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attached dol q&a with aba from 2009 presents a different perspective and suggests two plans sponsored by an employer are okay even if it results in avoiding the audit requirement. temp.pdf

Splitting plans was discussed at the 2000 ASPPA Meeting - during Q and A's. They indicated it "raises issues or avoidance and evasion." We only do it if we have another reason for doing so or if it is a new Plan situation.

I agree with the conclusion, but the statement "Top heavy minimums are required only for NHC." should be "Top heavy minimums are required only for non-keys, not that it makes a difference in this case."

It is my understanding the DOL does not believe an ERISA plan can turn assets over to the state ever. You need to either put it in an IRA, now the PGGC program (if elig) or reallocate as forf (if applicable which is hard at plan termination.)

Again, depending on what the document says, maybe explain (threaten) that any unclaimed balances at the time of final distribution get turned over to the state?

There are two circumstances where what you have described actually works. First, as Bird indicated, going to an insurance company and purchasing an annuity in the normal form will typically be more expensive than settling a participant's benefit in the form of a lump sum. Second, going to an insurance company and purchasing an annuity in the form of a 100% joint and survivor benefit where the plan provides that the 100% joint and survivor benefit is fully subsidized is much, much more expensive than a lump sum. The key to making it all work is that the insurance company, in both cases, offers a lifetime annuity. There is no option to convert to a lump sum at a future date.

Under the expanded PBGC program, unresponsive participants in a terminating DC plan count as missing.

What about the new PBGC missing participants program? Does that apply here? I can't remember off the top of my head if unresponsive DC participants count as missing participants. I know unresponsive DB participants are considered missing.

There are a number of providers out there that can assist with this as well: Millennium Trust and Penchecks, just to name a couple.

I agree with Bird, but would add one more important point. If your plan is written to a preapproved document, then the BPD may have already anticipated these issues and, hence, already include the language allowing for a distribution of balances in excess of $5,000 (regardless of participant consent). So, before you do anything, read the provisions on Plan Termination in your Basic Plan Document to determine the options that are already available to you under the written terms of the plan. Always remember, RTFD :-) Good Luck!

You have to set up an auto rollover option; no balance is too big for that for a terminating plan. Or at least threaten to; sometimes that gets them moving. And explain that plan expenses will now be shared by participants, and that person being the only one, will have to pay for administrative costs associated with doing all of this due to his/her recalcitrance.

$0/X = $0.00 where X is the MDIB factor.

When he was a teenager, I would have paid them to take him!

I'll take a different approach: do nothing. The EE does not get to decide what benefit plan(s) are offered by the ER. Whether or not the objection is based on religious grounds, the existence of an account INSIDE THE PLAN does not cause him (or anyone else) any harm (IMHO). If he doesn't want it, he doesn't have to take it when he severs employment.

Beware! Larry, I don;t mean any disrepsect, but your "arbirtray" bifurcation to me seems the likely target of the following Q&A. The one time I did this was for a union and a non-union plan, and of course there are a hundred reasons to have separate plan for union and non-union (ok just one big one called collective bargaining). I have also seen it done for different legal entities. Anything else and I start to get nervous about the implications of this Q&A. Now I know, I know, this is "just" a Q&A. But still being right will not make me feel any better if I end up in a protracted debate with the DOL. the question was raised at the 2000 annual ASPPA meeting, in the general Q&A session. The questions at this session were answered by Joe Canary, Scott Albert, Lou Campagna and Mabel Capolongo of the Department of Labor: Question 5: A 401(k) plan has 150 participants. The plan must file a full 5500 and have an audit by an accounting firm. Due to the cost of the audit ($10,000 or $15,000), my suggestion to the client is to split the plan into two plans, each with 75 participants. For 2000 there will be an audit. The plans could be split into two plans on December 31, 2000. Therefore, on January 1, 2001, both plans have less than 100 participants and no audit required. For tax qualification testing, they can be permissively aggregated. In fact, my plan is to administer as if it was one plan and just separate for 5500 purposes. Is my conclusion correct? Answer: This question raises issues of avoidance and evasion. It is not certain that you really have two plans for purposes of Title I of ERISA in this instance--even if there may be two plans for Internal Revenue Code purposes. In Advisory Opinion 84-35A, the Department stated it would consider, among others, the following factors in determining whether there is a single plan or several plans in existence: who established and maintains the plans, the process and purposes of plan formation, the rights and privileges of plan participants and the presence of any risk pooling, i.e., whether the assets of one plan are available to pay benefits to participants of the other plan. This Advisory Opinion also notes that the Internal Revenue Service has cited the existence or absence of risk pooling between funds as relevant to the determination of single plan status. See §1.414(1)-1(b) 26 C.F.R. §1.414(1)-1(b). In DOL Advisory Opinion 96-16A, the Department stated its position that whether there is a single plan or multiple plans is an inherently factual question on which the Department ordinarily will not opine in the Advisory Opinion process