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What does the deferral election say?

I hope I am not too annoying by hijacking the other thread and creating the poll. It is one of those Monday's however.

I would not presume to tell you how to fix this, but, having worked with the ERISA attorney who assists with most of our work of this kind, the better choice would be to leave the contributions in the plan and amend the formula or whatever reconciles the YOS with what they did. Nothing makes this error "disappear" but the better correction would be to reconcile the formula to what actually happened. Removing assets from accounts (and recalculating benefits for 10 years, including payouts, etc.) for 10 years would not seem to be the best for the Plan Participants.

You'd need to talk to your 403(b) provider about distribution options and what the implications might be for the investment contract. As I understand it you'd like to take a distribution from your 403(b) account and convert it to a ROTH-IRA while paying any taxes due with funds you have outside of retirement accounts?

Maybe other problems also. IMHO, this implies a need to research whether it's appropriate to use waivers. Maybe, start by looking for other discussion threads with a similar theme. For example,

You have a demographic failure that is likely to always exist with no good way to correct it that I can see. Either the waivers should not have been allowed or the plan should not have been implemented. I'm not sure what the correction is but it likely involves taxable refunds of deferrals and termination of the plan. Hopefully there haven't been any employer contributions yet.

Hi David, Thanks for the many years of doing this! I don't mind doing it a while- have a reminder on my phone for the start of every month. Not sure about the format, hope it is still readable. Data as of January 29, 2021 (Friday) Moody's Daily Long-term Corporate Bond Yield Averages Utilities Industrial Corporate Aaa NA 2.51 2.51 Aa 2.75 2.53 2.64 A 2.93 2.80 2.87 Baa 3.23 3.33 3.28 Avg 2.97 2.79 2.88 Moody's Daily Treasury Yield Averages Short-Term (3-5 yrs) 0.29 Medium-Term (5-10 yrs) 0.70 Long-Term (10+ yrs) 1.67

So do you know if there are any escrows or any other hold backs from the stock sale? I have had ESOPs take years to fully terminate because part of the sale's proceeds was put into escrow until some metrics were hit. At that time the rest of the sales proceeds were put into the ESOP trust. That might slow the full termination down. However, once the stock has been exchanged for cash and it is cash in the trust as a general rule the termination is like any other DC plan's termination. If there was an acquisition loan at the time of the sale something has to happen with the shares in suspense. I would let the lawyers give direction on that.

If you have late term vesteds, you have to pay in accordance with IRC 401(a)(14). That means an initial payment of the aggregate payments missed since age 65. plus interest. There is no actuarial increase on the remaining payments. If there are true late retirements, the payment should be actuarially increased, unless plan allows for annual offset of actual benefit accrual during period of late retirement. (It does not sound like it does.) Ask your lawyer if the distribution of a suspension of benefits notice that does not address a late retirement situation is sufficient for suspending the benefit of such a person.

I don't think the Plan Administrator has any liability in this case, unless the plan's procedures include review of submitted forms for validity along with formally notifying the participant that the form has been reviewed and found to be valid. Of course, I am assuming that the beneficiary designation itself, or the accompanying instructions, if any, specifically state(s) that in the absence of a valid spousal waiver the death benefit is paid pursuant to the plan's terms. I just checked my beneficiary designations and I think it does an adequate job by: 1) Including language something like the following - Your spouse will be paid the spousal death benefit as specified in the plan, unless you waive the spousal death benefit by completing this Form, and, your spouse voluntarily consents to both your waiver and to your designated beneficiary(ies) by completing the spousal consent section of this form. Without such waiver and consent, the spousal death benefit must be paid directly to your spouse. 2) Including in the relevant section a requirement for spousal signature and the signature line being clearly marked as asking for the signature of the spouse. I don't believe it is standard of care in the industry to perform a detailed review of beneficiary designation forms until a death benefit is payable.

Thanks for trying to help Peter, but I'm skeptical, especially about the "no review" part. There is a corollary example: acceptance of a J&S waiver. Suppose the J&S form and/or beneficiary waiver form form is returned with spouse signature. Since the ER is unlikely to have any knowledge about that particular handwriting, ERISA created the requirement for a witness. If this form has no witness signature (or the employee brings in the form and asks the HR rep to signoff on the already signed form), the ER must (IMHO) reject the form entirely. Of course, it can be true the ER representative who accepts the form might have no knowledge about the details, so somewhere up the line the form must be reviewed, which can give rise to a rejection of the submitted form. If such review is not immediate, the Plan is bound (as stated above by CuseFan) to follow the plan document and the law. The original question is about liability, which sounds like something a court might decide, so I'll decline an opinion on that part of the question, except to say "maybe". In my view, the ER is always "on the hook" to review the form before anything is paid.

It's legal. They just don't know what to do.