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I received a VCP compliance letter this week for a failure to adopt a plan. The broker switched firms and thought someone at the former firm had taken care of the documentation. Correction was a simple adoption of a plan document. Under 2019-19, many plan document failures can be cured by self-correction. The initial failure to adopt a plan requires VCP to correct.

Thanks. That is what my understanding is, too. Church Plans have their own lane on the 403(b) highway.

Your description is not completely clear, so pardon incorrect inferences. Taking the perspective of the AP, the intent of the division of the pension benefit was to provide to the AP some interest in the death benefit (an assumption). That would not be surprising -- the death benefit is an important element of the entire benefit. For some reason (bad drafting, bad interpretation) the plan read the order as not providing an interest in the death benefit and was competent in its procedures to make that interpretation clear (probably becuase the plan suspected that the omission was not intended). You like that interpretation, but it is not what was intended in the divorce settlement. Just as the plan said, if the plan got it wrong, then the order needs to be corrected by submitting an amended or superseding order. That is what the AP is working on. It is all about implementing properly what was intended by the state court order, not how the plan interpreted the words of the order. You can contest the AP's position about what what was intended/agreed in the divorce proceeding, but that contest occurs in state cocurt and the interpretation by the plan of the original order is irrelevant (my opinion). The AP's rights are what the state court awarded.

I have used Dietrich for this exact circumstance and found them to be excellent. While there are many annuity providers that won't sell an annuity unless they have the annuitant's signature, Dietrich can find one who will.

They have to purchase an annuity for this participant. I am not aware of anything they could do to force the participant to take a lump sum. If the participant was never an HCE, could they offer this person a subsidized lump sum? That might encourage them to take the lump sum distribution if it is significantly larger than the present value of the annuity. This company has sponsored a number of industry events - they might be able to help you. I have not personally used their services. https://www.dietrichannuity.com/

If they had terminated employment prior to their statutory entry date, they would be part of the otherwise excludable group. Once they satisfy statutory eligibility they become part of the "regular" testing group. It comes down to the method you are using to test coverage. Since you would normally be testing coverage using the annual method, you test on the last day of the year and include all employees who were not excludable during the year. This person in question met the plan's minimum age and service conditions, so therefore they are treated as non-excludable in the coverage test. When disaggregating otherwise excludable employees, you disaggregate employees who met the minimum age and service conditions under the plan, but not the maximum age and service conditions of 410(a). Since this person had satisfied the maximum age and service conditions of 410(a) during the year, they cannot be part of the disaggregated plan. ADP testing follows coverage testing, so the people you disaggregated as otherwise excludables for coverage are your otherwise excludables for ADP.

Happens to us when taking over Non-Electing Church plans from TPA's who were filing 5500's. We agree re not filing "final" 5500 because the plan still has assets. We have a letter we help the plan sponsor send when contacted by the IRS about the "missing filing." That approach seems to work fine.

The exemption has no change after October 12, 1979. I’ve considered the exemption only once. (And it was longer ago than your experience.) I explained that the exemption does not relieve a plan’s fiduciary from its responsibility to act loyally and prudently for the exclusive purpose of providing the plan’s benefits. A fiduciary must get the best deal the plan could obtain. The insurance agency decided that its fiduciary responsibility required it to negotiate the life insurance contract to zero the commission with the insurer lowering the premiums for the contract’s death benefits and increasing the cash values. An actuary reported to us that the insurer’s profit margin on the negotiated contract was equal to its margin on the commission-loaded contract.

Hi MoJo - no, that's not what I'm saying (or if that's what I said, it certainly isn't what I was trying to say). I'm merely saying that the Appendix ALLOWS the plan sponsor to include language to modify/override certain plan default language. It's a normal IRS pre-approved plan. As to WHY they chose to do this, and whether on the advice of counsel, etc., and whether it as smart, stupid, criminally stupid, or worse, I cannot say. Hence my questions to the legal eagles on this board. I would not presume to advise a client on this - that's a matter for counsel, which I ain't. I was just curious about it for my own background information. The discussion has been informative! Thanks.