We began paying a joint and 50% survivor annuity to a participant from our defined benefit plan several months ago. The distribution election was made by the participant’s court-approved guardian, due to the participant’s apparent mental issues. However, we have now been informed that the guardianship is being terminated by the court. There is some dispute as to whether the guardianship was necessary or appropriate in the first place, but at this point the court has simply terminated it going forward and states that the participant is capable of managing her own affairs.

As a result of the (perhaps inappropriate and unnecessary) guardianship, the participant did not have the opportunity to choose the form of benefit she might have preferred, but is instead stuck with the benefit form chosen by the guardian. I am having difficulty finding any authority for allowing the participant to make a different election now. The situation doesn't fit any of the usual exceptions for modifying an annuity payout. Has anyone encountered a situation like this before and, if so, are you aware of any authority for a new election now? Or has anyone obtained IRS approval of an exception in similar circumstances?

Thanks much!

I've dwelled in big Plan world...now filing a 7 life CB plan 5500...It doesn't appear that a schedule R is required, but am unsure about Schedule SB attachments for actuarial assumptions and summary of Plan Provisions....anyone confirm Yes or No????

A one-man plan is terminating. The 417(e) lump sum (which exceeds the lump sum based upon plan assumptions) is less than the assets, which are less than the 415 limit. The plan document states that excess assets are returned to the employer (who is the participant). When preparing the distribution election form, should the amount of the lump sum be the 417(e) lump sum? The current value of assets? If it should be the 417(e) lump sum, are the remaining assets simply transferred to the employer's business account? His personal account?

Thanks for any responses!

I know a sale of an overfunded DB plan can be problematic but does anybody have an underfunded plan (preferably in Virginia or mid-Atlantic)that would like to talk?

Are there still "brokers" out there trying to do these deals?

Thanks

Hello,

Participant elects to defer 100% of pay (after payroll taxes, etc.) this leads to $0 in pay. Participant will not exceed 402g as this election will apply only to a few pay periods.

Question: I always assumed that you can do this with no issues (plan doc does not have a restriction on deferral %). However, the argument is, can you "pay" someone $0 in a paycheck - I still say yes, as they chose to defer it. Under the Wage Act (of the state in question) section "Deductions from wages" says: "Deductions below the minimum wage applicable under FLSA are not authorized". Based on this, I am being told a participant must be paid the minimum wage in their check. I have never heard this before. Is this accurate? Or is this section of the wage act being taken out of context? Do 401k rules override any state wage act?

Thank you

In a multi-employer, qualified defined benefit plan, is it required that participants be notified that they have incurred a permanent break in service and have forfeited their accrued benefit? I've been told it's necessary by legal counsel because it gives the terminated participant time to dispute the loss of service and that the notice starts the "count" for the statute of limitations during which the dispute can be filed with the Plan. Without the notice being sent, then apparently the participant can dispute the issue decades later, which of course makes it harder for the Plan to defend the record. So, does anyone know if this notice is required based upon regulation or just good Plan practice for protection? If it is reg, I'd like to know where I can find the language outlining it.

A plan has 3 participants who are all family members and HCEs. There have never been and will never be any other employees. The plan is underfunded for 417e purposes and one of the HCEs is due a distribution.

The Treasury Regulations say that in most cases an HCE's distribution must be limited to an amount that would leave behind enough assets in the plan to at least equal 110% of the plan's remaining current liabilities. Treas. Reg. 1.401(a)(4)-5(b) states that the 110% restriction does not apply “if the Commissioner determines that such provisions are not necessary to prevent the prohibited discrimination that may occur in the event of an early termination of the plan” – do you think it would be reasonable to believe that “the Commissioner” would consider an unrestricted distribution to be nondiscriminatory since all of the participants are HCEs?

Could use some advice regarding disposition of excess plan assets. I have encountered remaining funds from 2 plans that are now terminated. We're embarking on a wellness effort and this money could provide several years of start-up funding. But I'm not sure it's an appropriate use of the funds. After some research I discovered the following:

Life Insurance Plan - Fully insured life insurance Plan was terminated in the mid-90s and the employer subsequently received a payout from the demutualization of the former insurance carrier. Funds have just been sitting since 2000. The plan was funded by both employer contributions (basic life benefit) and employee contributions (optional purchchase).

Disabiltiy Plan - Self-funded disability plan was terminated in 2013. All claims are paid. All premiums were 100% paid by employee contributions from a limited, definable subset of the employer (about 20% of the workforce). Excess assets accummulated over a 20+ year period.

While "finding" these funds is a good thing (?), their disposition may pose some issues. Although the plans are not subject to ERISA (governmental), its provides a reasonable guidepost. Researching a similar issue years ago, I recall an ERISA provision (but can't find the cite now) permitting an employer to recoup its own premiums first, and then providing that anything above that (if any) could be used for the benefit of employees generally, or distributed to current or former participants. That might solve the Life Plan excess issue. But the Disabiltiy Plan excess (all from employee contributions) is another matter. What are acceptable uses of this money?

I'd appreciate any leads, cites or suggestions you might offer regarding acceptable use of these funds. Many thanks in advance.

Do you have any online networks to recommend (please nothing obvious like YouTube)? Especially looking for one with lots of comedy. This has a whole chunk of comedy stations, not just commercial standup but sketch comedy and internet comedy: http://pluto.tv/ I feel like this does a good job of making it seem like you're still watching TV even though it's internet content... For some strange reason, I really like the concept of channels and shows, even if it is, in the end, internet content.

Under the terms of the plan document the Plan Administrator is the Named Fiduciary.

The Named Fiduciary wants to establish a Retirement Committee ( made up of management and employees) to have the responsibility for monitoring the investments and plan operations. This would include the hiring and firing of the 3(38) Investment Manager, Recordkeeper and TPA.

Can the Named Fiduciary, delegate this responsibility to the Retirement Committee and they and only they are responsible for their decisions and actions?

My question pertains to the ability to amend a profit sharing formula if the plan has the last day rule requirement.

Suppose the last day rule requirement is in place.

I understand that you can amend the allocation method prior to the last day of the plan year.

However, can you amend the method to New Comparability?

I thought that the allocation groups have to be stated in the adoption agreement prior to the beginning of a plan year.

Please correct me if I am wrong!

Thank you

Brand new plan with effective date of 1/1/2013, elective deferral and safe harbor matching contributions effective 1/1/2014. Employer planned to make a profit sharing contribution for the 2013, however, they decided to give the employees a choice of a bonus or profit sharing contribution to their 401(k) profit sharing plan. No surprise that the employees chose the bonus.

Unfortunately, they did not inform our office (the TPA) of this decision until after we filed the Form 5558 for the 2013 plan year.

My question is this:

Since we have already filed the 2013 Form 5558, should we file the 2013 Form 5500-SF even though the plan didn't have any money in 2013? Some of my colleagues mentioned filing the Form 5500-SF with a $0 beginning and ending balance.

There's no problem with providing a different rate of contribution for full-time vs. part-time employees, correct? So full-time ee's get 5% and part-time get 3%.

Thanks!

I have a new plan (new to us) that we have just gone through a conversion from Met Life to Nationwide. The plan apparently has some loans. There were two loans as of 12/31/13, yet three more loans were taken out from MetLife just prior to the black out period.

The plan sponsor has stated that the loans were collateral loans made between the participant and MetLife and that the ER was not involved or aware that they were being granted. The participants paid the loans back to Met Life on a quarterly basis. The loan application that was provided to us (the TPA) by MetLife has the amount initially borrowed and length of loan, but not amort sch, no interest rate and no end date. Nationwide has been asking for this data so that the loans can be set up on their site so that they can be tracked.

Have I mentioned that their plan document states loans are to be repayed via payroll, etc.

I have pretty much had it with these people (toss in the broker) and I don't know what else to do about this fiasco. Anyone have a similiar situation in the past? It's like trying to put the puzzle together when you are missing a few pieces....

If a plan is terminated and its assets rolled into a new plan; how is the 8955-SSA information previously reported suppose to be handled? Does it need to be filed with deletions for all the previously reported participants and added to the reporting for the new plan?

Have a PT where the plan paid fees to a party-in-interest/disqualified person.

Fees are going to be restored to the plan.

TPA preparing the 5330s is saying the amount involved is the lost earnings on the fees (as if they were a loan to the DP) while I contend the amounts involved are the gross fees paid.

Am I wrong?

Thanks

So, if I've been sponsoring a church plan and upon review determine that I'm not eligible for church plan status am I able to use EPCRS to fix it retroactively? I assume I would also need past 5500s and plan audits? If anyone has experience with this, and in particular, with how the IRS responded to someone applying to correct under EPCRS, please share. Thanks!

I have a plan sponsor that wants to amend their plan document (2015) to provide a reduced elective deferral maximum for certain HCEs. For example, the plan covers employees in Division A and Division B. The plan sponsor wants to limit the maximum elective deferral percentage to 5% for HCEs in Division, while leaving a 25% limit for HCEs in Division A. (All NHCEs are limited to 50%.) Does anyone see any issue with this? I see none at this time since it is limiting HCEs and not affecting NHCEs.

Thoughts?

We just got a new plan and a participant (HCE) took a $35,000 loan back in late 2009, the loan note and amortization schedule is interest only payments until final principal and interest payment (so the loan is already bad from the beginning). However, the Plan document he provided didn't allow for loans back in 2009 (he is looking for any amendments but cant recall).

If the Plan didn't allow for loans, how is this corrected? Is this considered an 'overpayment' but since it was back in 2009 can it be paid back (as an overpayment)?

Thanks.

Individual participant contracts are excluded to avoid the audit requirement. But now they are going over regardless. The client of course no longer wants to go to the trouble and expense of segregating out the pre-1/1/09 contracts and the auditor would prefer not exclude them because all of the trust reporting includes them.

How are people handling this? Two options come to mind, Transfers Into Plan and Rollovers (I guess it is called "Other additions, including rollovers").