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If the old plan had been merged instead of amounts rolled over, protected features of the balances (distribution timing, etc) and distribution restrictions (no deferrals or SH for in-service prior to 59.5) would have stayed with the merged amounts. If everyone rolled over to the new plan, the $ are there. The only thing needed to put the current plan where it would have been if the improper distributions had not been made is to reattach those features to the amounts rolled in. I think that would be your correction.

About QDROphile’s last point: My article “May an employer restrict who can amend the plan?” in the December 2018 issue of Wolters Kluwer’s 401(k) Advisor explains that the Supreme Court interpreted ERISA to treat “The Company may amend the Plan.” as an amendment procedure that meets the command of ERISA § 402(b)(3). What do BenefitsLink mavens think about a TPA inviting a plan’s sponsor to consider whether it wants to add to a preapproved document’s general provision some further details about which people can or can’t amend the plan, and what kind of written act is valid to amend the plan? Or is that impractical for TPAs too?

The IRS has historically shown that it does not understand what constitutes plan documents, plan amendments, or corporate procedures such as resolutions and delegation. The discussion above does nothing to clarify what constitutes plan terms and amendment of plan terms based on solid principles, therefore what is left is a confusing hodgepodge of apparent "separate" rules to ponder and try to remember and reconcile. 1. A proper and properly drafted corporate resolution can be a plan amendment. A lot is packed into "proper" and "properly" including respect for plan terms. That is not the best style for plan documentation. 2. Assuming the board of a plan sponsor has the authority to amend the plan, the Board should have authority to delegate the amendment function. The delegate must act properly, including act within the authority and within proper procedures for documentation. It would be nice if corporate and plan documents spelled this out rather than forcing reliance on generic corporate and agency law, but good luck with that in the world of pre-approved documents from vendors who mostly have concerns only for LRMs and their own internal administrative issues.

Q and A ASPPA Conference #9 2004 (of course such Q and As might not reflect an actual Treasury position, but I have generally found them reliable) If a plan document provides that the administrative committee may limit HCE deferrals in order to prevent ADP testing violations, and the plan administrator takes that action through resolution and not by plan amendment, is this considered to be an "employer-provided limit" so that contributions in excess of this imposed limit are eligible to be treated as catch-up contributions? A: Yes Is there any availability issue under 414(v) or 401(a)(4), since the limit applies only to HCEs if all NHCE employees can defer at that level, just not as catch-up contributions? A: No

Can you determine how the existing company will report it to the IRS? If they code the 1099-R as a 1035 exchange, you're good to go. Most likely, they will because transfers among spouses are not taxable events. Plus, companies tend to view the "obligee" as the contract owner, since the owner is the one that controls the contract. If they decide not to code it as desired, a potential work-around will be to have the new contract issued with the same annuitant and owner designations. Then, once issued, have the new company re-issue the contract with joint annuitants. HTH

C.B. Zeller, I generally agree with your response to baileybear and he or she should find it very helpful. However, would your answer be any different if the plan (which has a favorable determination letter), contains the following provision: "The [plan sponsor] and the Plan Administrator may from time to time impose limitations on Elective Deferral Contributions, including limitations that apply only to Highly Compensated Employees, as the [plan sponsor] and the Plan Administrator in good faith determine advisable to ensure compliance with any Federal income tax rule, or for administrative feasibility."

For a small employer (under 20), the Medicare Secondary Payer rules do not prohibit paying/reimbursing employees' Medicare premiums. It sounds like your small governmental employer may be asking about an HRA, but what they really want is a special type of HRA called a "Medicare Premium Reimbursement Arrangement." It's allowable under IRS Notice 2015-17. Here's brief info on the conditions: The employer offers a group health plan providing minimum value (e.g., major medical); Employees participating in the Program are actually enrolled in Medicare Parts A and B; The Program is available only to employees enrolled in Medicare Parts A and B and/or D; and The Program is limited to reimbursement of Medicare Parts B and D premiums, and “excepted benefits” (e.g., Medigap policy premiums).

If one attempts to input an entity's name and EIN in the online EIN application now, the website immediately displays an error message because it can't validate the EIN against its individual taxpayer database. I've entered my own SSN to double check - it will validate me and my SSN, so it's definitely looking at the individual taxpayer database. The thing is, I have hard copies of screen prints of SS-4 applications processed via the online EIN application for clients over the years, and the website definitely used to permit the entry of an entity name and EIN. The caption for Line 7b on the current Form SS-4 is "SSN, ITIN or EIN" - which implies that an EIN is a permissible entry for Line 7b. The current instructions state "Lines 7a-b: Name of responsible party. Enter the full name (first name, middle initial, last name (if applicable) and SSN, ITIN, or EIN of the entity's responsible party." Note the parenthetical "(if applicable)" with respect to entering the first name, middle initial, and last name. Note as well the explicit reference to an EIN. The instructions go on to state: "Responsible party defined. The “responsible party” is the person who ultimately owns or controls the entity or who exercises ultimate effective control over the entity. The person identified as the responsible party should have a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the person, directly or indirectly, to control, manage, or direct the entity and the disposition of its funds and assets. Unless the applicant is a government entity, the responsible party must be an individual (i.e., a natural person), not an entity." That last bolded sentence in the definition makes no sense when the entity applying for the EIN is an employer plan. By definition, it's the employer - as plan sponsor - who acts to establish an employer-sponsored retirement plan, and not an employee or officer of the plan sponsor. Moreover, looking at the rest of the definition, the employer clearly is the "person" who "controls" the plan and who "exercises effective control over" the plan. Therefore it is the plan sponsor who is the "responsible party" - and the appropriate "person" - albeit a legal person, rather than a natural person - to be listed as the "responsible party." Consider the implications with respect to applying for an EIN for a plan committee that is designated by the terms of an employer plan as the plan administrator. Other message threads on this site discuss the Form 5500's requirement that a plan administrator that is not the plan sponsor must have its own EIN and report it on Form 5500. Many plans designate a committee as the plan administrator, and, as a result, many plan committees have obtained EINs over the past several years for Form 5500 reporting purposes. It's the plan that designates the committee as plan administrator, and the plan generally will reference the board of directors of the employer as the entity that selects of designates the members of the plan committee. So who is the "responsible party" here for purposes of completing a Form SS-4 to obtain an EIN for the plan committee? The IRS will tell you it is the employer! I know this because an IRS representative told me this when I assisted a plan committee with obtaining an EIN several years ago, and I have a screen print of the online data entry - completed online while talking to that same IRS representative on the phone - showing the name of the employer and its EIN as the information entered for Lines 7a and 7b. So... in a plan committee scenario, given the definition of "responsible party" in the instructions and the online EIN application's restriction on entering an EIN, whose SSN should be entered as the "responsible party" for the plan committee? Hmmm.... IRS Form SS-4 Instructions - 12-2017.pdf IRS Form SS-4 - 12-2017.pdf

A simple non-actuarial general response is that yes, to the extent asset under performance results in the plan being under funded then the employer will be responsible for additional contributions, but on an amortized basis (pay off the shortfall over time) rather than an immediate dollar for dollar requirement. As noted above, there are a lot of moving parts and actuarial calculations and other experience related items like forfeitures that enter the equation.

One of the key defining differences between a defined benefit plan and a defined contribution plan is that in a DC plan investment risk is borne by the participant, and in a DB plan the investment risk is borne by the sponsor. So yes, it is possible that the sponsor could be on the hook for larger contributions if the assets perform poorly. It's also possible that the MRC is zero despite the value of the assets. It's impossible to know without more details specific to the plan.

A couple of observations - the 402(g) limit is a calendar year limit, and isn't pro-rated. Also, and you've probably encountered this - it is sometimes impossible to get the payouts done in time - sometimes participants just refuse to send their forms back in on a timely basis, and if you have many that are over the cashout limit, you may not be able to get it wrapped up by the end of the year. We always tell clients this in similar situations where they are anxious to get everything wrapped up before the end of a year. Also, watch out for top heavy if you have had people enter mid year and the plan excludes comp prior to participation date. (I'm assuming this termination is not due to "business hardship.")