"Can a plan have a provision in its loan program that loans are only available from sources that are 100% vested for the participant?"

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"Is there a regulation that requires the recordkeeper to follow the client/employer's instruction to liquidate and supply all the necessary information to another service provider when there are unpaid invoices, including the most recent plan year end work and data conversion work?"

"The plan sponsor went from a basic safe harbor match in 2018 to a safe harbor non-elective in 2019. Unfortunately the basic safe harbor match deposits were still being made during all of 2019. Can we do a self-correction? If so, I'd like to just reclassify the funds as SHNEC but some participants may have overages if they were deferring over 3% of pay. Can I just forfeit the overages? Am I required to calculate earnings on the overages to be forfeited?"

"We have a participant who is terminated, wants to take a full distribution, and also has a loan outstanding. She does not want the loan to be offset at the time of the distribution. Instead, she wants to send a check to pay off the loan after the distribution is done. Is that allowed? My understanding is that it's not, because the loan offset must be done when taking a full distribution -- is that correct?"

"Participant is partially vested in a source. She takes a partial distribution. The plan document gives this formula to determine what her vested account balance will be after the distribution:

X = P(AB + (R x D)) - (R x D)

For purposes of applying the formula: P is the nonforfeitable percentage at the relevant time; AB is the Account balance at the relevant time; D is the amount of the distribution; and R is the ratio of the Account balance at the relevant time to the Account balance after distribution ( AB(1)/AB(2) ).

So I have: P = 50%; AB(1) = $10,000; D = $1,000; AB(2) = $9,000; R = 1.111 (10/9). So the math according to the formula is: 0.5 * ($10,000 + (1.111 * $1000)) - (1.111 * $1000) = $4,444.44

Shouldn't the vested balance be merely $4,000? She had $5,000 vested and took $1,000 of it. So that would seem to leave $4,000. Where have I gone wrong?"

"I have a brand new start-up plan that started 1/1/19. The owner is just now calling me on 12/11/2019, wanting to amend the plan to a SH plan because the company did well and he has extra funds to put to work (and not get taxed on). Obviously it's too late for that. And it's too late to change to SH for 2020. BUT the owner is saying that his accountant, other attorneys and colleagues are saying we should be able to backdate this and thus be able change the plan to SH for the 2020 plan year. I can tell you that my Trust Co. and our TPA partner would never go for doing something like that. But he thinks there should be no problem doing that, especially if each employee signs off that they received their SH notice. Thoughts/opinions on how to handle?

Another issue: he asked whether, if he terminated his plan and went to another company and started a new Safe Harbor plan elsewhere, could that be effective for 2020? Or, he wonders, what if he decided to terminate our services and convert the plan to a new provider and change it to a SH Plan in the process? What are the dates and deadlines for that, he's asked me."

"I'm having trouble with the benefit accrual rules in 430(d). A client started a pension year in year X. Unit benefit formula is High 3 x 5% per year of service (including prior service). High 3 is computed based on all years of service. In year X there are 7 years of prior service and high 3 is $8,000/month. Accrued benefit follows method under 430(d)-1(C)(1)(ii)(C) -- at beginning of year X accrued benefit is 5% x 7 x $8,000 = $2,800 for the FT, and $400 for TNC. We're now in year X+2. Due to a huge bonus of $500,000, High 3 is now $22,000. Accrued benefit for FT is then determined as 5% x 8 * $22,000=$8,800 and benefit for TNC is only $1,100. Thus the big change in average comp is being spread over all years of service rather than applied in year X+1. Is that correct? And if the benefit accrual method were changed to where the increase in pay is fully applied in year X+1, would that be a change in funding method? Also, is there a way to change the benefit accrual method that doesn't require a change in the funding method?"

"A two company controlled group is ending as of 12/31/2019. Both participate in a 401(k) plan together. The main sponsor would like to kick out the Participating Employer at the end of the year. The Participating Employer likely will voluntarily end its participation anyway. They aren't ready to have a new plan of their own. The plan document (yes, I read it) is silent on this exact scenario. The participating employer MAY choose to set up a successor/spin off plan. But nothing in the document says they have to. I think the old rule was that the discontinuance of a participating employer doesn't necessarily create a partial plan termination or distributable event because the employees haven't terminated employment. But I thought there was a narrow circumstance where it could be considered a partial plan term and distributable? Am I imagining that?"

"My divorce was final 5/2017. I was married 24 years. My former spouse has worked as a police officer for 30 years. The QDRO to divide my former spouse's defined benefit retirement plan was completed about a year later. QDRO was then approved by the Plan Administrator, sent to the court and the actuarial firm that manages the Plan approved the QDRO and sent me the paperwork this past August to begin distribution of my portion. After reviewing the paperwork, I called the attorney who prepared the QDRO to inquire about the valuation date as I had understood it was to be the date of our divorce but instead the valuation date on the official paperwork was written as 7/2019. The attorney then called me back and proceeded to say that she had conferred with the Plan Administrator who then told her that the QDRO was drafted incorrectly as a Separate Interest (with Survivorship) rather than a Shared Interest. Furthermore, I was told that I would not be able to commence benefits until my former spouse retires (he has reached retirement age) and that the Shared Interest will not allow for Survivorship. This is a real turnabout and greatly affects the equitable division of our monetary assets in the Divorce Agreement. I have since retained an attorney and we are 4 months into a very slow process. My question is simply when does a QDRO become set in stone? At what point can one be assured that it is approved and settled without the worry that at some point in time there may be redress of it? Also, does anyone here have experience with a situation like this where the Plan Administrator approved a Separate Interest QDRO 'by mistake'?"

"I've been told by a vendor that the address for an ERISA plan administrator must be in the same state as the plan situs. Is that correct?"

"A Plan Sponsor has a Profit Sharing Plan (3 participants) with pooled investments held at a brokerage firm, which charges quarterly investment advisory fees. Plan Sponsor wishes to reimburse the Plan each quarter for the fees paid. I haven't seen this in years, but I believe there are two options: [1] Treat the reimbursement as an employer contribution (deductible on the corporate tax return); or [2] Treat the reimbursement as an expense of the Employer, deductible on the corporate tax return. Is that correct?"

"I have a doctor who is a PC. The PC closed down its business in September 2019. The last paychecks went out to employees in September 2019. The doctor wants to do a SEP contribution for himself in 2019. The PC hasn't been dissolved, but employees have taken distributions from their respective SEP accounts (or rolled them over elsewhere). Would the client be obligated to pay the former employees a SEP contribution for 2019 if he takes one for himself?"

"Each year we seem to have a handful of RMDs for deceased participants. The client tell us they don't have a designated beneficiary on file, nor does the fund family. The client also tells us they don't have a way to track down the family and that they can't assist. These are typically small plans. We haven't found a way to force the balance out of the plan. The fund families don't seem to have a process. Anyone else run into this situation? Thoughts?"