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Did you ask for legal fees? If so, the answer might be an award of zero. If not, you/attorney must determine if you have any opportunity for additional claim. Could this mean something simple like, "your lawyer screwed up"?

see the attached. I'm very happy with this. Every time rule of parity would come up I would research for an hour. I finally wrote this down. Let me know what you think! I would incorporate suggestions and reshare. [Edited to add revised pdf, 1/24/2021 in the early am][Edited to reattach the revised PDF per suggestions/corrections]. Rehires And Rule of Parity.pdf

If you had a lawyer when you won your case, the lawyer should have evaluated whether or not a claim for lawyers fees was viable.

Yes, it sounds like the rest would end up getting the surrender fee as part of the income allocation it sounds like. To me the solution is to value the contract net of the fee until there is no fee. That would seem to have the effect to stop that. It would at this point however mean everyone takes a one time hit of all the possible fees. It has been a long time since I have dealt annuities with these kinds of fees in a plan so maybe I am not thinking it through fully.

I work in HR and have an account with the SSA for their Business Services Online service. There was a lot of paperwork to get access to it but once I did it made my life tremendously easier. We are decentralized and we do find typos in SSAs from time to time, not to mention the occasional fraudulent number. https://www.ssa.gov/bso/bsowelcome.htm A few years ago, I volunteered to help our health and welfare people with their ACA reporting when the IRS kicked out hundreds of our submissions, claiming that the SSNs were wrong. When I submitted the so-called "bad" SSNs to the SSA online they all came back as correct. IRS was clearly wrong and I would not rely on IRS-provided info.

No. Receiving a lump sum equal to 100% of the maximum benefit uses up the maximum benefit. There is nothing left in the maximum to be paid as an annuity.

The question is "who is (was) the owner?" Obviously it should have been the plan but it sounds like it was set up incorrectly in the name of the individual. Or...I've never seen an annuity actually "mature" (they always just continue until surrendered). I suppose if the individual was the annuitant and it was paid or supposed to be paid to the annuitant it would be "proper" to issue a 1099-R to that individual. I'm very surprised the insurance company prepared a 1099-R showing the plan as the taxpayer. The whole thing sounds weird to me; probably set up wrong from the get-go.

If you play with your deposits and transfer between plans then you are asking for trouble, in my opinion, as that is not a legal transaction. Whoever set up your DB should have asked about your PS and its 2020 funding BEFORE adopting the new plan and informed you of that limitation. If your did not make your DB deposit in 2020, you could deduct for 2020 (deposited in 2021) up to your combined plan limit and then deduct for 2021 the remaining amount of your 2020 minimum required funding deposited in 2021. You'll need to limit all future PS to 6% of eligible pay and best to do this after year-end. The funding rules are such that your maximum DB deduction in year 2 should be significantly higher than your 2021 minimum, so you should be able to deduct some of your 2021 requirement for 2021 as well and so on, catching up eventually. You need an actuary for a DBP, or a TPA who outsources to an actuary for required functions, and the actuary and/or TPA should be able to map this out for you.

It's not the way we in the biz would title the accounts but frankly it doesn't matter. No one is comparing your plan filings to your account statements, trust me. If you were audited I doubt an agent would even raise an eyebrow. As Bill Presson notes, all plans are aggregated for purposes of the $250K limit so if that was a motivation it was ill-founded. I also wonder whether you have one plan or two. Probably two, at least that's how it should be since I doubt Vanguard allows their plan to be used with E-Trade accounts and vice versa. You should file two returns.

I am not a lawyer but in theory the bank works for the client. The Plan Administrator and Trustee have the final word if someone should get paid. However, experience has taught me many banks fear real or perceived regulatory risk more than a customer threatening to leave and go to a different bank.

Yes, thank you! Always helpful to have a visual approach to solving the question.

Very handy. Thank you, Mr. Powers!

Its semantics but it appears based on the information you provided that this is a "transfer" within the plan assets and not a "distribution" of plan assets. Therefore no 1099-R should have been generated. That being said, I had a client some years ago with a similar situation and the 1099-R reflected the name of the Plan. The broker and client tried to get the investment firm to fix it but they refused. There was never any fallout or followup by the IRS in our case.

Hello Stash - Yes - beneficiary ssn and name and you can use both a 4 and a G in Box 7 on the 1099-R forms. The 1099-R instructions (attached pages 15-17 and available on the irs.gov website) have a list including all of the codes and those that can be used together, which I have found an invaluable resource! ["fyi" I do realize that these instructions are for 2021 1099-R forms, however there aren't any 2020 1099-R instructions posted on the irs website] i1099r_2021.pdf

I agree a 75/25 split would work, assuming no attribution (including options) or other application of the stock-exclusion rules. This could involve a review of the shareholder agreements, buy-sell agreements, etc. Also, unless the values of the two businesses are (and remain) identical, my guess is the owners will try to find some way to "equalize" the value of their ownership through something that may implicate one or more of the attribution/exclusion rules. Controlled group ownership can be premised on the voting power or the value of the stock owned, so changing voting share ownership to 75/25 may not break up the controlled group if there are different classes of shares that give the owners a closer-to-50/50 economic split.

The accounts should be in the name of the plan and with the plan TIN. Also, you mentioned transferring balances in excess of $250k. For filing purposes, all accounts are aggregated.

Thanks! Missing a word here at the start of the last paragraph: "The rule of parity can be only applied with respect to the service a Participant."

👍

Nice summary, thanks for sharing - typo in the first word? "Rehies"

POA and submit as practitioner?

Yes. Assuming no stock attribution any other way. That would be an interesting discussion.

Correct. And it doesn't matter that they are brothers.

It looks like your 2nd and 4th column are basically a repeat. You have the two big ones in my opinion. If they ever deferred or had any vesting in the past you have to give them their old service. Those two rules means 90%+ of the time you have to give them their old service back. That is so true that I have reached the point that I think most plans ought to be written to simply give everyone their service back. It would save you hours of research (or feel the need to make a cheat sheet) to get to that point 90%+ of the time. 😀

Jpagano, it sounds like the plan to which new money is going for the employee group is a multiemployer defined contribution plan. If that is the case (and I have of course not confirmed that it is), then IRC sec. 413(b)(3) says that the exclusive benefit rule is satisfied, so you probably could. Nevertheless, I would want to look for more specific guidance under 413(b)(3), if there is any, specifically dealing with transfers, and most of all you would need to review the plan documents to see whether they provide for such a transfer. If they do and the plans are covered by favorable determination letters, that would be good. If they need to be amended to accomplish the transfer (and it sounds like at least your client's plan would need to be amended), then of course that is somewhat problematic given that IRS no longer issues DL's for amendments. Also, whenever you are dealing with union employees the employer should coordinate with the bargaining unit.

Payments to employees for paid sick leave due to the COVID-19 pandemic should be included when determining compensation under a plan, unless that plan’s provisions specifically exclude this compensation from the definition, e.g., specifically excluding compensation related to sick leave and/or family and medical leave.