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Message Boards Digest

May 1, 2019

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

Richard Hyman created a topic in Nonqualified Deferred Compensation

Can New Jersey Tax My NQDC Benefits Even Though I Don't Reside There?

I have a question about non-resident taxation by New Jersey of my NQDC if my residence is in Florida. Under federal code 104-95, distributions would not be taxed in the nonresident state if one of two conditions were met. The condition in question is section (ii), which states, if a plan was "created solely for the purpose of providing retirement benefits for employees in excess of the limitations imposed by 1 or more sections, including 401K plans". How do you interpret "solely"? The plan I am questioning states explicitly that the plan was created to allow tax savings for the participants. I have submitted a non-resident tax return, requesting that all withheld NJ taxes be returned. Will that be allowed?
Number of replies posted  4 replies      Number of times viewed  50 views      Add Reply
 
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ERISA11 created a topic in SEP, SARSEP and SIMPLE Plans

Replacing SIMPLE with 401(k) Plan Mid-Year After Correcting SIMPLE Employer Eligibility Failure

Notwithstanding the general rule that you can't terminate a SIMPLE and replace it with a 401(k) plan mid-year, if the employer has become ineligible to maintain a SIMPLE and is beyond the grace period, and they correct under VCP by stopping any further contributions in the middle of this year, can they start a 401(k) plan for the rest of this year? Or must they wait to start the 401(k) until next year? It seems to me that, given that they can't continue the SIMPLE for the rest of this year, they should be able to start the 401(k) plan. But EPCRS says that a SIMPLE plan that is corrected for an employer eligibility failure through VCP "is treated as subject to all the requirements and provisions of ... 408(p)," which could mean having another qualified plan is prohibited for the rest of the year. A TPA is suggesting that the employer would need to wait until the next year.
Number of replies posted  3 replies      Number of times viewed  36 views      Add Reply

justanotheradmin created a topic in 401(k) Plans

Recordkeeper Produced Grossly Incorrect Reports -- DOL or IRS Remedy?

A 401(k) plan sponsor used a daily recordkeeper for its plan assets. It has become clear from the trust report (which is by participant and money source) provided by the recordkeeper, that the transactions are not recorded accurately. For example, several distributions were processed in 2018 with the non-vested account balances to be forfeited. The report has a column for forfeitures, but in many instances, it isn't used. The forfeited amounts are variously lumped into Transfers, or Gain/ Loss, etc. Similarly, several items which I would expect to show up as Contributions, are instead listed under transfers. The known errors have been pointed out to the recordkeeper and several requests for an updated trust report have been made. The recordkeeper will not provide an updated report unless someone agrees to their hourly fees for the time it would take to fix the transaction history and trust report. I suspect there are a number of other mis-coded transactions that haven't come to light yet. At what point should the plan sponsor and trustees contact the DOL? Would that be futile? For what it's worth, due to other issues with the recordkeeper the money and recordkeeping was moved away to another provider, so future errors should be limited. I usually only see DOL involvement when it looks like fiduciaries might mishandling plan money. I don't usually see the plan fiduciaries go to the DOL (or IRS) over an issue with a service provider. So I'd love some suggestions, or to hear of people's similar experiences and how they were resolved.
Number of replies posted  8 replies      Number of times viewed  90 views      Add Reply

Jessalynn created a topic in Litigation and Claims

I Am Surviving Spouse; Want to File Non-QDRO Counter Claim Against My Deceased Husband's Ex-Wife

Background: Married in 2016, then we had an accident in Colorado in October 2017. I survived but my husband did not. I hire a accident firm. Life insurance is under ERISA which is based off 2 times wages (there's an annual raise). Within the first week my husband's ex-spouse submitted a claim and was told she wasn't listed as the beneficiary. She hires a lawyer. DRO from 2014 does not have plan names or amounts. In January the employer sends them a non-QDRO letter. In February they open a motion to clarify for DRO to insert 2014 amounts. Judge tells them they need to figure out who to substitute in, due to death. Around the same time my accident lawyer contacts the ex-spouse to ask if she'll sign for a QSF to work out details of wrongful death suit that will go to husband's daughter. Her lawyer contacts my accident lawyer trying to get 2014 life insurance information. My lawyer informs him she's only handling the accident case. The ex's lawyer decides to fight QSF since he can't get 2014 information. In May he starts declaratory judgment case against the employer and me while also asking the court to weight the life insurance and wrongful death amounts against each other. Case is transferred to federal court under ERISA. Oct 2018 passes by and I don't have to open the estate since we were co-signed on house and totaled our truck. I hear nothing back about modifying the DRO. I think they missed the 90 days to substitute someone in. No claims come into estate from ex's lawyer -- he still just wants 2014 information. in January 2019 the judge dismisses case and separates wrongful death back to state court. In February 2019 the ex's lawyer rewrites his case against employer to ask that DRO be considered a QDRO and asks court to consider extending time to sue the estate if not QDRO. He then also starts a conversion case against me at state court saying I'm controlling the funds that the employer has not paid out yet since I won't sign them over. Question: Have you ever seen a statue of limitations to submit a claim against an estate extended relating to an ERISA benefit? I am excused from the ERISA case but have been keeping tabs on it with my Pacer login. New case against me brings up my accident lawyer, so she is going to respond asking for fees and harassment since the other judge in the dismissal hinted to the ex that I'm not a part of the DRO.
Number of replies posted  0 replies      Number of times viewed  27 views      Add Reply

College Run created a topic in 401(k) Plans

401(k) Hardship Distribution for My College Tuition: How to Document Costs Ahead of Time?

How does one get a statement of sorts or proof of college tuition billing for the future 12 months? Normally you don't know what classes are available for the future semester until around the end of the current semester you're in. To figure out what classes are available in 9 months isn't really possible, nor is it possible to submit paperwork with correct classes on it if the college doesn't even have the courses posted that far out. I'm looking at doing a withdrawal because I don't have any more financial aid loans available before finishing my degree in about 9 months.
Number of replies posted  1 reply      Number of times viewed  33 views      Add Reply

BG5150 created a topic in Distributions and Loans, Other than QDROs

75-Year-Old Participant Takes Full In-Service Distribution Before Termination; RMD Required?

Participant is age 75, non-owner, still working. She decides to take a full in-service distribution and rolls it to her IRA. In June, she retires. Is she required to remove what should have been her plan-related RMD from the IRA?
Number of replies posted  4 replies      Number of times viewed  41 views      Add Reply
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