Leaderboard

It's right in the regulations, A-11 (ii) Option for different section 204(h) notices. If a section 204(h) amendment affects different classes of applicable individuals differently, the plan administrator may provide to differently affected classes of applicable individuals a section 204(h) notice appropriate to those individuals. Such section 204(h) notice may omit information that does not apply to the applicable individuals to whom it is furnished, but must identify the class or classes of applicable individuals to whom it is provided.

I agree with CBZeller. Generally, DB plan documents we work with have excess to revert to the company. This is necessary if any excess will be transferred to a QRP. But then, we could always amend to allocate excess to participants (I think I have this right).

A restorative payment is not a § 415(c) annual addition. It’s enough that there was a “reasonable risk of liability for breach of a fiduciary duty[.]” You can read the whole clause here: 26 C.F.R. § 1.415(c)-1(b)(2)(ii)(C) https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFR686e4ad80b3ad70/section-1.415(c)-1#p-1.415(c)-1(b)(2)(ii)(C). I wrote Treasury a comment that led to this rule.

Yes, and agree with chc93, usually documents are set up to provide reversion because you can always amend last minute to change and allocate in the plan.

If you search these boards for the term "recalcitrant" you will find other discussions which may prove helpful.

Assuming this is a 5% owner, since there is no mention of retirement date. If they attained age 72 in 2022 then required beginning date is 4/1/2023. If you commence benefits on 4/1/2023 then the amount distributed is the participant's benefit as of 4/1/2023. To adjust the benefit calculated as of the 12/31/2022 (I assume you meant 2022) valuation to 4/1/2023, refer to the plan's definition of actuarial equivalence. If allowed by the plan. If he takes a distribution of his entire benefit as a lump sum in 2022 then he can use the DC method to calculate the portion of the distribution that is an RMD and roll over the rest. Be mindful of the rule that requires the plan to be 110% funded for an HCE to take a lump sum.

It seem like the Plan Sponsor and Trustee can cash the participants out under the terms of the document. Send Ascensus the relevant section(s) from the Plan Document and ask to escalate it to a manager.

Yes

I have not seen any. Maybe they updated for the new COLA but forgot to change the years? Someone dropped the ball.

What are the other options? You could do a consolidated notice, but it would need to disclose the individual impacts, which would probably require them to disclose that everyone has different benefits. How did you handle the SPD?

Do the plan’s governing documents allow an “immediate and heavy financial need” beyond the seven deemed needs?

Generally, you satisfy DB RMDs by commencing the benefit as an annuity, either single or joint life, unless the plan allows other options. If the plan allows a lump sum and participant so elects, then a portion of the lump sum will need to be parsed out for one or two year's worth of RMDs, depending when paid. The RMD portion can be determined as 12 or 24 annuity payments or considering the lump sum as a DCP balance and using DCP RMD methodology, which always (in my experience) leads to a lower RMD portion. If this is for an owner or HCE, the plan will need to be sufficiently funded to pay a lump sum.