Message Boards Digest

August 13, 2018

Here are the most recently added topics on the BenefitsLink Message Boards:

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52626 created a topic in Distributions and Loans, Other than QDROs

RMD Before Making Rollover After Termination of Employment But Before RMD Due Date?

Participant terminated 1/2/2018 and was 72 at the time of termination. Not a 5% owner. Under the RMD rules he could postpone his first RMD until 4/1/2019. If he did, he takes a second RMD in 2019 for 2018. The participant rolled his account balance to an IRA on 5/1/2018. The IRA custodian is now telling the participant he had to take his first RMD before the funds were rolled. The 401(k) recordkeeper is saying he did not have to take the RMD before rolling the funds. I do not agree with the recordkeeper. I say the participant HAD to take the 2018 RMD before the funds were rolled. The first RMD is technically for 2017, the second is for 2018. Even though he could postpone the payment until 4/1/2019, the rollover to the IRA triggered the RMD. Need some help in understanding what and when the payment needed to be issued. To complicate matters, the rep from the recordkeeper said when they spoke to the IRS about this matter, (called the 800 number) IRS rep told her the funds did not have to be returned to the 401K trust and paid. The payment could be made from the IRA. Anyone else have issue with this response?
Number of replies posted  2 replies      Number of times viewed  47 views      Add Reply

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Fiduciary Guidance Counsel created a topic in Retirement Plans in General

What's the Practical Benefit of Becoming an ERPA?

Nowadays, retirement plan documents are mostly about IRS-preapproved documents. Seldom does an employer apply for an IRS determination letter. Beyond Form 5300 applications, what is it that enrollment as a retirement plan agent permits an ERPA to do that one could not do absent enrollment? Is it only about the Employee Plans Compliance Resolution System? Does the right to represent a taxpayer in the IRS's examination of a Form 5500 report matter? Is there something else allowed for an ERPA (but precluded for others)?
Number of replies posted  6 replies      Number of times viewed  76 views      Add Reply
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ldr created a topic in 401(k) Plans

How Must a 404(a)(5) Notice Be Delivered?

If a 401(k) plan is on a platform like John Hancock, and JH produces the 404(a)(5) notice, how must it be distributed? It's available on the participant's account page at JH. Is it enough to tell the participants via an email or a written memo how they can access it themselves on their account page? Or must the employer access it off the Plan Sponsor page, download it, and either distribute paper copies or email it to the participants? Must this be done every quarter? I am not picking on John Hancock -- I could have used any platform provider -- we just happen to have a number of plans with them.
Number of replies posted  8 replies      Number of times viewed  66 views      Add Reply
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Meem created a topic in SEP, SARSEP and SIMPLE Plans

SIMPLE Contributions Deducted from Pay of Employee Who Never Signed Up

I was in the insurance and financial service industry for over 20 years. I moved and left an agency I ran after 20 years, in order to take care of my ailing dad. Previously I was a registered representative for my company and actually handled our own SIMPLE Plan for our office, in part because 'i' shares were available -- we actually did retirement planning at the time. This preface is why I feel so dumb! After my dad's death I went back to work for a different agent. At hire he provided a SIMPLE Plan with a 3% match. I took the job on the condition that he provide some type of group health coverage for me. I was overwhelmed already in an environment that was seriously non compliant and sub par regarding just client accounts. If I ever brought up a compliance issue -- only wanting to help to resolve -- it was met with disdain as if I was trying to 'run the show' and I was reminded who's name was on the door and that he was a CFP! After leaving for another position, I realized he had been deducting 3% for my SIMPLE contribution every two weeks but I never did a risk tolerance tool, any paperwork, nor got any correspondence. I texted him to inquire "where my SIMPLE was" -- his response was "I don't know and why would I know where your investments are"? My response was simply "huh?" ... I waited until the next day hoping he was in a mental crisis at the time and then sent him another text explaining he had been deducting the 3% contribution. Again the shocking response was "that's news to me and I guess I owe you some money." I was mortified but still trying to not burn a bridge, so I replied "Oh well, you saved me the 10% penalty because I need the money." I waited another few days because I was praying he'd do the right thing and at least offer to repay me my contributions plus the 3% match. I decided to just suck up the market loss (which was huge). He said he'd have to contact his CPA although I told him I had my last stub showing the 3% he deducted. Sadly, a week later he sends me a text that says "Damn it, I owe you $XXX" which was EXACTLY MY contribution! I have not responded at all since then! I also found out his only former competent staffer had set up the plan 5 years ago! He has hired multiples of people since then, and I have no doubt he has neither done their paperwork to start their accounts nor has he been even sending in the contributions for former employees within prescribed times if at all! On the one hand I want to help him get out of this mess. On the other I just want my money plus the promised matching contribution. Telling him again the ramifications of his actions will only make me look like the "know it all" again and be met with an unpleasant outcome. I don't even want to disclose what happened with the health insurance in this thread now. I knew I was in trouble when he told me "Men have vulnerable egos" and that his wife was "a better man than he was." Help! What is he potentially facing and how can I help him without hurting myself further?
Number of replies posted  2 replies      Number of times viewed  55 views      Add Reply
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WM created a topic in Defined Benefit Plans, Including Cash Balance

Current Employee Wants Credit for Previous Service as Independent Contractor

A defined benefit plan requires participant contributions. An independent contractor signed an independent contractor agreement but later became an employee with no break in service. He is claiming that he should have received eligibility service credit under Code Section 414(n) because he was really a leased employee (worked under direction of company and solely for the company using their equipment). Also claiming that he was never provided with information about the plan and contribution requirement. There are no plan records to verify these claims and we cannot confirm that SPD/application was provided. Does he have a claim?
Number of replies posted  1 reply      Number of times viewed  30 views      Add Reply, Inc.
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