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Re trustee - it’s an owner-only plan. Usually the owner is the trustee, no? The bank is just the custodian. They still shouldn’t be allowed to switch the account type though. Move the money quick.

Also, be careful of this. If dad has any exercisable option on stock owned by son he is deemed to own that as well. (e)Constructive ownership (1)Options If any person has an option to acquire stock, such stock shall be considered as owned by such person. For purposes of this paragraph, an option to acquire such an option, and each one of a series of such options, shall be considered as an option to acquire such stock.

Unfortunately this raises questions about past practices, like whether full appraisals were done every year. Assuming yes, about which I have to be skeptical, then I think the only option would be to carve out these illiquid assets and leave them as pooled and the rest self-directed. If the owner keeps them you have a BRF issue as noted.

I'm guessing here but it sounds like the Bank is getting out of that business and just unilaterally converting accounts to what they still do. Doesn't make sense to me but that is my best guess.

I do not believe bank has an authority to force the change from EIN to SSN. They can definitely terminate servicing the account altogether though. Talking to the bank is likely to yield nothing, just move the money as others said. Schwab for example would set it up in couple of days and you client can invest in bank products (cds and such) using the brokerage platform. Arguing with a bank might be worth only to waive any kind of termination/transfer fee.

For what it is worth I am with the others. I don't understand the desire to fight the bank. They are treating their customer awfully. Why does your client want to reward such bad behavior by still doing business with such a bank?

Don’t try to fight the bank, just move the money. It’s not worth the risk.

@Lou S. poses questions. It might be wise to interpret by changing the question marks to exclamation points.

You are right. I need to talk to a lawyer. The employer says I have 60 days to appeal again and at least I can schedule a free consultation. Thank you so much Bill!

While my observation is limited by situations my clients have told me about, I never heard that an EBSA investigator asserted that a summary annual report was untimely because filing the Form 5500 report by its unextended due date meant there was no extension of the time for delivering the related SAR.

I found the prior discussion and (1) it was related to tax returns and the deductibility of a contribution made by an extended due date on a return filed by the original due date, and (2) there was a revenue ruling or PLR cited where the deduction was allowed and so the extension was not invalidated. So my memory of the question was correct, or at least related, my recollection of the resolution was not - therefore, I think there is not issue following that course of action regarding 5500 extensions, filings and SAR timing.

You may be correct, but there also could have been a default election. For example, if you didn't elect to stay in the traditional DB Plan you were automatically moved to the Cash Balance plan. So, there may be no election form and you are where you are. I agree with Paul, go ahead and ask, but be prepared that there might not be any records. Each organization has their own retention policies, and I don't believe there is any specified rules/regulations about retention in the rules of retirement plans (other than the necessary information to determine vesting and eligibility benefits). Good Luck.

I would then say, they are overwriting the trustee duties which I am assuming here. In this case, I agree with all, take the money and run somewhere else in order avoid any taxation and many other issues that may arise since this is a DB plan subject to QJSA

The instructions are a little confusing, but they kind of do say not to report: For line 8e, also include in the total amount a participant loan included in line 7a, column (a) that has been deemed distributed during the plan year under the provisions of Code section 72(p) and Treasury Regulations section 1.72(p)-1 only if both of the following circumstances apply: 1. Under the plan, the participant loan is treated as a directed investment solely of the participant’s individual account; and 2. As of the end of the plan year, the participant is not continuing repayment under the loan. If either of these circumstances does not apply, a deemed distribution of a participant loan should not be included in the total on line 8e. Instead, the current value of the participant loan (including interest accruing thereon after the deemed distribution) should be included on lines 7a, column (b) (plan assets – end of year), and 10g (participant loans – end of year), without regard to the occurrence of a deemed distribution. Note. The amount to be reported on line 8e must be reduced if, during the plan year, a participant resumes repayment under a participant loan reported as a deemed distribution on line 2g of Schedule H or Schedule I of a prior Form 5500 or line 8e of a prior Form 5500-SF for any earlier year. The amount of the required reduction is the amount of the participant loan that was reported as a deemed distribution on such line for any earlier year. If entering a negative number, enter a minus sign (“–”) to the left of the number. The current value of the participant loan must then be included on line 7a, column (b) (plan assets – end of year). Although certain participant loans deemed distributed are to be reported on line 8e, and are not to be reported on the Form 5500-SF or on the Schedule H or Schedule I of the Form 5500 as an asset thereafter (unless the participant resumes repayment under the loan in a later year), they are still considered outstanding loans and are not treated as actual distributions for certain purposes It says if either DO NOT apply (underlined above), then you add with 10g. Most likely, both DO apply (that's why we are here because the participant is not paying on the loan), so you would show as a deemed distribution on 8e, and not include on 10g. Also, if you have Empower clients, on their annual admin report, they break it out and it shows like this: The 5500 entries ties to the Active Loans column. Hope this helps.

Ask your employer for a copy of the Summary Plan Description. That is a document that should have the plan provisions in easier to understand language.

Generally, not for profit entities refer to a retirement plan that is exclusively employer funded as a 401(a) plan. The employee funded plan is 401(k) or 403(b). With that said, an employer funded plan under 401(a) may have a one year wait for eligibility (pretty typical) but employee enrollment isn’t required. About the only thing a participant needs to do is complete a beneficiary form. But not doing that doesn’t keep one out of the plan. Whole thing seems a bit off kilter to me.

The best course might to move the money to an institution that will retain it's tax qualified status. If they convert it to his SSN and a personal account it's going to trigger 1099-R reporting on the income under his SSN which can cause him tax problems at year end and possible backup withholding issues. Whether they can do it I don't know as I'm not knowledgeable about banking regulations but it sounds like they are going to do it whether your client wants it or not so the easiest solution might be to move the funds before that happens.

Does the plan file a Form 5500-EZ? If yes, then it is even more important to preserve the plan's EIN. EFAST2 will be looking for continuity and likely at some point will send out a penalty letter if it doesn't get a filing that shows a final filing and assets going to zero for that EIN. You may want to try to contact a compliance officer at the bank (not at the branch, and who hopefully know a smidgen about retirement plans), and have a discussion about the bank making an unauthorized change to the plan's EIN. You may want to salt the conversation by saying "IRS" and "compliance" a few times. You actually may be doing them a favor. If this does not go well, then definitely follow Lou and David's advice!

Move the funds before the conversion to personal?Get a new investment vehicle?

It sounds as if you are in a stalemate with the employer where you expect the employer to make changes to accommodate you and the employer expects you to mange your situation within the constraints of the plan provisions. Please note that none of the discussion below is intended to be judgemental in any way either of you or the employer. Consider what will happen if the employer refuses to accommodate your situation. You will have to meticulously manage your affirmative elective deferral percentage of zero and if you don't, then you will face some punitive penalties attributable to your status as a sanctioned man. Your other alternative would be to find work with another employer that will accommodate your situation, and you have acknowledged that you have worked for other employers that have been accommodating. Your asked your employer to accept a waiver of your right to participate in the plan. This type of waiver is an optional plan provision available to employees who have not yet become eligible under the terms of the plan and would have to be available to all employees before they became available. Many employers do not want this provision in their plan, and without this plan language, you have no right to demand a waiver. You could achieve your goal if the employer was willing to accept a standing election from you of zero deferrals. The employer apparently wants employees to participate in the plan and does not want to set a precedent that other employees could point to as a reason to let them make standing elections. You have involved the DOL which is appropriate with respect to addressing eligibility issues, but you have not said anything about approaching the IRS which is heavily involved not only in the regulation of retirement plans but also with managing sanctions. Frankly, it is doubtful either agency will do anything more than be sympathetic and encourage the employer to be accommodating. Absent legislative or regulatory guidance allowing an employee to waive their right to participate if the plan does not allow this waiver, it also is doubtful that hiring an attorney will succeed in forcing the plan to accommodate you. The above being said, and assuming the employer wishes not to risk your leaving them, then it is worth exploring potentially another possibly palatable step to accomplish your goal of not being required to manage your zero deferral election with extreme care. You may wish to ask the employer to have a conversation about the following suggestion. Ask the employer if they would consider adding a plan provision that excluded from participation the classification of employees who are subject to the sanctions. This would not require them to name you explicitly in the plan document and other employees likely would not understand the exclusion (other than it does not apply to them). Good luck!

I think the misunderstanding that many people have is that if the participant did not fill out a beneficiary form/designation, then the account is subject to the terms of a will, or if no will, then intestate rules. It isn't. 401(k) plans have default beneficiaries written into the governing plan documents, so that in the event a participant passes without a affirmative beneficiary designation, there is a default beneficiary. Typically that is something like spouse, children, estate, but it varies. Read the plan's document carefully. Even if the estate is where the benefits are to go - they go there because of the beneficiary rules in the plan document, not because of the application of a will or intestate laws. So If everyone else pre-deceases the participant (not what we have in this post) the estate is the named default beneficiary under the terms of the plan, and gets the $$ because of that.

I look at this one step at a time. When uncle dies, plan assets go either per a beneficiary designation *or* if none, per the terms of the plan. I would guess that the spouse (aunt) is the bene under the terms of the plan - so those assets go to her - whether she exercise control over them or not. Uncles will is irrelevant. Only a valid beneficiary designation or the terms of the plan govern. So, when aunt died, assets go per her bene designation (if any) or per the terms of the plan - and uncle, uncle's estate, and uncles trust have no bearing on aunt's distribution of her interest in the plan. Aunt's representative (estate) or others would be entitled to those benefits - absent some fact not disclosed. The court has NO JURISDICTION over the plan assets until paid, and cannot direct those assets to be paid to the trust, and whether it is a pass-through is really irrelevant..

I think the latest required restatement will be in 2076.