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Today is the first day of the rest of your life. It's also the first day after my retirement. After 43 years of being an actuary, I'm moving on to other things. It has been a wonderful profession. Thanks to Dave Baker and BenefitsLink, and all the contributors here, for helping. My brain will not atrophy, at least not immediately; I'll be glad to help anyone who needs anything. A brief reflection on the most important rules of consulting: 1. Never lie to your clients, or your colleagues. 2. Never be late for a meeting. 3. Date everything, and never back-date anything. 3a. Date and initial all worksheets, drafts, etc. Don't toss any of them until you have completed the final version. 4. Remember that you are selling expertise and creative thinking, not trying to fit your client into a pre-determined solution. 5. Professionalism and integrity matter. Good luck. Rigby out.

Yes. Limiting compensation is a qualification requirement under 401(a)(17). Close, but yes. It is not technically a forfeiture. The correction under EPCRS is to move the excess amounts (plus earnings) to a suspense account. The suspense account must be used to fund future employer contributions (as opposed to a forfeiture account, which can be used to pay plan expenses). No further employer contributions may be made to the plan until the suspense account is exhausted. If the failure is insignificant, you can self-correct. If it is a significant failure, it would have to be corrected under VCP since it is past the 2-year window.

While the definition is an issue, this is an example of why I never want the plan to specify the fail-safe correction. I would much prefer to have all options available and do an -11g amendment to correct.

There's DOL guidance on similar situations at https://www.dol.gov/agencies/ebsa/employers-and-advisers/guidance/field-assistance-bulletins/2006-01. While I'd encourage you to read the entire guidance, the DOL seems willing to provide considerable flexibility with respect to how settlement proceeds are allocated as ongoing fund assets, summarized as follows: "While plan fiduciaries generally have flexibility in designing a methodology for allocating settlement fund proceeds among the plan's participants and beneficiaries, plan fiduciaries must ensure that the selected methodology does not otherwise violate the prudence and "solely in the interest" requirements of section 404(a)." My guess is that the individual named in the "FBO" was a prior trustee or signatory for the plan--based both on the scale of the settlement amount and on the fact that only one check came in for the plan. But that's just a guess. Getting more information would help considerably!

I agree with both, just need to convince others. Thank you both for your input.

Forfeit and offset future match. That's what I'd do.

Agree with Bill. I would cite DOL reg 2510.3-3(c)(1) which says "An individual and his or her spouse shall not be deemed to be employees" - it says nothing about their children.

Pretty sure the adult children make the plan subject to Title I and that requires a bond.

What does the plan document say? If it says that benefits with a present value less than $5,000 will be paid out in a lump sum and the participant cannot elect another form of benefit, then you do not need to provide the alternate forms and relative values since the participant could not elect them. If the plan permits the participant to elect a life annuity or other form on small benefits, then you would have to provide them with the disclosures necessary for them to make the election.

It applies only to the 1 year vs 3 years income inclusion.

If you have fail safe it's probably spelled out in detail and without discretion in your master text. I'm pretty sure ours reads something like 1 add back active NHCE with the most hours until you pass or run out of them then go to 2. 2 add back NHCEs who terminated closest to the end of the year, if more than one on the same day add all that terminated on that date even if more than needed. So in our document you'd add back employee A who terminated 9/28. But your document may be drafted differently. And I'll add my voice to the chorus of 11g amendments if you want maximum flexibility to pick and choose who gets added back in to pass testing.

Not sure if I entirely agree with Bill on this. The right to receive your distribution at a particular date (e.g. upon attainment of age 59-1/2) is a protected right. There is an exception written into the regs that says hardship distributions are not a protected right, so I agree you can limit those to >$500 or eliminate them entirely. But for other in-service distributions you may have an issue. There might be a de minimis clause somewhere that says you can eliminate the right to distributions of less than a certain amount, I don't know.

1. Agree with Bill on preference to use 11g amendments. 2. If plan defines year of service in terms of hours, then my opinion is that hours should be your measuring standard and employee B gets added. 3. Could Plan Administrator reasonably interpret that provision in the alternative? Sure, and maybe that is best way to handle, but then document their decision so it gets applied consistently in the future. 4. The spirit of the failsafe is to add in the people closest to fulfilling the allocation requirement - but if you require both hours and year-end employment, who is considered closest, most hours or latest employment? The provision disregards the 1,000 hour rule first in favor of year-end employment, so maybe that is the intended measuring stick for who is closest, so I'm no longer strongly favoring hours as stated in #2 above. Suggest the Plan Administrator decides and then amending out this provision in favor of future 11g amendments.

It's not a cutback. Those benefits aren't protected benefits. I think you could go as high as $1,000 (which I always recommend) or could eliminate them altogether.

Allow me to interject here. If the doc wants to invest directly in bitcoin or gold, I am assuming that this is a participant-directed defined contribution plan, Code Section 408(m) subjects the investment in collectibles by an IRA or participant-directed defined contribution plan to treatment as a potentially taxable distribution (which is the treatment given to any prohibited transaction entered into by an IRA). The definition of collectible specifically includes an investment in metal or a coin (other than certain gold coins referenced in Section 408(m)(3)(A) or gold bullion described in Section 408(m)(3)(B)). Although bitcoin was not even contemplated at the time of the section's enactment back in 1981, the definition of collectible is sufficiently broad as to encompass bitcoin, subject to any determination made by the Treasury Department. The best alternative for the other doc is to have the self-directed brokerage account invest in a mutual fund or ETF investing in such assets.

No. You need to view the above as a transfer for all purposes and not a termination, same as going from an eligible employee to ineligible employee in the same plan (think non-union to union status).

My guess is the strict answer will be try and find the person. But as a practical matter are we talking $10s, $100s, $1000s+? The simple fact is most people are going to have a much different attitude about a $1,000 check vs a $10 check. So if you don't mind letting us know the range we are talking about here. The risks of getting it wrong between the two amounts seem to be very different. For one thing would the cost of hiring a search firm exceed the amount for example? But let's say it is in the $100s or $1000s+ I would think you would have to at least hire a search firm to look for them. You can get a good search for <$20 it seems like. Also, to be clear it really is for just one person? It was in some kind of self-directed investment and no one else was in that fund at the time?