Would appreciate any thoughts on the following.

An ongoing governmental defined benefit plan provides a small death benefit (under $5,000) upon the participant's death in various scenarios. There is an order of payment (spouse; named beneficiary; children; estate). However, in some cases, the sponsor is (1) unable to contact a beneficiary, but believes they have the beneficiary's correct information, (2) is unable to identify the correct beneficiary at all, or (3) is unable to obtain a name, address, valid SSN, etc. for someone they believe may the correct beneficiary.

Assume no relevant state law, no representative has qualified on the estate, and that the sponsor has conducted a diligent and reasonable search under the circumstances.

Under scenario (1), I believe they could forfeit the death benefit subject to reinstatement, force an IRA rollover, or possibly escheat. 

What are valid options under scenarios (2) and (3)? My understanding is a forced IRA rollover would require establishing an IRA in the beneficiary's name, which may not be known (or may be suspected but an SSN not known). Same with escheating, which would require withholding and 1099-R reporting.

Does this leave forfeiture and reinstatement as the only alternative as it requires no taxation, withholding, or reporting? 

Plan allows for in-service withdrawals at age 59.5 for deferrals and SH, and PS at NRA.

Participant was told she could take an in-service withdrawal from the plan.  She was not told about the age requirements.

She took a $100k distribution from the brokerage account in September 2020, and a 1099-R was issued.

Problem is, she is only 35.

Can we retroactively amend to allow in-service w/d from Non-Elective contributions at age 34?

I see in EPCRS you can do that for hardships and loans.  Nothing about "regular" withdrawals.

If not, what's the correction?  Return the money and reverse the 1099-R?

Client forgot to file form 5558 yesterday and was told by accountant o file one today, send overnight and also to get"into gear" and file Form 5500-SF today and check off the box for Form 5558.

I know Ogden is backed up, but what are the odds this one would slip by with no penalty?

I mean, I have never heard of a penalty for a form 5500 being one day late.

I am having a hard time finding rules on the two year of service eligibility requirement.   I thought you could not have dual entry dates because someone could actually be excluded from the plan for more than two years.    

Example:  Joe is hired 7/15/2018.  He meets eligibility 7/15/2020.  Does he enter the plan on 1/1/2021 or can there only be one entry date for the beginning of the plan year.   

Am I confusing rules with 1 year of service and more than 18 months?

Client is filing 2018 and 2019 5500s soon and has what I believe to be a reasonable cause for the late filing.

Client received a penalty notice for the 2018  from the IRS but not from the DOL.

I have prepared a reasonable cause statement response to the IRS but am unclear what needs to be done with regards to the DOL.

Do we file DFVCP and pay the penalty or can we get any penalty waiver pursuant to a reasonable cause statement? If the latter, where do we send it?

Our plan is looking into the possibility of adding an in-service withdrawal feature tied to the occurrence of a short-term/temporary disability.  We have not been able to find much guidance in our research to confirm that (1) this is permissible and (2) what parameters can we place on it.  I know the Treas. Reg. 1.401(b)(1)(ii) allows for in-service withdrawals of funds after a "fixed number of years, the attainment of a stated age, or upon the prior occurrence of some event such as layoff, illness, disability, retirement, death or severance of employment."  Would a short-term or temporary disability (that would not qualify for the exception to the 10% early withdrawal penalty if the worker is under 59 1/2) be an event that would allow for an in-service withdrawal?  (We would only allow withdrawal of employer contributions that are vested and put a cap on the amount that could be withdrawn, plus require proof/documentation for the short-term disability).  If anyone has added this type of feature or can provide references to any IRS or DOL guidance (whether articles, PLRs, Rev, Ruls., etc) that would be great. My research hasn't been very fruitful (although I did come across at least one plan that incorporates this feature) but not much more. 

I have an employer who states they have joint employer status with their employees, but almost all the employees are directly employed by other entities. No controlled group exists between the entities, but they are claiming a controlled group isn't necessary for these employees to participate in their plan.

Has anyone encountered such a scenario? How do you set up the plan document this way when it seems like the IRS and DOL conflict?

Does the postponement in tax filing deadline (from 4/15 to 5/17) also cause a postponement of when 402(g) corrective distributions must be processed?

I have a 401(k) plan where the employer has many union employees covered by a collective bargaining agreement. The union employees are currently excluded from the 401(k) plan. The owner is covered by the CBA under a separate union agreement, along with only a few other employees. For a little background, about 75% of the company's workforce is made up of union employees.

If the plan were to amend to allow employees from only the separate union agreement that includes the owner, would all union employees need to be included in the compliance testing, regardless if they are excluded from the plan? The concern is that including all union employees would more than likely result in failed coverage testing.

I'm looking for a little confirmation on what I hope are easy questions - with a lot of set-up.  A control group has 9 different 401(k) plans.  A few of the plans fail the ratio % test so we are going to aggregate the plans into 3 separate groups:

Group 1: Plans 1, 2, 3, and 4 are not safe harbor and all have identical provisions.

Group 2: Plans 5, 6, and 7 are not safe harbor and all have identical provisions (but different match than group 1).

Group 3: Plans 8 and 9 are safe harbor match with identical provisions except Plan 9 also has a fixed 2% non-elective contribution.

Groups 1 and 2 each pass the ratio % test for 401(k), 401(m), and 401(a) as well as ADP and ACP so we are in the clear. Group 3 passes the ratio % test for 401(k) and 401(m), but not 401(a). The only option for Group 3 is the average benefits test and it passes - if our system is running it properly. While I know the basics, I don't have a ton of experience dealing with the ABT and I'm always leery of results that I can't double-check with confidence. I know I should trust the software, but I trust the opinions of many of those who reply to this message board a little more.

In the average benefits test the HCE and NHCE in Group 3 are having the EAR's calculated while all HCE and NHCE from Groups 1 and 2 are shown with a 0.00 EAR. The average EAR for all HCE is .72%. The average EAR for all NHCE is .65% so definitely more than 70% of the HCE EAR. Non-discriminatory classification seems fine - excluded employees are only those employees from companies 1-7 and the ratio % test for 401(a) was 52%.

1. With this information does it sound like our system is running this properly and all three groups pass coverage - or is this not enough information to hazard a guess?

2. I think we've aggregated the most-logical way possible but am I missing any potential problems with aggregating these 9 plans into 3 separate groups?

3. Each of these plans uses different recordkeepers, have different investment lineups, and very different fee structures. Is this a potential BRF problem?

Company A and Company B both sponsor 401k plans. Company A purchases Company B in a stock acquisition. Prior to the acquisition, the attorney's draft a board resolution establishing a termination date for Company B's plan. The plan termination date was the day before the closing of the purchase of Company B. The resolution was executed timely. 

The TPA for Company B's plan is stating that since the plan was not restated for the tricycle amendment prior to the establishment of the termination date, they are now considered a non-amender and must file under VCP to bring the document current. They state that had they known about the acquisition ahead of time, they could have avoided VCP by restating the document before the termination date. Note - the purchase happened within the past two weeks, all assets are still in the trust. 

I know the document needs to be updated, but I have never heard that it must be updated before the termination date is established. 

Is the TPA correct that Company B must file via VCP to restate the document as if they are a non-amender? 

Thank you

(I should have posted this under the termination message board, not sure how/if I can move it or if a moderator can move it for me, thanks)

What is a "reasonable period" of time for a plan sponsor to implement salary deferral election changes?  Plan states that an election to modify a salary reduction agreement "will take effect within a reasonable period following such election."  Typically, election changes would take effect on the next semi-monthly payroll date (i.e. 1-2 weeks). But due to an administrative error election changes made earlier this year did not take effect for up to 12 weeks (i.e., an election change made 1/1 to increase deferrals was implemented 3/31). 

I'm analyzing whether the election changes were not implemented within a reasonable period, resulting in an Election Deferral Failure under IRS rules. Any thoughts would be appreciated.  

My cousin was in the final stages of a divorce and there was an agreement on NYCERS pension. Unfortunately he took his own life before it was finalized. Furthermore, he retired and received his 1st check. In the event he didn't leave her as beneficiary and elected maximum option as his temporary option,  will NYCERS accept an " After death " QDRO.

We have two employees who retired in December 2020.  Shortly before their retirement, their pay rate was adjusted retroactive to JUNE, 2020 but the compensation is only being paid to them now, in late March/early April.  This is after the 2 1/2 months referred to in the regs.

• The payment is regular compensation for services performed during their normal working hours and in all respects meets the definition of compensation under our plan,
• The payment would have been paid to the employees prior to their severance from employment if the employees had continued working, BUT
• The payment is not being made by "the later of 2½ months after severance from employment or the end of the limitation year that includes the date of severance from employment with the employer maintaining the plan."  Our limitation year is the calendar year.

I believe this means that the employer cannot make corrective contributions to their accounts to reflect the retroactive pay change.  For the sake of equity, we would probably make a compensatory payment outside the plan but I think the participants would prefer a contribution.

Any thoughts, anyone?

Group:

I may not have all necessary research tools

to find the above query at my disposal just yet.

Is there a resource (I'm willing to buy the resource if necessary)

that illustrates when a plan sponsor discharges their duties as a fiduciary?

I'm looking for a number of instances connected with setting up ESOP's, maintaining ESOP's

and winding down/terminating such ESOP's?

As example, I note from my reading of DOL Greatbanc (and 2018 Lubbock case)

there are steps a fiduciary takes when choosing a valuation appraiser.

Once all the steps are accomplished doesn't the plan sponsor discharge their duty

to participants?

Another example is when a fiduciary hires a TPA to perform 5500 filings

and preparation of employee benefit statements (summary of annual reports/SAR's)

is there any legal support to reflect that their duty to provide notices

were delegated to said TPA's and the plan sponsors/trustee's

reliance was reasonable?

Reason for my query is I'm dealing with an unhappy TEGE/IRS

auditor (on an ESOP matter) who doesn't like my initial argument

that the plan sponsors/trustees discharge their duties

by hiring experts. ie. valuation experts, TPA's

even the CPA's, Tax/ERISA counsel, etc.

I can't find the text/law/support that says the fiduciary discharges

their duty and can not be assessed penalties/taxes/other sanctions.

Is there an easy to use searchable database, related

to all things ESOP's, for all DOL advisory bulletins?

IRS LRM's?  Treas Regs?

I'm sure there is a treatise out there that I have not run across

just yet and hoping one of my learned colleagues may have already

done some leg work on this matter.

Thank you in advance!

My acappella group sings “When I’m sixty-four” in our charity appearances, especially at a retirement community.

I wonder whether Lennon’s and McCartney’s choice of 64 relates to what in the 1960s was a relevant age under England’s law, whether for a State pension or an occupational superannuation scheme.

Does anyone have an answer more confident than my hunch?

Request for comments --

I wonder if you think it would be a Good Thing vs. a Bad Thing for the community to allow members to post a message (i.e., start a topic) that's commercial in nature because it would enable the member to describe more about himself or herself, or describe his or her firm/employer, or both -- e.g., something like a LinkedIn page. It might describe what services or products are provided by a firm/employer, where it's located, who to contact for more information, a logo or other image (e.g, a map or a photo of the member or a facility etc.), its history, how many people are employed, and similar facts. A personal bio might describe what sorts of hobbies the individual has, and whether he or she would like to connect with other members who are ham radio operators (for example), in addition to any desired "commercial" information (without the fear of breaking any rule that otherwise would stop the member from feeling free to include it).

It would be limited to one such topic per firm/employer, but it could be edited from time to time as desired by the member.

It would allow the posting of reply messages into the topic (e.g., people could ask questions or even develop a conversation with the member about the firm/employer).

I know the message board software has a "profile" feature (click on a member's name next to any posted message), and it includes an "Interests" field and a "About Me" field, but it's a bit hidden, and not as free-form as the idea I'm describing.

Perhaps the privilege would extend only to members who have are large contributors -- X or more posts -- as a reward and incentive for participation.

Has the 2020 IRA contribution deadline been deferred to May 17th?  I noticed some outlets have been reported the extended (May 17th) deadline however the IRS hasn't posted/announced anything.

Thoughts?

An employee was recently moved from a foreign entity to the US entity of the same company that sponsors a 401(k).  They are a resident non-citizen with US income now.

Should the original hire date form the foreign entity be used for crediting service for vesting? Or the date that they moved to the US and began employment with the US entity?

The plan document is mum on the topic; no provisions that state how to credit service based on service at the foreign entities. The plan has immediate entry but ER contributions have a vesting schedule.

Thank you in advance.

I am researching options to offer pre-65 retiree insurance to select early retirees who meet specific age, service and level requirements. Specifically, I am trying to determine whether it is permissible (in terms of ERISA, Section 105(h) etc.) to offer an HRA (retiree-only?) to these individuals to purchase exchange coverage on their own or perhaps via a private exchange (such as Mercer 365 marketplace). 

One of my concerns is whether this would pass 105(h) discrimination rules since it would only offered to select employees (who would be executives based on the proposed criteria). From what I have researched, I believe this type of arrangement would not be subject to discrimination testing under 105(h), if we only reimbursed premiums. In terms of ERISA, since this type of arrangement entails the retiree to select and pay their own premiums (albeit from the HRA), would this type of arrangement be exempt from the requirements of ERISA (i.e. recordkeeping, plan doc etc.)?

I'm sure there are other considerations I may have overlooked. Appreciate any guidance on this or alternative suggestions on acceptable approaches.