As the US District Court for the Western District of Washington recently stated in Palmason_v_Weyerhaeuser_Company

"In other words, a participant can not sue just because someone working for the defined benefit plan erred, that error has to actually cause the promised benefits of that participant to decrease."

Misconduct by the administrators of a defined benefit plan will generally have no effect on an individual’s payments under the plan. In order to establish the requisite personal injury to pursue an award of monetary damages, the participants in such a plan must show that the alleged breaches of fiduciary duty created an appreciable risk that the defined benefits would not be paid. In other words, plaintiffs must show that the challenged investment policy and other fiduciary breaches “create[d] or enhance[d] the risk of default by the entire plan.”

Thus, if an actuary makes an egregious error that upon termination is found to have resulted in a significant underfunding and the Plan is terminated under a distress termination, the fact that a participant may forego part of his benefit or option to lump sum may give him cause against the actuary. One would think that a miscalculation of an AFTAP leading to lump sum restrictions applying would also be cause.

It sounds like no foul, not suit. That is, if benefits aren't affected but the employer may have to put in unanticipated dollars, then that's no cause for employees to sue. Of course, if employer fails to fund, then there could be cause.

If an employer is going to change their plan year, will a grace period still apply to the short plan year? For example, the current plan year is June 1 - May 31, with a 2 1/2 month grace period. The employer changes the plan year to December 1 - November 30, so the short plan year is June 1 - November 30. Can a grace period still be added to this short plan year?

I can't find anything specifc to this in the EBIA manual. Thanks for any guidance.

another question under a different scenario...

Suppose the document is currently written - profit sharing allocation is integrated with social security with 1000 hours and last day rule.

Client wants to remove service requirements and change allocation method to new comparability.

Plan year ends 12/31. Can this be done now?

Our firm has been approached by a governmental entity to provide TPA services to their money purchase plan. Curious as to what type of services TPAs provide for governmental plans other than documents, distribution, rollover and compliance assistance? And do most governmental plans use TPAs?

The assets of Corp A were bought by LLC B. Corp A sponsored a profit sharing plan for man years. One of the shareholders of Corp A is a memeber of LLC B

One option is for LLC B to adopt the existing plan and keep it going.

One new owner suggests terminating the old plan and starting a new one to prevent LLc B from having any liability for any problems (not are expected) that might crop up for the previous years.

Any thoughts on what liabilities the LLC B might have? If a problem was found in any previous year, would sanctions be against the defunct former owner? Would the new owner have any responsibilities for mistakes made by the previous sponsor?

Company A wants to have a maximum match of 1% of pay. No problem. However, to receive the match, a participant must defer 4% of pay or more. For example, a participant deferring 4% or more of pay receives a 1% of pay match. A participant deferring less tha 4% of pay receives no match.

Can Company A do this? Thanks!

Can anybody point me to the citation for this rule?

Client wants "proof" that they can't do this

Thanks

We are a bundled provider with plan assets invested in a daily valued group annuity contract. Within the contract is not only a guaranteed account, but also a separate account that houses underlying investments (one separate account in which the plan may have 20 funds in which they have invested).

Do the disclosure regulations require a fair value report on the underlying investement within the separate account?

Our actuaries are telling us they do not have to provide that information, however we have had multiple auditors for our large filers that are insisting we do have to provide it.

Any help would be appreciated!

It has recently come to my attention that some of my Taft-Hartley pension plans were not amended for the HEART Act. I won't go into why as it's not really important right now.

My plans' restatement cycle begins February 1, 2014 and runs through January 31, 2015. I am planning on submitting them for restatements within that time.

I am going to have my non-amended for HEART plans pass amendments at their next quarterly meetings (all of them will be held before the end of 2013). I am then going to submit those amendments to VCP.

My questions:

1) If the amendments are passed by the end of 2013 and I submit to VCP by the end of 2013, will I qualify for the reduced $375 VCP fee (pursuant to Rev. Proc. 2013-12, Sections 6.05(3) and 12.03(2))?

2) Which schedule would I use when submitting to VCP? Appendix C, Schedule 1? Appendix C, Schedule 2? I'm thinking schedule 2 because these plans were not amended within the remedial amendment period. So, I'll just have to fill out the "other" box on the schedule and say that it was for HEART, etc. But, I wanted to see what you all thought.

Thanks.

Does anyone use it?

How do you like it?

Did you convert from another recordkeeping system? If so, was that hard?

participant has an IRA and a profit sharing plan. He is 75 and his wife is the owner. Can he satisfy the profit sharing's RMD by taking it solely from the IRA?

A large calendar year DB plan (150 participants) terminated and the sponsor purchased annuities covering 100% of the plan’s benefits in December 2012. After the purchase of annuities the plan’s trust balance was $0.00.

Of course, a week later a $200 dividend posted to the trust and was not dealt with until June 2013 when it was used to pay plan fees (balance in trust as of 12/31/2012 was $200).

We have no problem with preparing a 2013 5500, but I am not sure how we should be reporting the participant counts. I would think that technically the plan had no participants or benefit liabilities since the annuities were purchased.

Question – is it reasonable or even allowable to file a Form 5500 with a 0 participant count as of 12/31/2012 and still have assets in the plan? Going with the same thought, could we than file a final 5500-SF for 2013 showing zero participant counts as of 01/01/2013?

Any thoughts or suggestions are appreciated.

Just curious as to what others "typically" find that employers choose to do. Say you have a two owner corporation, or a two person partnership, and either the partners split to form their own separate businesses, or the corporation dissolves and both owners form new corporations.

It seems like it is rare for either person to do an assumption of liability and change over the plan to new employer name/id #. They typically just terminate the old plan and set up new plans.

I can see reasons why they would do this, but I just wondered if this is typical in your experience? Maybe the biggest factor is they just want a clean break with the prior business. Any thoughts on specific pros and cons that you have experienced?

Does the allocation of a forfeiture follow the same deadline as a regular contribution to the plan? Seems it should...

Hi,

I know that we must count our interns and fellows in terms of determing large employer status. What's unclear to me is whether we are required under PPACA to offer them coverage. Interns typically work 3 months but that may be extended in some cases. Fellows typically work 6 months. Both types of employees work 40 hours per week while on board. Currently, they are considered ineligible for our benefits.

May we continue to exclude them under PPACA? If we do continue to exclude them and they receive a subsidy on the exchange, are we liable for the 3k penalty? Or, does the penalty not apply since they were not eligible for our plans to begin with?

Thanks!

The employer wants to make a safe harbor match of 100% of the first 3% and 100% of the next 2% - this would be an enhanced match of 100% of the first 5%.

Since the match formula is not less than the contribution determined under the basis match this is a good enhanced match.

Now the employer wants to cap the match at $10,000.

The accountant says this is ok, since the "level" in the enhanced match is better than the basic match. He claims even though the particpant receives less of a contribution under the enhanced match than the basic match, the fact the level is better, will allow his client to implement this match.

When I read the ERISA Outline book it states, ... A matching contribution will satisfy the ADP safe harbor contribution requirement if it is no less than the contribution determined under the "basic" formula.

I am looking for some quidance regarding the "cap". My thought is you cannot cap the safe habor. Need some help in understanding the rule.

Thanks

I am looking at a valuation report created by another firm and the 417(e) mortality table listed is "Male-modified RP2000 combined healthy male projected 23 & 15 years, Female-modified RP2000 combined healthy female projected 23 & 15 years." Is this just the Applicable Mortality Table? Also, what does "projected 23 & 15 years" mean - projected 38 years?

Any help would be appreciated. Thanks!!

Just before Line 3, Schedule R says "Profit Sharing Plans, ESOPS and Stock Bonus Plans, skip Line 3"

I just can't see why this information is relevant for a 403b Plan. It seems to me they meant to say "non-pension plans, skip Line 3." Has anyone been filling this line out for the audited 403b's?

Employer's 100% owner purchased 100% of another corporation 10 years ago without telling Tpa. so, employer and other corporation have been part of a brother sister controlled group since then. both companies have 401k plans but, the plans are different. one is safeharbor 401k , the other is regular 401k.

employer A has matched contributions to plan A. Employer B has matched-at a different level-contributions to plan B. neither employer has affirmatively agreed to participate in the other's plan.

the two companies clearly have to test to make sure that they have passed and will pass testing on a group basis. However, plan A has the following language from sungard volume submitter. Would 1.30© below require that the employees of B should be considered participating employees of the A plan after the 410(b)(6)© grace period runs out?

1.30 "Eligible Employee" means any Employee, except as provided below, and except as provided in any other particular

provision for the limited purposes of that provision (e.g., ADP test). The following Employees shall not be eligible to partiCipate in this

Plan:

(a) Employees of Affiliated Employers, unless such Affiliated Employers have specifically adopted this Plan in writing.

(b) An individual shall not be an Eligible Employee if such individual is not reported on the payroll records of the Employer as a

common law employee. In particular, it is expressly intended that individuals not treated as common law employees by the

Employer on its payroll records and out-sourced workers, are neither Employees nor Eligible Employees, and are excluded from

Plan participation even if a court or administrative agency determines that such individuals are common law employees and not

independent contractors. However, this paragraph shall not apply to partners or other Self-Employed Individuals unless the

Employer treats them as independent contractors.

© Unless or until otherwise provided, Employees who became Employees as the result of a "Code Section 410(b)(6)©

transaction" will not be Eligible Employees until the expiration of the transition period beginning on the date of the transaction and

ending on the last day of the first Plan Year beginning after the date of the transaction. A Code Section 410(b)(6)© transaction

is an asset Of stock acquisition, merger, or similar transaction involving a change in the Employer of the Employees of a trade or

business that is subject to the special rules set forth in Code Section 410(b)(6)©.

Employer's 100% owner purchased 100% of another corporation 10 years ago without telling Tpa. so, employer and other corporation have been part of a brother sister controlled group since then. both companies have 401k plans but, the plans are different. one is safeharbor 401k , the other is regular 401k.

employer A has matched contributions to plan A. Employer B has matched-at a different level-contributions to plan B. neither employer has affirmatively agreed to participate in the other's plan.

the two companies clearly have to test to make sure that they have passed and will pass testing on a group basis. However, plan A has the following language from sungard volume submitter. Would 1.30© below require that the employees of B should be considered participating employees of the A plan after the 410(b)(6)© grace period runs out?

1.30 "Eligible Employee" means any Employee, except as provided below, and except as provided in any other particular

provision for the limited purposes of that provision (e.g., ADP test). The following Employees shall not be eligible to partiCipate in this

Plan:

1. Employees of Affiliated Employers, unless such Affiliated Employers have specifically adopted this Plan in writing.

(b) An individual shall not be an Eligible Employee if such individual is not reported on the payroll records of the Employer as a

common law employee. In particular, it is expressly intended that individuals not treated as common law employees by the

Employer on its payroll records and out-sourced workers, are neither Employees nor Eligible Employees, and are excluded from

Plan participation even if a court or administrative agency determines that such individuals are common law employees and not

independent contractors. However, this paragraph shall not apply to partners or other Self-Employed Individuals unless the

Employer treats them as independent contractors.

© Unless or until otherwise provided, Employees who became Employees as the result of a "Code Section 410(b)(6)©

transaction" will not be Eligible Employees until the expiration of the transition period beginning on the date of the transaction and

ending on the last day of the first Plan Year beginning after the date of the transaction. A Code Section 410(b)(6)© transaction

is an asset Of stock acquisition, merger, or similar transaction involving a change in the Employer of the Employees of a trade or

business that is subject to the special rules set forth in Code Section 410(b)(6)©.