Plan Distributions

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The retirement plan landscape is ever evolving. We distill the details so you don’t have to!

We’ve corralled the best news from inside the beltway – not only regulations, but also new legislation from Congress as well as relevant guidance from the IRS and Department of Labor. In true DWC fashion, we don’t just repackage a recitation of the rules, we provide our thoughts and commentary about what those rules mean to you.

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Have 401(k) questions? We have 401(k) answers! We bring you answers to many of the common questions we receive.

A behind-the-scenes look not at how the sausage is made, but why we make it the way we do. (Hint: It’s all about the best interests of the client.)

We’re all about learning from other people’s (alleged) mistakes. We might not be attorneys, but we still follow benefits-related cases and summarize lessons and key take-aways. No hourly fee needed for these insights!

A deeper dive into retirement plan topics doesn’t have to be headache-inducing. Our Pension Primer articles provide depth of information without depth of jargon!

DWC |

Lost Participants: I Ain't Missing You at All!

Nope, this isn’t an article about bad pop songs from the 1980s, but it is about something that can be just as much of a bother – lost participants with remaining balances in your retirement plan. ...
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DWC |

Distributions from a Retirement Plan

Distributions from a Retirement Plan
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DWC |

In-Service Distributions FAQs

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Jen Swets |

New Distribution Options to Encourage Savings

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Sue Schnur |

Grab Bag of RMD Changes

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Carter Kimball |

Cash Out Limit is Movin' On Up

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Haden McDonald |

Trust But Verify...But Not For Hardship Distributions

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DWC |

Can I Convert a Coronavirus-Related Distribution to a Roth IRA?

Facts We added Coronavirus-Related Distributions (CRDs) to our 401(k) plan in 2020, and a number of our participants availed themselves of the new feature. I know they have the option to pay any ...
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DWC |

Can a Former Employee Roll a Coronavirus-Related Distribution Back into our Plan?

Facts Earlier this year, we decided to make the CARES Act coronavirus-related distributions (CRDs) available to participant in our 401(k) plan. We know that it is possible for participants to repay ...
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DWC |

How Can I Minimize my Risk When Reviewing and Approving Hardship Withdrawals?

Facts As a plan sponsor, I want my employees to have access to their retirement accounts in the event of a financial emergency. I know that offering hardship withdrawals could satisfy that goal, but ...
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DWC |

Do We Have to Provide New Paperwork When a Participant Requests a Second Distribution?

Facts When a participant requests a distribution from our plan, I provide them with a with a package that includes an election form and a bunch of other information. A participant who terminated and ...
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DWC |

Should We Make Up for Earnings Lost as a Result of a Delayed Distribution?

Facts Over the past several months, our turnaround times for normal business processes have lagged somewhat as we have adjusted operations in response to the various stay-at-home orders. When ...
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DWC |

Is There Any Coronavirus Relief for Participants Who Want to Postpone Plan Loan Payments?

Facts Several participants in our 401(k) plan currently have outstanding plan loans, and many others are looking to initiate them. However, given the current pandemic, many participants are concerned ...
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DWC |

How Does the CARES Act Expand the Availability of Retirement Plan Loans?

Facts Our 401(k) plan allows participants access to their accounts via hardship distributions and, for those at least age 59 ½, via in-service withdrawals. But with the economic uncertainty of the ...
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DWC |

Can We Allow a Distribution for a Coronavirus-Related Hardship?

Facts Some of our employees are dealing with financial challenges due to the coronavirus situation, and they are asking whether they can access their 401(k) accounts. Our plan allows for loans and ...
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DWC |

Do We Still Need to Suspend Deferrals Following a Hardship Distribution?

Facts Larry and Kent are both participants in our company’s 401(k) plan. Both recently went back to school on a part-time basis to pursue graduate degrees and will continue working for us. Each of ...
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DWC |

Do We Need to Continue Paying RMDs for a Deceased Participant?

Facts The CEO (and 5% owner) of our company passed away earlier this year at the age of 73. He started taking his required minimum distributions right on time after reaching age 70 ½. At the time of ...
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DWC |

Do 401(k) Loans Impact a Participant's Credit Score?

Facts Our 401(k) plan allows participants to take loans from their accounts. We have a written policy that describes how the loans work and spells out the requirements that the plan and participants ...
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DWC |

What is a Suspense Account and Can We Use Our Forfeiture Account Instead?

Facts The annual compliance report that our TPA provided to us indicates that we over-funded matching contributions for certain employees and instructs us to transfer the excess amounts out of the ...
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DWC |

How Do I Calculate How Much Money is Available for a 401(k) Loan?

Facts The participants in my company’s 401(k) plan are regularly inquiring about how much money they have available for a loan. When I report back the amount available to them, it’s not unusual for ...
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DWC |

Uncashed Distribution Checks? The IRS Provides New Guidance...Sort Of

Just about anyone who has dealt with a 401(k) plan – either as a plan sponsor or a service provider – for any amount of time has had to deal with the issue of participants not timely cashing plan ...
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DWC |

Are We Required to Force Former Employees to Take Their Money Out of Our Plan?

Facts We just received our year end testing and it mentioned that we have several terminated participants with small balances that we are required to distribute from the plan. I remember seeing ...
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DWC |

Can Employees from a Former Subsidiary Take a Distribution from our 401k Plan?

Facts Our company has several wholly-owned subsidiaries, and each of them has signed onto our 401(k) plan as participating employers. We sold 100% of the stock of one of those subsidiaries – Glen’s ...
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DWC |

Plan Loans & Past Participants: What Happens to a Participant's Loan Balance When They Terminate Employment?

Facts We have a participant who took a loan from his 401(k) account at the beginning of the year. Yesterday, he gave us notice of his resignation, effective in two weeks, but he still has an ...
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DWC |

Hardships & Hurricanes: What are the Hardship Rules Following a Natural Disaster?

Facts Our company sponsors a 401(k) plan. One of our participants lives in the Florida panhandle and lost her home in Hurricane Michael. She is under age 59 ½ and is not eligible to take in-service ...
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DWC |

Are We Still Required to Suspend Deferrals Following a Hardship Distribution?

Facts I sponsor a 401(k) Plan for myself and my staff. I recently processed a hardship distribution for the purchase of my primary residence in October 2018. I know the rules require me to suspend my ...
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DWC |

Are RMDs Required for a Retiree Turned Independent Contractor?

This QOTW has been updated to reflect changes made by the SECURE Act, which was signed into law on December 20, 2019. Participants who were born on or before July 1, 1949, are required to start ...
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DWC |

Breaking News: Hardship Distributions Becoming Even Less of a Hardship Than Previously Expected

Nearly a year after Congress passed changes to the hardship distribution rules in the Bipartisan Budget Act and the Tax Cuts and Jobs Act, the IRS has published proposed regulations to fill in some ...
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DWC |

Can We Suspend RMDs for a Rehire?

This QOTW has been updated to reflect changes made by the SECURE Act, which was signed into law on December 20, 2019. Participants who were born on or before July 1, 1949, are required to start ...
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DWC |

Can a Participant Get a Jump on RMDs & Start Taking Them a Few Months Early?

This QOTW has been updated to reflect changes made by the SECURE Act, which was signed into law on December 20, 2019. Participants who were born on or before July 1, 1949, are required to start ...
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DWC |

What Costs can be Covered Under a Hardship Distribution for Purchase of a Primary Residence?

Facts One of the participants in our 401(k) plan submitted a request for a hardship distribution for the purchase of a primary residence. On review of the supporting documentation, we discovered that ...
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DWC |

Retirement Plan Design

Introduction Whether you are starting a new plan or reviewing your current plan design, the key to success is access to knowledge for selecting the best plan.
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DWC |

Can In-Service Distributions be Taken Prior to Age 59 1/2?

Facts One of the participants in our 401(k) plan heard from a friend that it is possible to take money out of a plan while still employed. I’ve always heard that age 59 ½ is the rule of thumb as to ...
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DWC |

Can a Charitable Organization be Named as a Plan Beneficiary?

Facts Our company sponsors both a 401(k) plan and a cash balance plan. One of our employees is a strong supporter of a local charity. She does not have a spouse or children, so she would like to name ...
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DWC |

Can a Company Freeze a 401(K) Account if an Employee Is Suspected of Stealing From the Company?

Facts We just discovered that one of our employees has been stealing money from the company for quite some time. We fired him as soon as we discovered the theft, and we are working with the police ...
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DWC |

401(k) Distribution Rules: After Taking a Hardship Distribution, How Quickly Must a Participant Stop 401(k) Contributions?

Facts A participant in our 401(k) plan recently took a hardship distribution. We know we are supposed to suspend his deferrals for six months following the distribution, but we are not entirely clear ...
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DWC |

Is it Possible for a 401(k) Beneficiary to Waive Benefits?

Facts One of our employees who was a participant in our 401(k) plan recently passed away. He never submitted a beneficiary designation form; however, since he was married, we understand that his ...
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Adam C. Pozek |

Hardship Distributions Will Soon Be Less of a Hardship

In the wee hours of this morning, Congress passed a spending bill to end the most recent government shutdown that had just begun at midnight. Although the bill was focused on funding the government ...
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DWC |

How Should a Plan Sponsor Handle Required Minimum Distributions For Missing or Nonresponsive Participants?

Facts One of our employees retired on July 31, 2017 at age 73. During her tenure with the company she was an active participant in the 401(k) plan, accumulating a balance while having never taken a ...
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DWC |

What Are 401(k) Plan Forfeitures and How Can They Be Used?

Facts We have a 401(k) plan that includes several different types of contributions—employee deferrals, a company-provided safe harbor match, and a profit sharing contribution. The plan has a 6-year ...
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DWC |

Who Must Receive Retirement Plan Blackout Notices?

Facts We have selected a new recordkeeper for our 401(k) plan. We are told that there will be a period of eight business days when our participants are not able to log in and manage their accounts. ...
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DWC |

Retirement Plan Termination: Are There Special Rules for Paying Out Account Balances?

Facts The owner of our company is retiring next year, and the business will close as a result. We sponsor a 401(k) plan that we know we need to terminate, and we want to get started right away so ...
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DWC |

Is There a Specific Format or Required Content for a Beneficiary Designation Form?

Facts A participant in our retirement plan just passed away. When we were reviewing our files, we were glad to see that he had completed a beneficiary designation form. On closer review, however, we ...
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DWC |

Should We Deny a 401(k) Loan Based on an Expectation of an Employee’s Termination?

Facts One of the participants in our 401(k) plan just applied for a loan for $25,000. He has enough in his account to support the loan, but there is a bit of a wrinkle. We are planning to reorganize ...
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DWC |

Can a Company Owner Withdraw More than the Required Minimum Distribution After Age 70 1/2?

This QOTW has been updated to reflect changes made by the SECURE Act, which was signed into law on December 20, 2019. Participants who were born on or before July 1, 1949, are required to start ...
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DWC |

Do We Need an IRS Favorable Determination Letter for Former Employees to Roll Over Their Balances?

Facts We recently processed a rollover from our 401(k) plan for a former employee who wants to roll her balance into her new employer’s plan. Shortly after the payment was processed, the former ...
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DWC |

Can We Split QDRO Fees Between Participant and Ex-Spouse?

Facts We have a participant who is going through a divorce and told us that he will be submitting a Qualified Domestic Relations Order to assign a portion of his 401(k) account to his ex-spouse. It ...
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DWC |

Form 8955-SSA FAQs

What information is required to be reported on the Form 8955-SSA? The form requires the plan sponsor to report any participant who terminated in a prior year and is still due a vested benefit from ...
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DWC |

Required Minimum Distributions FAQs

What are required minimum distributions (RMDs)? When a taxpayer reaches age a certain age, he or she must begin withdrawing minimum amounts from all tax-favored retirement accounts each year. This ...
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DWC |

Hardship Distributions

Plan sponsors have the option to allow participants to access their accounts while still employed via a plan loan or an in-service distribution. However, some companies prefer to limit that access so ...
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