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Agreed. See 1.401(m)-2(a)(6)(ii).

This PLR discusses the exclusive benefit question under a writ of garnishment following a criminal conviction -- not exactly your situation, but close: https://www.irs.gov/pub/irs-wd/0426027.pdf

Why does this matter?

You were lucky

They were good with getting valuations as required (even quarterly). The hard part was with one company, their fund in the plan ended up being behind some sort of "gate", with limited way to get funds out.

Interesting, so you got a DL? One issue dealing with hedge fund assets was the proper valuation. Dealt with a few of them in the past and it was challenge to get a proper valuation.

Well, SECURE 2.0 hasn't become law yet, but generally a plan may include a QNEC to help to pass the ACP test in lieu of refunds. (See what your plan document may already allow, or if a plan amendment would be needed to customize something more tailored for your sponsor's wishes.)

They stole that from Socrates.

I think the obligation to pay remains, unless discharges in bankruptcy (and there are specific sections of the bankruptcy code for municipal bankruptcy - which is well beyond my area of comprehension, let alone expertise!)

In the mid-1970s, a friend (now 90) bought New York City bonds when the city was plainly insolvent, and had big operating deficits and huge debts. Many of his friends questioned the risks he took. His response: “If we can imagine a world in which the City of New York does not pay on its obligations, the concept of money will have ceased to have any meaning.”

Agreed. But having just completed restatements, the thought of another large amendment project to be completed by 12/31 was not an enjoyable prospect. That, coupled with the possibility of yet more amendments for SECURE 2.0 (or whatever is passed, if anything), makes this reprieve all the sweeter. Possible if SECURE 2.0 or something similar passes, we can roll the whole thing into one project, rather than two separate ones. Haven't considered ramifications yet, as I just found out about this at 5:00 AM... As an aside, there are employers who don't know what they did. With all the Covid confusion in 2020 particularly, and the fact that some recordkeepers took it upon themselves to offer some of the Covid features, coupled with the fact that some clients are less than stellar about providing information to us, it is sometimes difficult to determine who did what and on what date. Might make the determination of the "best" default amendment somewhat challenging.

I've seen it, I've helped their actual ERISA counsel with the DL application, and I've updated account balances based on it. I saw it as a trustee-directed investment with pooled accounting. The real ickiness was when things went wonky with the fund itself.

In a word - "YES." Plans have to be in operational compliance - and that means decisions should have already been made. The amendment only records that which has already happened.... And BTW, as a service provider - we've tracked those decisions for them (at least those that responded to our inquiries).

The fallacy in the scenario you posit is that when the dollar becomes worthless, you assume that society still functions - with functioning infrastructure. If the dollar truly becomes worthless, who's going to keep the lights on? How are people going to access their crypto wallets - all of which requires a functioning society. People can indeed live without electricity - and can indeed engage in limited commerce without electricity (using "hard assets and barter) but by definition, crypto requires electricity and an internet - and in the Mad Max scenario, while there may be some with some access, the majority will in fact lose that access - and that is the "bend over and kiss ..." scenario. And yes - the dollar's value is perception based, but the "full faith and credit" scenario create a guaranteed perception of value. The only situation in which that value goes to zero is the complete breakdown of government, which is the complete breakdown of commerce beyond that which is local. Placing faith in BTC to be your savior in that scenario is basically laughable.

Did the defendant steal plan monies or other, unrelated employer property? What do the plan rules have to say about benefit forfeiture, or eligibility to participate, or disqualifying events? Has any of the benefit been assigned in a QDRO? A naked exclusive-benefit rule does seem to weigh in favor of the defendant's argument, and a legal status as as a defendant agreeing to pay restitution for a wrongful act doesn't seem to change that. However, assuming a distribution made, the distribution then becomes an item in the defendant's attachable asset landscape -- because once distributed, that money is immediately subject to attachment. A creative prosecution can attach those funds when distributed faster than the defendant can blink. Even if the defendant doesn't survive his shame (snark caveat), his estate can be sued if enough money is at stake to make it worth the effort. I had a client who was a former spouse under a FERS order make a claim sounding in equity several years ago when the employee lost his FERS benefit by operation of 5 U.S.C. § 8312. In that case, 5 years post-decree the employee was discovered having done some very bad things, for which he forfeited his pension, and my former client having moved by then, made a claim for her portion with counsel in another state, which was partially denied. I learned about it in a holiday greeting card last year from one of her children, who wrote to inform me she died of covid. Life has a way of not being fair.

Catch-ups occur when you have exceeded a statutory or plan imposed limit. If the plan has no restrictions on deferrals then catch-ups can generally occur in one of 3 ways: 1 - any contributions in the calendar year above the 402(g) limit that are not in excess of the catch-up limit. 2 - recharacterization of contribution due to failed APD test (it is recharacterized as of the last day of the plan year) 3. - recharacterization of contribution due to exceeding the 415 because of employer allocations. (it is recharacterized as of the last day of the plan year) If the Plan has an imposed limit (like 5% of pay) I'm honestly not sure the date that the contribution is considered catch-up. For non-calendar year plans it's possible to get 2 catch-up limits in one plan year if they exceed the 402(g) limit in the first part of the non-calendar year plan. For the most part I agree with you that catch-up are generally the last dollar deferred.

You can't shift contributions between the ADP and ACP tests unless both tests are using the same method. Since the ADP test is being satisfied by the safe harbor non-elective contribution (regardless of whether the ADP test would have passed without the safe harbor), I think that prevents you from shifting contributions.

I have to disagree with Bird on this. The compensation used to determine the 25% deduction limit takes into account only those participants who actually receive an allocation other than elective deferrals. If an employee's only contributions for the year were their deferrals then you do not count their compensation when determining the deduction limit.

The question needs to be analyzed under the Prohibited Transaction rules, which tend to be fact sensitive. As part of the analysis one may well run into questions of enterprise organization and ownership (part of those important facts). For what it is worth, I would approach the question with a bias toward the negative, but would not presume anything. In other words, you are not going to get a reliable answer based on what you have provided*, except that it is a complicated question that deserves the attention of competent legal counsel if they are serious about the proposition. Oh, and I think it is unwise in any event. Part of the underlying philosophy of ERISA and the prohibited transaction rules is that one’s employment (and related income) should be insulated from one’s retirement savings. Eggs in a basket and all that. *Providing more information is quite unlikely to get a reliable response, except perhaps a negative. This is not the place for this kind of advice — too complicated and too important —especially for those who may be presumed to be able to pay for it.