PACE will timely review and request all proper information to confirm a participant’s eligibility for a withdrawal or loan from the plan.
It is important to follow a consistent protocol and maintain appropriate records and proof for any distribution or loan due to financial hardship and abide by the IRS financial hardship guidelines.
A Required Minimum Distribution (RMD) can be difficult for a plan sponsor to monitor and track once an employee has retired. Some active employees have the option to postpone the RMD until the year in which he/she retires while owners are exempt from this forgiveness.
Failure to process an RMD carries an excise penalty up to 50% of the RMD amount.
- Send distribution forms to participants
- Review distribution forms
- Review distribution requests
- Review and approve or deny distribution claims:
- If approved, process the distribution
- If denied, notify participant and assist with any appeal
- Hardship distributions:
- Review request for adequate hardship
- Notify payroll provider to suspend deferrals
- Notify participant when they are allowed to resume deferrals
- Remit tax withholding payments
- Send Forms 1099-R to participants and the IRS
- Notify participant, or beneficiary, of required distribution and provide election form and process distribution or rollover
- Authorize the use of forfeitures of non-vested account balance
- Authorize the use of forfeitures as permitted by the Plan
- Maintain copies of all distribution paperwork
- Assist participants with distribution requests
- Send loan paperwork to participants
- Review loan request
- Approve or deny loan requests
- Send loan documents and amortization schedule to participants
- Review and Maintain signed copies of loan documents
- Review and approve or deny loan repayment suspension for a leave of absence
- Decide if/when a loan default occurs:
- Notify participant of default and tax implications
- Send tax forms for a loan default