physician. The physician did complete the form; I then sent it onto my ex-spouse for his completion. There is also a section for the employee, i.e. the father, to complete. It asks for financial information - is child claimed as a dependent on his tax returns and what percentage of support does the father pay. Father provides NO support and does not claim this child as a dependent. Employer has again sent me the form and has advised me I must sign the form, not the father and that financial information can be waived. Previously, father sent in unsigned form without providing this information. Insurer responded that approval to continue coverage was denied due to missing information. Has anyone ever had a situation like this? I don't understand why the insurer doesn't want the information from the employee. It's been 18 months since the first form was sent to the insurer.

Relius users, our firm recently processed a hardship for an employee. The employee wanted to use the available Roth basis as the amount for the hardship. No problem on the processing of the transaction. The slight trouble comes in with taxation. The Roth dollars have been in the plan for 5 years, but the employee is not 59-1/2, so the distribution is not qualified, so taxes would be applicable. With that, my understanding is that there is a proration between the basis and the total value of Roth. In this instance, let's say basis is 75% of total value. So we did a manual calculation of taxes for the 1099. I really expected the transaction to give a taxable amount calculation because a "regular" cash distribution will calculate the taxes on the Roth piece if the distribution is not qualified. So I called Relius and put in an incident to see what they say. Relius says the "Hardship distribution template is set to use Contributions Only, which will not include earnings." Makes sense, but not for a Roth Hardship that isn't qualified. Am I missing something? Did we do something wrong in regards to the taxation? In regards to the Roth recovered basis. The transaction used the full amount of the basis, which I would expect, it's just weird because you don't expect taxes on the basis, but then again the distribution wasn't qualified.