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This is to share with you the happy news that today is the 25th anniversary of the first day on which the BenefitsLink Newsletter began daily publication. I didn't see this coming when I decided to go daily in 1999, at age 41. (The newletters had begun four years earlier, but they weren't being published every day.) The free information must be helping employee benefits practitioners to help their clients, which translates to the ability of employers to effectively run and fund programs that improve the lives of so many millions of working people (and retirees, and beneficiaries), even if most of them wouldn't know (or want to know) the difference between an ERISA and an eraser. What a noble endeavor, to be an employee benefits practitioner! Some lawyers and TPAs and other benefits practitioners have found work through our job board that's been running since 1996, which means they've gone to new workplaces and sometimes new cities, which means some of them have met people they wouldn't have met otherwise, which means some of them have fallen in love and then had children... which means there are people walking around on the planet now who wouldn't be here but for this "web site" thingie that started in 1995, and then the idea of sending "newsletters" by "email." None of that would have been possible without readers. The existence of "BenefitsLink babies" didn't occur to me until one day about 10 years ago, but I kept it quiet -- at that time, they were still teenagers! True to form, I and my business partner and wife Lois Baker (formerly an employee benefits lawyer, whom I met on CompuServe in 1990 while trading ERISA questions using dial-up modems) have failed to do any marketing of this happy day. But as I sat here at the keyboard today I had the idea that we would get so much joy by celebrating the occasion with readers. I hope this hasn't come across as a commercial but instead is the lifting of an E-flute of cyber-champagne -- here's to employee benefits practitioners everywhere! It's a wonderful community, and for 25 years now and still counting, we are so happy to be a part of it.

Congratulations Dave & Ms Lois! It's been an incredible benefit. I'm very proud of my December 3, 1999 join date with BenefitsLink.

Non-lawyer opinion follows: Since the original question said nothing about a spouse, it appears we are to assume "not married" and "no QDRO". Just trying to be thorough. This might be because the deceased has debts greater than assets, although that is (probably) not a concern of the Plan. I've encountered a few cases where the death benefit went to an estate; it seems likely (to me) that the Plan Administrator's best position is to follow the plan definitions precisely. But it should open the discussion as to whether the plan can be amended for more flexibility, going forward. For example, many plans use a definition that includes (after spouse), the deceased's lineal descendants and ascendants, followed by "the estate"; is there a problem of amending the definition to include siblings?

Peter with due respect to the vendor---My client the CFO early on tipped his hand that he did not favor these individual contracts (wish he had not done that)--so they treated him with a lack of decorum and professionalism--made us wait in their lobby in Charlotte after we flew there for more than an hour before they shunted us to a small nondescript conference room---I found out that a larger plan in our geographic area---the much larger Jefferson Health System where my son is an endocrinologist, was allowed to cancel its individual contracts quickly and cashed out in apposition to the 9-year trailing provisions--so size matters ! TIAA maintained a campaign of calling our individual participants at home to keep their funds there--again, in my opinion, unprofessional the way it was done. I am a fan of yours and live in a 'burb of Philly part of the year and have been an ERISA attorney for more than 49 years.

If the plan’s governing documents specify no more than that the default beneficiary is “the Participant’s estate”, the meaning or effect of that phrase might be ambiguous, and there might be some need for the plan’s administrator to use its discretion to interpret the plan. Some administrators insist on paying only the estate’s court-recognized personal representative. Others use some tolerances for less control, taking some risks. Here’s a BenefitsLink discussion about whether to take some risks by relying on a small-estate affidavit. The plan’s administrator, with its lawyer’s advice, might consider whether a court’s decree or other determination of heirship might involve some similarities. Among the ways a plan’s administrator might manage communications with the estate’s heirs’ attorney could be to follow ERISA § 503 and the plan’s claims procedure. IF a plan’s administrator decides any tolerance to pay someone other than the estate’s personal representative, that would not excuse a need for each distributee’s certification of one’s Social Security Number, Individual Taxpayer Identification Number, or other TIN. This is not advice to anyone.

As CuseFan points out if the Plan allows for ROTh and in-Plan conversions of ROTH, then sure he could do that. If by recharaterize he means go back and change each year from pre-tax to ROTH retroactively, no.

You can do an in-plan Roth conversion provided the plan document allows for it, which may mean an amendment from the sounds of it.

I'd also look at this from the employer/plan sponsor's nonfiduciary role. In simple terms, the employer presumably maintains the plan as an employee benefit. The end of that benefit is getting money to the former employee or his survivors. I'd think the employer would want to ensure that. So why not eliminate the fiduciary cost issue by having the employer absorb the cost as a business expense of maintaining the plan. If I were the employer, that's what I think I'd do. From a fiduciary standpoint, a consideration should be, "How likely is it that the DOL's Lost and Found Data Base is going to be effective"? That's going to be tough to evaluate. Based on my own experience dealing with the DOL, I'd say it's not likely to be effective. What we don't know is whether the DOL's database will be set up and managed well. It sounds good in theory, but remember that humans at the DOL will be in charge. On the other hand, maybe for those few cases it would work out it would be worth it.

It is a fantastic resource, and has been run so well, for so many years. A rarity these days. Thanks so much for all your hard work!!

I can attest to the fact from long experience that Michael is a good man-- I would call him or Scott or Marcus as they each could probably help you. BOB

The Form 5330 Instructions for Schedule C line 5 include this: “For purposes of section 4975(d)(23), the term ‘correct’ means to: Undo the transaction to the extent possible and in all cases to make good to the plan or affected account any losses resulting from the transaction, and Restore to the plan or affected account any profits made through the use of assets of the plan.” https://www.irs.gov/pub/irs-pdf/i5330.pdf I’d say the prohibited transaction is not corrected until the plan’s trust has not only the late participant contributions but also the interest or investment gains the plan would have obtained had the contributions been promptly invested or, if greater, the interest or investment gains the employer made by having the plan’s money.

Imagine how joyful things will be here if the "tribe of Guardians" comes through in October just one time, too!

Is your concern that he wording on timing is within 90 days after becoming a participant and you don't think you can give it to before they are a participant? Maybe an ERSIA lawyer could weigh in, but since the purpose of the SDP is to be a easily understood reading of the plan terms for the participant, I don't think either the IRS or DOL would have any problem giving the SPD at the same time you are giving the rest of the enrollment materials so the participant can make informed choices.

CONGRATULATIONS, Thank You So VERY MUCH! Wishing you ANOTHER 25 YEARS! DPS RICH

Thanks, Dave. Your webpage was one of the first bookmarks I ever saved (prior to 1999).

IMHO, BenefitsLink has changed, for the better, the way benefits professionals do their jobs. Attaboy Dave!

Much thanks to you and Lois - it certainly makes all of our lives much easier. You guys can't retire EVER!

From the instruction quoted above: “If you are required to file 10 or more information returns during the year, you must e-file.” Consider exactly which person is the “you” in that sentence. Also: “The 10-or-more requirement does not apply separately to each type of form. For example, if you must file four Forms 1098 and six Forms 1099-A, you must e-file.” If the quoted instruction fairly describes the law, the measure is not about whether one files ten 1099-Rs; it’s about whether one files ten information returns, counting several kinds. Consider that it might be impractical for a TPA to get from an employer or a plan’s administrator the total number of information returns it files. Or, that the count varies from year to year, with some years fewer than ten but other years with at least ten.

OMG - thank you SO much for creating and maintaining this forum which has proved invaluable for many practitioners, not to mention entertaining at times! Echoing Peter, you should be very proud and never hesitant to promote the impact you've had on our industry. Doing the math (it's much of what we do LOL), that makes you a young and not ready to retire age 66 so we can all rest assured BL will continue for years to come, right? Truly, thanks for all you and Lois have done and continue to do, it is greatly appreciated.

David, many thanks for this great publication. I read it every day although sometimes I only have time for the headlines. Remember you fondly from your Orlando days. Thanks a bunch! Love the comment "ERISA and an eraser"! Too funny!

You should be justly proud of the great community you created.

This brings up so many more questions about the TPA. I assume the 401(k) is OK on its own but that's probably not a good assumption on my part.

Looks to me like Plan A does not pass ratio percentage (I get 55%). If the CG can satisfy average benefits then you could test A separately on ADP and the PS appears to be a safe harbor (depending on comp definition). If you do not pass average benefits then you MUST aggregate A with B to satisfy coverage and then must also aggregate to satisfy nondiscrimination (ADP, 401(a)(4)). Since B is cross-tested, you may very well have to run average benefits for the CG anyway, so you'll have your answer on the above. Note if you do not HAVE to aggregate, you may permissively aggregate and do so independently with regard to 401(k) and 401(a). If you want hasenpfeffer sometimes you have to go down that rabbit hole!

Assuming C has no employees, then A: (2/80)/(1/22)=55.00% B: (79/80)/(21/22)=103.45% So plan B passes the ratio percentage test, plan A fails ratio percentage but might pass average benefits. If A fails average benefits, then it would need to be aggregated with B for coverage. Whatever aggregation options you use for coverage, you have to do the same for nondiscrimination (i.e. 401(a)(4) and ADP/ACP). If A and B are aggregated for nondiscrimination, then A's safe harbor formula won't do you much good and you'll have to general-test them.

The best approach when too much is deposited for a payroll is to leave the excess in the trust and use it as a credit against the next payroll. The company is made whole as of the next payroll date when the credit is applied. Administratively, this is the cleanest approach, but be sure to document, document, document everything. What was the reason for the voiding/reversal of the paychecks? Sometimes there are paycheck reversals because payroll was processed incorrectly such as when hours worked were wrong. This could be appropriate. Sometimes there are paycheck reversals because payroll is trying to fix a plan issue such as when a participant made a valid deferral election and then after receiving a paycheck, changed their mind, decided not to defer, and want their money back. This is inappropriate.

I think @jsample is referring to an "unallocated suspense account" rather than a forfeiture account. I don't recall where this is discussed, but I don't think its EPCRS. If I remember it correctly, the excess is moved to an unallocated suspense account and is not an annual addition. You then have to use the assets in the unallocated suspense account before you make any further contributions, and they are an annual addition when allocated. So from a deduction perspective, you can deduct it when allocated, but not when deposited.

Does the document have a section that deals with rehires? Most of them do. It is typically near the primary eligibility section. If you are dealing with a document with a base document, like a prototype plan, check it. The vest majority will tell you in pretty good detail how to handle someone who met eligibility but didn't enter except for the fact they weren't employed on an entry date. The guy who taught me this business back in the early '90s told me that 99% of your questions will be answered by reading the document carefully. I would recommend you look for a section that spells out what to do with rehires. Here is an example of a Volume Submitter plan our firm uses as an example of what I am talking about: Rehired Employees. Subject to the Break in Service rules under Section 2.07, if a terminated Employee is subsequently rehired, such Employee will be eligible to participate in the Plan on his/her reemployment date if the Employee is an Eligible Employee, and the Employee had satisfied the Plan’s minimum age and service conditions and reached his/her Entry Date prior to termination of employment. If the Employee had satisfied the Plan’s minimum age and service conditions, but terminated prior to reaching his/her Entry Date, the Employee will be eligible to participate on his/her reemployment date or the original Entry Date, if later. If a rehired Employee had not satisfied the Plan’s minimum age and service conditions prior to termination of employment, such Employee is eligible to participate in the Plan on the appropriate Entry Date following satisfaction of the eligibility requirements under this Section 2. For purposes of Salary Deferrals, the requirement to participate on the reemployment date is deemed satisfied if a rehired Employee is permitted to commence making Salary Deferrals within a reasonable period following reemployment. See how clear this is spelled out? That was found in the base document not the Adoption Agreement part. My guess the person enters based on seeing so many documents over the decades but I really think looking for a rehire section of the document will confirm that or not.

If anyone might help, consider Connecticut attorney Linda Ursin. Among other reasons, her website mentions some opportunity to change a property settlement if a party can show fraud. https://www.ursinlaw.com/modification-of-property-settlement/ This is not advice to anyone.

This appears to be a matter of state (CT) law, as is the concept of “automatic orders”, and would be strange to most everybody who participates in this forum. Maybe you will get lucky with a response by someone competent with CT law. The only thing I can offer you, after hesitation and some misgiving, is the principle that the statute of limitations is commonly “tolled” (essentially meaning that the running of the statute is suspended) if the breach is concealed (you mentioned collusion) but only until the victim learned, or should have learned, of the breach. However, the application of the statute of limitations is determined at the trial level, and if not brought up at trial, it might an issue that the appeals court will not consider. Furthermore, this is a highly technical, legal argument, the details of which are beyond an untrained person. The explanation of the principle is not legal advice. At best, it is a suggestion of something you might get legal advice about. Unfortunately, the system is difficult (if not impossible), complex, and expensive, especially when you are going back in time to undo or re-examine something that was decided in the past. But you know that already.

S2.0 section 301 added Code 414(aa)(4) “(4) OBSERVANCE OF BENEFIT LIMITATIONS.—Notwithstanding paragraph (1), a plan to which paragraph (1) applies shall observe any limitations imposed on it by section 401(a)(17) or 415. The plan may enforce such limitations using any method approved by the Secretary for recouping benefits previously paid or allocations previously made in excess of such limitations." If the issue is the individuals received an allocation formula that incorrectly included compensation in excess of the compensation limit, then the plan should take steps to recoup the excess amounts. If the allocation of excess amounts affected other participants (e.g., they received less because the total allocation basis was overstated), then these participants need to be made whole. Given that the individuals are very highly paid and very likely HCEs, and possibly could have been owners, officers or other disqualified persons listed in Code 4975(e)(2), failing to recoup the overpayment can lead to a host of other compliance issues.

Fundamentally, the plan must be administered according to its plan provisions. If there are operational errors, they must be corrected and each participant should receive the benefits to which they are entitled under the terms of the plan. You do not indicate the reason there was over-funding to certain accounts and the number of participants that are affected by the error. This information could be relevant to deciding the procedure to use make the corrections.