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Having trouble getting to health care plan

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Plan has three related employers ( controlled group).

Forfeitures are held in one forfeiture account - Question - is there any issue with allowing the related employer to only use forfeitures triggered by former employees within their group. For example there is $100,000 in the forfeiture account - $40,000 from Company A, $10,000 from Company B and $50,000 from Company C.

The Plan Sponsor would like each entity to use only the forfeitures triggered by their respective former participants.  Plan document does not address is provision

I’m now reviewing a draft of a plan’s restatement. (The draft is not from the recordkeeper, nor my firm.)

The IRS-preapproved documents lack items to specify which of SECURE 2022’s optional provisions the plan includes or omits.

For whatever plan amendment ought to be done by December 31, 2026, the plan sponsor (following its internal business reasons) wants to do everything now.

What’s an effective way to document the plan’s SECURE 2022 optional provisions (without defeating reliance on the IRS’s opinion letter on the IRS-preapproved documents)?

Or is the plan sponsor’s preference to document now its SECURE 2022 provisions unwise?

Some great information on this site, thanks to you all!

I have a somewhat unique divorce situation, and need advice on how to calculate the value of a QJSA that is and was solely paid out of non-marital assets. My husband and I got married just before I retired from State of AK in March of 2019, in order to allow me to add him to my state benefits (free Health insurance, Long-Term Care Insurance and a 50% Joint Survivor Pension Option in the case of my death). I then retired 4 months later in August of 2019 and we now live in Minnesota, an Equitable Distribution State. He retired a few months after I did and has done contract work for his former employer off-and-on since.

I have taken a deduction from my pension annuity for both his LTC Insurance and the QJSA of which he is the beneficiary for the past almost-7 years of my retirement. The QJSA option I elected prior to my retirement is completely irrevocable, as I sadly found out recently - my pension annuity will be reduced because of this election for the rest of my life, even after we are divorced, and even if my husband dies before I do and no one ever receives the benefit of the QJSA. It is not transferrable to a new spouse, and nothing can be changed, even through a QDRO. So that election resulted in a lifetime pension reduction for me. What angers me is that we had a (verbal) agreement at the time of marriage that he would obtain a life insurance policy on himself with me as the beneficiary as compensation for that LTC insurance and QJSA, and he did get that life insurance policy, but then he let it lapse a year or two after the marriage ("fool me once"...) 

I had a prenup prior to the marriage that ensures that my soon-to-be-ex and I each maintain our own pensions.  I have not worked at all since the marriage, so all my assets are my own pre-marital money. We kept our finances separate throughout the marriage. My husband had three pensions that were earned before the marriage that are solely his own pre-marital assets, which he is now collecting on. However, he did work some during the marriage too, so some of his recently-earned assets are legally half mine (he has greater income than I do). He was also married previously, and his ex-wife is the beneficiary of his QJSA, so that doesn't factor in. The only assets being split in our divorce are a home, vehicles, and perhaps a small amount of his recent joint marital income. It does not seem fair to me that I will need to take a reduction in my pension for the next 30 years when I was only married to him for 4 months before I retired. When I looked into it, it sounds as if court cases in several states have considered the the QJSA to be a "valued asset" of the receiving spouse; one that can be offset by other assets in the divorce settlement, although I don't see any case law relevant to that in my own state. I'm pretty sure I can't get compensation for the value of the past (already-provided) LTC and QJSA benefits that I've paid for during the marriage, even though he reneged on the life insurance agreement. But I'd at least like to get compensation for my future losses over the next 30 years for the non-reciprocal QJSA that my ex-husband will benefit from.

So finally, if you're still with me....

My Question: For settlement purposes, how do I calculate the value of my future annuity reductions due to the irrevocable QJSA? My pension annuity has already been reduced by approximately $7,000 for the LTC Insurance and approximately $12,000 for the QJSA option over the past 7 years. The LTC Insurance is revocable, so there will be no further deductions for that. However, over the next 30 years (my approx. estimated lifespan), I will incur a loss of approximately $96,000 in pension reductions for the QJSA. The annuity deduction will increase with inflation each year. I'm certainly no accountant, but I have been trying to find a calculation that could give me a reasonable estimate for a settlement offer. My best Google-guestimate (found on an A.I. search) as to how to calculate this would be:

S_n = A x (1-rⁿ) / 1-r  where A= first year’s total payment ($2028) and r = annual growth rate (1.03) and n= number of years (30), so S₃₀ = 2028 x 47.5754 = $96,583.

I then attempted to calculate the present value in 2026 dollars at a 3 percent average annual inflation rate (?) (where PV = FV / (1 + r)ⁿ  and PV = $96,483 / (1 + 0.03)³⁰ = ($96,483 / 2.427262) = $39,750.

I have no idea whether my calculations or assumptions are correct, and I know I need to find an actuary to help me, but I'm wondering if anyone here can give me advice, as this is a somewhat unusual situation. Am I getting warm, or am I totally off-base here?

Thanks for any advice you could provide!

just because there might be new people to Benefits Link who didn't have to suffer through this one yet...

An employer is insisting that they filed Forms 1095 for 2023 and 2024 (when electronic filing was required) without filing a 1094 for each year. Is that even possible on the AIR system?

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Is anyone aware of guidance regarding exactly how the distribution (and in some cases, return) of overpayments should be handled for 1099-R purposes, under the new rules of 414(aa) and 402(c)(12) (as added by Section 301 of SECURE 2.0) and Notice 2024-77?

I can see several permutations that might affect reporting, including not only whether repayment is sought, but also whether the amounts were originally taken in cash or rolled over, whether repayment is sought in the same or a subsequent taxable year, and whether any repayment occurs in the same or a subsequent taxable year.  The 1099-R instructions don't appear to address these issues.

Hi 

Thank you, as usual, for all the insights.

A traditional DB plan is being audited by the IRS.

1. It appears from the questions being asked on the IDR, that the one asking the questions is not well versed in traditional DB plans or in DB plans in general. 

As they ask ...that the FT shown in the val report on the maximum contribution page is 1,846,234 is different  than the FT shown on the SB of $1,345,367. 

The answer is that the SB shows the FT for the minimum funding requirements, while the FT on the val report in the  maximum contribution section of the val report is based on the 404(0) rates for the maximum allowable contribution.

There is indeed, a section in the val report that shows the FT for the minimum funding and it properly matches the FT shown in the SB.

2. They ask to provide a demonstration  of how the plan provides meaningful benefits required by 401(a)(26).

In a memo for EP determinations  on 7/17/2007 (and Paul Shultz?) The IRS confirms that a benefit accrual of 0.5% per year of participation or service is meaningful...thus...a traditional DB plan that has a benefit formula of 0.5% of average compensation times credited service has a “meaningful benefit”. 

This plan under audit has a benefit a formula of 3% of avg. comp per year of year of service limited to 10 years. 

Question: Since the formula is 3% per year of service  shouldn't this mean that the plan provides meaningful benefits?

3. They ask how the plan satisfies the nondiscrimination in amount requirements of 401(a)(4).

A DB plan that uses a safe harbor formula satisfies 401(a)(4).

This pla uses a SH formula...

As it is the same formula for all employees, calculated based on the same number of service, and does not exceed 100% of comp.

It uses a uniform accrual formula..benefits accrued at a consistent rate for all.. ...3%per year of service.

Question: Therefore based on this, doesn't this plan meet the 401(a)(4) non discrimination in amount by design, and does not need annual testing?

Thank you very much for any insights on this.

Hi All,

A DB Plan sponsored by a corporation has the following provisions:

1. No in service distributions allowed, even if attained NRA.  

2. However, if working less than 40 hours a month, then if attained NRA, allowed to start taking benefits.

What if the corp has two owners (50/50). One of the owners wants to cut back on his work schedule and salary etc and work less than 40 hours monthly. 

Can this owner, who has reached, NRA, start to take monthly benefits from the plan, since he works less than 40 hours monthly or does this 40 hour rulr not apply to owners?

Thank you

Perhaps I was derelict in not researching this further or fully understanding it, but I had thought I could self-report ERPA CE credits to the IRS. During renewal, they ask you to enter credits per year (separated by ethics). When I added all the classes I had taken, I received an email from the IRS stating that I was one credit short based on what they had been reported to them directly, and that I needed to contact my CE vendors if there was an error (there wasn't).

Furthermore, many of the classes I took did not appear to be eligible for ERPA and, therefore, were not reported. I was one credit short. And, of course, I didn’t learn about this until after the cycle was over, when it was too late to make it up. That’s on me for not fully understanding the rules.

In any event, I replied to the IRS explaining that I had over 100 hours of ASPPA credit (albeit not ERPA) and asked if there is any possible flexibility. I’m waiting to hear back.

A few questions:

1. Has anyone experienced this before? What did you do, and what was the outcome?
2. Besides John Hancock and ERISApedia, who else offers free ERPA CE credits?
3. Is there a web-based platform where I can take multiple classes (paid is fine) to quickly accumulate credits?
4. I know ASPPA and NIPA offer certificates, credentials, conferences, and other paid options. For example, ASPPA charges about $72 for a 1-credit on-demand webcast. Are there more efficient options?

Thank you in advance for any insight.