Leaderboard

Not really. In a true DB plan the employer pays the cost of the ancillary death benefit, it does not reduce the normal retirement benefit. So there really isn't any "election" to be made. Why would employees opt out of a free (to them) benefit? DC plans are different - the premium comes out of the account, so the participants pay the cost of the death benefit in a reduced retirement benefit. Here there is a valid choice to be made by participants. Death benefits have to be non-discriminatory. If they are a function of the retirement benefits that are also non-discriminatory, all's well. So the death benefit (e.g. 100x the monthly benefit) is non-discriminatory in a DB providing non-discriminatory retirement benefits. But now, suppose the DB plan is tiered - 415 max to owner, 0.5% benefit to NHCEs, then paired and tested with a DC plan for non-discrimination. The DB benefits are discriminatory on their own, that's why it's aggregated with the DC plan. So if a death benefit (100x for example) is provided in the DB plan only, the death benefit is also discriminatory. If the NHCEs death benefit that would be non-discriminatory is provided in the DC plan, that's a problem too because it reduces the projected retirement benefit in the DC plan. If the DB plan provides a death benefit that would be non-discriminatory based on some theoretical non-discriminatory retirement benefit that the DB plan doesn't actually provide, then the DB plan likely blows the incidental limitations. CBs are typically a variation of this tiered DB. The CB benefits themselves would be discriminatory, so any death benefits that were just a function of the CB retirement benefits would also be discriminatory. If the CB is stand alone, then the death benefits would be non-discriminatory but again, the CB is a DB plan so the death benefit is employer-paid, so giving employees an opt-out for a free benefit is a non-starter. Now there are lots of ways that some try to beat insurance into the plan using a "if it doesn't fit get a bigger hammer" approach. Some say giving ees the "option" for insurance in the DC plan works - I don't see how. Others figure out how much the death benefit needs to be in order to be non-discriminatory, then put it in the DC plan but also increase the ER contribution to the ees in the DC plan to cover the additional cost of the death benefit without reducing the retirement benefit needed to be non-discriminatory. In a theoretical sense this might work, but I can't imagine a TPA being able to make a profit on this unless they are getting a commission split. The fee-based market does not support the fees that would be necessary to adequately compensate us for this amount of brain trauma each year. I imagine there are a few other approaches as well. For my own practice, retirement plans are complex enough as they are, I don't need to find ways to complicate them further, and I've never seen an rigorous economic analysis demonstrating the benefits of having life insurance in the plan. So I choose not to go here.

I don't think so, the client fired them mid 2019, so I would assume they DID get the 2019 plan year notice. It is the notice for the current year that wasn't provided since the TPA believed they were fired during the time the notice (and instructions) would have been sent to the client. Notice requirement or not, I agree with you that the IRS probably wouldn't make a big deal out of it though.

I, personally, agree with shERPA. The one little niggling memory I have on this issue is that I attended a Q&A at an ASPPA Annual Conference (where Larry Starr was sitting next to me, so I know he heard it, too) where Kyle (Brown?) from the IRS made a clear and unequivocal statement that one looks solely at the DB plan in this circumstance. I think, after hearing the comment, Larry went to the microphone to convince Kyle he must have misunderstood the question. Kyle just shook his head and reiterated his position. Not formal authority for sure but at least food for thought.

This hyperlink is to the Labor department’s posting of the exemption, amendments of it, and a clarification. https://www.dol.gov/agencies/ebsa/employers-and-advisers/guidance/exemptions/class Among the constraints on the amount of the loan is that the persons that seek to rely on the exemption bear the burden of proving that the loan’s proceeds are used only to pay the plan’s ordinary operating expenses. That condition might suggest that the loan must be limited in amount and duration based on a prudent estimate of the anticipated expenses. And even if the lender is willing to make an interest-free loan for a long period, the plan’s fiduciaries must act prudently to avoid disadvantageous terms, including the possibility of an obligation to repay in an inopportune amount or at an inopportune time.

If that's the last date that deferrals could have been taken then that's the date. If the resolution said "no deferrals after 3/4 (or whatever date - 2/28* maybe?) and the plan is term'd as of 3/31" then I'd use the earlier date. Were there no deposits after 3/4 due to participant choice or other, maybe arbitrary reasons? *To clarify, the deposit date is totally irrelevant. It's the last payroll date that deferrals could have been taken that matters.

What does your document and or termination amendment say?

Yes it is the 3% SH nonelective - and yes the SECURE Act says plans that use the SH NEC will not be required to distribute notices to participants before the beginning of each plan year, beginning with plan years beginning after 12/31/2019. That would be this particular plan. Thanks so much, 'justanotheradmin' - you are my hero for today!

Yes. § 45E(c)

I'm not sure what your question is - Is she concerned employees will claim that they were never offered the ability to make deferrals? Sounds like the plan does not have automatic enrollment - She gives them the enrollment forms or instructions - then she process payroll as normal unless they turn in a deferral form. Some ERs make a note of when then provided the forms (and how, paper, e-mail etc) so that they can document that there was no missed opportunity to defer. But if the participant doesn't turn in a form - there is no deferral. She doesn't need a form saying ZERO to proceed with ZERO deferral. Getting a ZERO election form returned is of course best practice - but it's not required.

A sale of stock does not involve a shareholder vote. It is an investment decision to sell by the owner of the stock. It does not involve a corporate action (such as a merger) that requires a vote of shareholders. No vote needed, so there’s no vote to pass-thru to ESOP participants.