Leaderboard

Look at the instructions for the 5500 page 6 or 5500-SF page 7 in the section titled Authorized Service Provider Signatures. It says among other things that: "(3) that, in addition to any other required schedules or attachments, the electronic filing includes a true and correct PDF copy of the completed Form 5500-SF (without schedules or attachments) return/report bearing the manual signature of the plan administrator or employer/plan sponsor, as applicable, under penalty of perjury; (4) that the service provider advised the plan administrator or employer/plan sponsor, as applicable, that by selecting this electronic signature option, the image of the plan administrator’s or employer/plan sponsor’s manual signature will be included with the rest of the return/report posted by the Department of Labor on the Internet for public disclosure;" The instructions for the actuary's signature on the Schedule SB are "The actuary must provide the completed and signed Schedule SB to the plan administrator to be retained with the plan records and included (in accordance with these instructions) with the Form 5500 or Form 5500-SF that is submitted under EFAST2. The plan’s actuary is permitted to sign the Schedule SB on page one using the actuary’s signature or by inserting the actuary’s typed name in the signature line followed by the actuary’s handwritten initials."

10% excise tax on the unpaid minimum, IRC 4971. There is a second tier tax that can increase to 100% if it remains unpaid. You must also notify the PBGC of the failure.

I've done it before. I don't see any issue.

Me too unless the rollover happened before turning 73 which is already too late.

I can’t envision a circumstance where an RMD isn’t required.

I don't think so. While it is true that a qualified disclaimer means that the person who would have otherwise received the payment would not have any tax consequences because they did not receive any of the benefit under the qualified disclaimer, the disclaimer may cause an unintended consequence. Quick note...not only must the disclaimer meet 2518 of the Internal Revenue Code but it also must meet state law. I am only looking at federal law... many states use a rule that treats the disclaimer as predeceasing the dead participant, which might actually make it easier to see the issue I am bring up but--state law--I am not going there. If a qualified disclaimer is provided to the Plan (and assuming the Plan accepts a qualified disclaimer (some plans don't)), it will affect to whom the Plan pays the survivor benefit, and it might actually cause no survivor benefit to be paid. Under a qualified disclaimer, the disclaiming surviving spouse will not be paid any of the funds by the Plan and under IRC 2518 he or she cannot have any say on to whom the benefit, if any, will be paid. Under the joint and survivor annuity (JSA) form of benefit that was elected in your case the survivor benefit can only be paid to the surviving spouse. If the surviving spouse that is to be paid files a disqualified disclaimer, then under 2518 the Plan will not pay the survivor annuity to the surviving spouse.... and there cannot be another surviving spouse (as noted previously, the surviving spouse is the spouse on the day the JSA benefits commenced... no one else). Under the qualified disclaimer, the surviving spouse will have set things up where under they can't be paid and no one else is eligible to receive the benefit. So, it appears to me that under the terms of the Plan and the JSA election, the Plan w/could not pay anyone else the survivor benefit and the Plan might be able to just keep these funds. Don't rely on my thoughts here...but be very careful If considering a qualified disclaimer and go to your own attorney or other qualified advisor before doing so.

Might a fiduciary-decided investment portfolio be “invested in accordance with the requirements of [29 C.F.R. §] 2550.404c-5”? (Observe that the statute’s text does not use the term qualified default investment alternative.) The referred-to rule allows: “An investment fund product [sic] or model portfolio that applies generally accepted investment theories, is diversified so as to minimize the risk of large losses[,] and that is designed to provide long-term appreciation and capital preservation through a mix of equity and fixed income exposures consistent with a target level of risk appropriate for participants of the plan as a whole. For purposes of this paragraph (e)(4)(ii), asset allocation decisions for such products and portfolios are not required to take into account the age, risk tolerances, investments or other preferences of an individual participant. An example of such a fund or portfolio may be a “balanced” fund.” 29 C.F.R. § 2550.404c-5(e)(4)(ii) https://www.ecfr.gov/current/title-29/part-2550/section-2550.404c-5#p-2550.404c-5(e)(4)(ii). If a plan does not provide participant-directed investment and instead provides a common investment for all participants, beneficiaries, and alternate payees, wouldn’t a fiduciary seeking to meet its responsibility under ERISA § 404(a)(1)(B)-(C), including diversification and impartiality, invest for a similar balance? The statute provides: “An eligible automatic contribution arrangement meets the requirements of this paragraph if amounts contributed pursuant to such arrangement, and for which no investment is elected by the participant, are invested in accordance with the requirements of section 2550.404c-5 of title 29, Code of Federal Regulations (or any successor regulations).” Internal Revenue Code of 1986 (26 U.S.C.) § 414A(b)(4). The Treasury’s proposed interpretation states: “An eligible automatic contribution arrangement satisfies the requirements of this paragraph (c)(4) only if amounts contributed pursuant to the arrangement, and for which no investment is elected by the employee, are invested in accordance with the requirements of 29 CFR 2550.404c-5 (or any successor regulations).” Proposed 26 C.F.R. § 1.414A-1(c)(4). Neither text limits the phrase “no investment is elected by the participant”. And neither text describes, at least not expressly, a context in which such a fact condition might occur. Couldn’t the fact condition the phrase describes result because the plan does not provide for a participant’s investment direction? And in that situation, would Internal Revenue Code § 414A(b)(4) be met if the fiduciary-decided portfolio is sufficiently balanced? This is not advice to anyone.

It's scary how many plans don't do this. We also require photo ID, verify bank account ownership for ACH, and more. People are sometimes unhappy with all the hoops we make them jump through, but most accept that we are trying to protect them as much as we are protecting ourselves.