MoJo

Obviously a larger client with resource. Best way to do it, is as you described... On the other hand, we've actually had "handshake" acquisitions, where with one, when we asked if it was a stock purchase or asset acquisition (after it occurred), was asked back "which way is better." No joke.

And that would be the vast majority of those who are running their businesses and not relying on the pros for guidance in a very complex situation involving their retirement (and other benefit) plans. Most M&A attorneys have no ERISA expertise and many don't have access to that expertise. Only the larger law firms have in-house ERISA departments. They advise their clients to "seek guidance from their ERISA counsel" when most have none, or simply advise to "terminate the plan" before the aquisition" which results in their client acquiring a bunch of new employees with new bass boats and pickups, but no retirement savings (costing them an arm and a leg as they get older, and require more expensive medical care and no ability to actually retire.) .... There are some interesting studies on the long term costs to employers of plan leakage.

In my 43 years in the industry, I've lost count of the number of time the acquirer's plan doesn't exclude employees of a wholly owned sub, and the target's plan doesn't exclude employees of other members of the controlled group (i.e. the parent and any other entities under that umbrella) meaning, all employees get to participate in both plans - and then operational failure despite the 410(b)(6) transition exemption. Many, many other issues arise in these situations... Many.... In the last 10 years alone, we've done a dozen or so VCP on issues related to NOT "RTFD"ing the plans PRE-ACQUISITION.....

Music to my lawyer ears.... I see a VCP filing in the offing.... 🤣

Austin: Of course the merger agreement governs, and of course you can write the agreement as you see fit. I think the people here are expressing concern that being non-specific on the date ("when assets transfer") and the inadvisability of delaying the merger of the plans beyond the merger of the entities. As far as a non-specific date, consider 1) that may require additional audits (each "plan" requires it's own audit if large enough; 2) with various "puts" and delayed transfers for a variety of funds, the "last" asset transfer date may be 1, 5 or even 10 years out; and 3) each plan will require it's own 5500..... There are other issues as well. Most acquirers I've worked with generally want the newly acquired employees participating in "their" plan as soon as they become employees (and if you don't, then you have to deal with contributions to two plan, aggregated or not testing issues and the like) - so if you don't merge the plan, each must be amended appropriately to handle the other (hopefully) frozen plan. I can't tell you how many times we've had operational errors because of failures to properly end participation in one plan when allowing it in another. Reconciling assets held away is easy compared to the complexities that can arise if NOT merging the plans "legally" even if there is a delay in asset transfers....

In my mind, option 1 is very problematic for one very simple reason. Despite a participant making two elections (one for regular and one for catch-up) from the get-go, the amounts withheld pursuant to the catch-up election ARE NOT CATCH-UP CONTRIBUTIONS UNTIL A PLAN/REGULATORY LIMIT IS REACHED. Consider an employee who terminates mid-year, after the employer made a "tax-election" on behalf of the participant, without considering their entire tax situation, and then it turns out that the catch-up contributions are NOT catch-ups, because a limit wasn't reached. The employer just potentially cost the participant tax consequences unnecessarily, and "malpracticed" it at the same time. I'm a lawyer (but not a litigator) but if a large enough employer did that, then maybe had mass layoffs costing many people money, I'd brush up on my class-action litigation skills (or referral skills) rather quickly. As a recordkeeper, we hate all available options, but the single election with spillover seems less problematic. That said, my recordkeeping employer uses the dual election method (and when this becomes effective, it will impact me personally.) Frankly, I'm not going to be working long enough for the numbers of beginning Roth contributions to work, so my after-tax savings won't be in the plan.... I expect this will impact a number of those who are going to be subject to this rule....

I would tell the auditor that they are free to ask employees for copies of their DL, but the employer isn't required to produce (or obtain) anything that it doesn't already have.

The way I look at this is, if they are an excluded class - the regular eligibility is irrelevant, so they never actually "achieve" eligibility status, so LTPT would still kick in. Can't think of a reason why it would be otherwise. But then again, I bet I can trap you into admitting that the exclusion is service based, and therefore impermissible in the first place....

IraLogix (with Matrix as the actual custodian.) They are really a fintech, but the offering is efficient, easy to use, and from our perspective seamless. We also have an in-house IRA product that is used, but there are some limitations that IraLogix doesn't have.

My go to phrase: "We are a nondiscretionary, directed, ministerial service provider. Go find a fiduciary."

Amazing how little some people pay attention. The snark in me wants tos ay the remedy (for stupidity) is termination, but, I'll refrain. We have on every statement, every confirm, the landing page for web access and other places a statement that after TWO notifications of something, it is presumed ratified by the participant. At most, two bites would be the second statement post the action, but generally the first bite is the confirm, and the second would be the next quarterly statement. Never had to defend that, and I'm not sure I want to, but it has caused some people, including lawyers, to back-off of a claim (lest they be embarrassed by lack of attention they had in a "participant directed" plan.)

That is a good question, but it goes deeper than that. Often the trustee claims to be a non-discretionary directed fiduciary (and often claim they aren't a fiduciary - but that is a topic for another thread.) Our practice as R/K and custodian, and the entity directly responsible for directing the institutional trustee, was to not process distributions, as there was no fiduciary to authorize them. Even in those cases where processing distributions was outsourced to us (i.e. the plan sponsor need not be involved except to provide term dates and we'd handle the rest), we would refuse to process distributions as our authority was under an on-going delegation from the fiduciary - that evaporates when there is no active fiduciary to continue the delegation to us (and yes, our agreements so specify). So "freeze" may not be the right term, and the trustee may not have been acting with authority, but rather not acting as not having continuing authority.

I'm thoroughly confused. The only effect of the employer filing bankruptcy is that a Bankruptcy Trustee may be appointed who should become the plan fiduciary for purposes of terminating it and distributing assets. In any event, absent the bankruptcy trustee assuming responsibility, the existing plan fiduciaries remain the plan fiduciaries . Interestingly enough, the OP indicates an active plan fiduciary, but also the pendency of an application under the DOL's Abandoned Plan program - and those two facts are inconsistent. In order to have a QTA appointed, one must documents efforts to contact an existing fiduciary, and only if they can't be found, or are unable to continue as fiduciary, will a QTA be appointed. In any event, if a plan fiduciary exists, it's a fiduciary decision to approval or not requests for distributions, considering many factors but including a diminishing pool of assets/participants to pay ongoing fees. If the choose not to all distributions (a good idea, IMHO) then some "action" should be taken to effectuate plan termination and minimization of fees - else the DOL, when the denied participant complains, will question the fiduciary. If the plan is "abandoned" under the DOL criteria, then by definition no fiduciary exists until a QTA is appointed. Where I used to work, I was the QTA, and we would have a plan to bulk distribute benefits so as to reduce fee impact. Often; however, the fees were due to us (a r/k), and we would waive those fees as to charge them might be perceived as egregious or greedy, and reputational risk outweighs revenue. So, bottom line, who's the fiduciary NOW, and in any event allowing distributions is a fiduciary decision....

I do too, but I would not hold out hope that the IRS will rule favorably since the non-adopting employer has but one participant, an HCE by ownership.

What QDROphile said. If any claim exists for the AP/estate, it would be external to the plan and possibly a liability of the participant - BUT, the plan has no obligation or authority to dig into this further. No DRO means no DRO.

I think this falls under the "unless the employer has knowledge to the contrary" part of the statute. We've discussed this internally (we are a recordkeeper) and have decided not to offer self-certification to our clients who use our "outsourced" services for hardship processing. When an "apparent" abuse exists, does that constitute "knowledge" that this isn't a real hardship? This is what we need the regulators to provide guidance on.

The simple answer to the original question is "No!" The data belongs to the plan and is controlled by fiduciaries. Absent a regulatory REQUIREMENT, each and every client/fiduciary would have to consent, if not direct us to do so. I guarantee you some will say no, and others will not respond, and we don't want to track who has allowed it and who hasn't - so it's not a capability we intend (for now). Also, it's a lost and found that requires the participant to know, think, or at least suspect they have money, and then trust that the info is real and not a scam, and to be sure (I would, anyway) that my interaction with the database is secure. Nothing worse than finding lost money only to have someone eavesdropping and then taking that money.... Good idea. Very bad implementation.....

I agree with everything everyone has said thus far, but I think a few practical points need to be put forth. First, if a plan is a start-up post Secure 2.0 signing, then whoever is the recordkeeper should "strongly encourage" the employer to implement the ACA provisions from day 1. In our case, virtually all did. Second, it is actually highly unlikely that a post effective date start-up has actually decided to move recordkeepers. In most case (not all, but most), there aren't sufficient assets to entice a successor recordkeeper to seek out that business, nor are salespeople interested because the payout is low. If a salesperson is going after start-ups or newer plans, it's because of a relationship with the advisor (and of course, they are the most important advisor on the planet gobs of new business if we do this one favor for them....) Indeed, many recordkeepers loathe startups to begin with (the payback is lengthy) end have back end "term fees" that discourage moving the plan early. There are some that move, and it is incumbent on our transition services team to verify status, and our document consulting team to engage the client to implement ACA at transition time, rather than 1/1/25. Our approach, is to accept startups, or many newer plans ONLY IF they implement ACA provisions to kick start asset growth (oh, and it's good for the client too.)

Ditto....

Self-certification is only good as long as the employer has no knowledge to the contrary. The quip cited by metsfan would , to me, be "knowledge to the contrary" that a hardship condition doesn't exist.....

Doing what you suggest raises the possibility of a successor plan issue. In effect, what needs to take place is a "spin-off from the PEP to a standalone plan. Not sure it actually is, as the participation in the PEP is more of an administrative structure that a "plan" in the classical sense. No new plan, no terminated plan. Simple continuation of the plan the pan sponsor already has, sans the PEP structure.

We have been communicating the LTPT provisions since right after we caught our breath from CARES Act issues. Webinars, monthly newsletter articles (repeated quarterly), "datasheets" (mini-whitepapers) and lots of other communications. We charge RMs with actually having conversations with clients (wow, go figure - actually talking to clients) and targeted clients who had part-timers on the payroll - including medical PRT employees, seasonal employees, and others. We even targeted off-calendar year clients, where under S2019, some part-timers could become LTPT participants in 2023. If our clients haven't heard about LTPT, and their role in facilitating that provisions, we should fire them as undesirable clients. Absolutely positively not. We "inform." We don't decide. We are a "nondiscretionary directed ministerial service provider" with a wealth of knowledge we like to share with our clients - always for "review by counsel!" Whether they do or not, well ....

Late deposits are a prohibited transaction. Not making the assets productive (i.e. investing them) *may* be a fiduciary breach. If the fiduciary does determine a fiduciary breach occurred (based on the facts and circumstances of the situation), then the fiduciary *must* correct the breach. I'm on the fence as to whether or not the situation you described is a breach. The plan, apparently, was in a blackout. Hopefully an appropriate SOX notice was provided to the affected EE. If not, well that is another issue to contend with - as that employee did become a participant, albeit one who's contributions weren't invested.... The appropriate correction method is another issue. VFCP calculators, as I read the rules, is a "last resort" method, after the others described.

Lois and Dave: You've got my thoughts and prayers, but is there a local org that needs cash to help with the recovery? I can certainly send to the national orgs, but I've found that local efforts are better equipped to serve local needs. Let us know. Michael

I would respectfully disagree. A "simultaneous death" doesn't mean at the same time or even for the same reason. In some cases, a "simultaneous death" occurs even if there is a gap of up to 30 days, if the deaths were the result of a common cause (i.e. a car accident that kills one instantly, and the other lingers for weeks before dying of injuries received). In other cases, the cause of the second death is irrelevant, if the deaths occur in close proximity (sometime days separated). The bottom line is, each state has it's own simultaneous death statutes that will define whether or no a simultaneous death exists give the facts - and each determination is very fact specific.