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My understanding is that it is cumulative, that the preservation of capital requirement applies upon distribution unless the terms of the plan dictate otherwise, such as a zero percent annual floor. Using actual ROR can cause high 401(a)(26) minimums when there are low or negative investment returns and can cause low 415 lump sum payout limits when there are high investment returns, so be careful out there!

RatherBeGolfing....thanks for the response and feedback ! We are seeing this issue more and more and do have difficulties in obtaining prior reports. Plus this just adds additional work on the already full plates of our Consultants.

We see this way too often, and have started defaulting to completing the work for the client unless the prior provider affirm that they will do it and provide a timeline for the work so that we can make sure it gets done. No matter who is responsible, the client wont be happy when they have to pay penalties a year or two later. It takes more time to do damage control, so we have opted to do it during the takeover. About 30-40% of our takeovers come from MEP/PEP providers, and they are usually the better ones to work with (with some notable exceptions) As for recourse, there is no easy answer. Is there a service agreement? What is in the service agreement? Does it spell out the responsibilities of each party? Does it detail the fees, how it will be billed, and what happens when services are terminated? Unless your takeovers come from pretty much the same place, every situation is going to be different. Are you having a hard time getting information from prior providers? We have noticed that there are a few big providers (who will remain nameless) that are getting more and more difficult to work with during the takeover process.

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When a plan in merges into a PEP, as we know, it needs to be shut down with a final year compliance testing and 5500 filing. It has become more common where as soon as the current TPA is notified of the intent to merge into the PEP, they stop their service and fail to complete the final testing and 5500 filing. What recourse does the client have to ensure the current TPA completes the shut down, especially since the fees have been paid for that service ? Besides the new TPA completing the final work, are other solutions available ? Thanks for your time.

If a plan has the Rate of Return pegged to something like the S&P500, and the S&P goes down 20% in 2025, but then goes up 10% in 2026 , what happens to participant hypothetical accounts? For example, if someone's hypothetical account was $10,000 on 1/1/2025, it stays at $10,000 through 12/31/2025 because the benefit can never go down. My big question is will there account still be at $10,000 at 12/31/2026, because the 10% return in 2026 was not enough to make up for the losses in 2025? i.e., is it a cumulative tracking? Or is the ROR always just pegged to the ROR specified in the doc for that year, with all prior returns (or losses) ignored?

Even if an employer learns what it believes to be the new mailing address for a terminated employee with a balance, doesn't that participant have to (must) take action to provide instructions to the employer or recordkeeper to change their mailing address? Otherwise, there could be privacy violations, etc.?

Before launching a project to take over administration of beneficiary elections, find out is considered the existing primary source for capturing and maintaining beneficiary elections. Many employers are the primary source and keep originals (or certified copies) of beneficiary election forms along with other employee records. Their motivation often is to be able to work with survivors and executors deal with death benefits across multiple insurance and benefit programs. The service agreements with providers should document who is the primary source of records, and communications to employees on how to make elections should be clear about how to make their elections. I agree that reminding participants relatively frequently to review and update beneficiary elections is a best practice. I also is best practice to make this a step when dealing with changes in family status such as marriage, divorce, birth of children and other similar events that are likely to result in changes to beneficiary elections.

I agree with David that you should ask for it. But in my experience, we rarely receive it from other providers. I recommend that you require all participants to re-enter their beneficiary data and remind them several times a year to update their beneficiaries. In the case we do receive beneficiary information from a provider, we keep the data on file. In the rare instance that someone passes away without a beneficiary, we look to the old file to see if anything is listed there.

Thank you!

i would tend to think that if the mortgage they're getting is for a principal residence then the plan should be comfortable with that designation as well.

First of all it they terminate the 410(k) plan, the company cannot implement a new 401(k) plan until at least 12 months after the last assets were distributed. So, there's a detriment right there. What they could do is stop investment into the funds that have surrender charges and contract with another record keeper to offer a daily-valued, participant-directed platform (like Voya or John Hancock or Empower--just examples, not necessarily recommendations). They liquidate and transfer the funds from the annuities to the new custodian as the surrender charges expire. Don't confuse where the assets are held as being 'the plan'. Assets can be moved from provider to provider, even the types of investments offered, without changing the underlying plan. Or, in other words, don't confuse a service termination with an asset custodian with a plan termination. What is your role in this? Are you in the retirement plan industry or are you just a friend asking on his behalf?

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Thank you for your inputs. I have one more question. If my friend wants to terminate the existing 401(k) (thus pay the surrender charges) and start a new 401(k) plan which allows each participant to make his/her own investment decision, would the answer to Question 1 change if my friend decides to increase this year's contributions to make up for the loss? The plan has been around for 3-4 years, and he has financial means to do so.

Guess we got the official answer! I'm just not patient enough.

You should review the many prior discussion threads for more ideas and concerns. A search term of "missing" might be helpful. Probably an important part of this process is interviewing current and former employees who know/knew the missing employee. Perhaps interviewing former neighbors. This step is likely undertaken by the employer (not by any TPA). Because the plan sponsor wants a real answer, do not be sucked in by the "last known mailing address" excuse; this is (in very practical terms) a "cop-out". And the sponsor should eventually be prepared to deal with a response similar to "returned to his/her home country".

Good advice above. My suggestion is to carefully inspect all the relevant filings and dates. For example, your checklist should include: making sure there is no typo (especially the EIN) on the 5500 and/or PBGC filing(s). verifying (don't assume) the exact date each payment was made. For example, if the 09/15 payment was made on 09/16, that is late.

Just observing that you edited your OP, but the thread doesn't say "edited", which I find odd? The way you have it worded now, does not look as much like a scam as it did previously. Hmm, I edited my first post to remove the name as you did, but it doesn't say "edited" either. I guess they changed that functionality. Anyway, I think not filing a 5500 could cause the PBGC to assume they missed an MRC. Also, if their funded ratio was low, the PBGC considers quarterly contributions to be "required minimums". Years ago they put a lien on one of my clients for missing quarterlies.

And remember as WCC notes it is FICA wages which are W-2 Box 3. Those could be different from Box 1 wages, 414(s) compensation, 415 compensation or eligible plan compensation.

agreed and thank you, you got it spot on.

Speculating but if you filed PBGC premiums and not a 5500 that might trigger a response from the PBGC but I don't know for sure. You could discuss with your client reaching out the PBGC directly with a copy of the e-mail asking the PBGC to verify the authenticity. If it is from the PBGC, and there are no missed MRCs you could let the PBGC know their information is incorrect. If there actually are missed MRCs, you could file the required Form 10(s). But if there are also still missing 5500s, the plan may have some additional issues to fix.

Since you said they are still working (and presumably now getting W-2 wages) and are not a 5% owner in their 1st RMD year, then they are not required to take a 2025 RMD unless they separate service before 12/31/2025. if I misunderstand the facts, that could change things.

Employee Locator — Best Of The Best Employment Screening! and PenChecks Trust - A Leading Provider of Comprehensive Retirement Plan Payment Processing Services – and more I found both easy and provided quick results. I have had various levels of success finding participants with the results, but you do get reports showing you complied with the DOL search rules for your files. I found APscreen a little more through in the reports they generated. There are quite a few others out there that all seem reasonably comparable on pricing. If you have a lot, you might look for a company that offers a bulk discount.