MoJo

There is a difference between walking into a bank as you suggest, and going to an employer requesting information about a benefit: *E*R*I*S*A* There is a "requirement" to retain records for as long as necessary to calculate and pay all benefits due - regardless of how long that may be, or how many corporate transactions (M&A, spin-offs, etc.) may have taken place...I would suggest that plan sponsors also maintain all records showing that all benefits that had been paid, were actually paid. "Purge" is a a word and action that should be "purged" from ERISA plan operations.

And therein lies the problem. If the search produces "heirs" (whether or not they are the ones who would actually take under the laws of descent and distribution) can you then conclude the "heirs" are "lost" such that you can forfeit the balance? Personally, I don't think so. I think the DOL is clear that you have to take reasonable steps to "find" the beneficial owner of the account and can *only* forfeit if you can't find anyone. If you have identified potential owners, would it not be reasonable to maintain the balance intact, and urge those you've found to make a claim (even to the point of being helpful in facilitating them to do so)? We often look at obits, and use Spokeo and Ancestry.com to do the research to find benes - and when appropriate, point them to the small estate "forms" section of the probate court.

Based on a conference call I had with the DOL this morning - the answer is "yes." They wanted to know 1) if the plan sponsor (and by extension the service provider) knew where all the vested terms were, and 2) why the small balances had not been cashed out (despite the cash out provision saying "may" be cashed out, their theory was that as long as the money was in the plan, it was incurring fee expense that it didn't need to.) - and both of those are "fiduciary" issues in their eyes. Shaking my head wondering why the fees incurred in an institutional account would cause them more concern than the retail fees of any IRA, but that is where they come down on it.

I'm not sure why some people believe changing service providers is the termination of a "plan" and setting up a new one - which is what they did here. The plan is plan 001. Using 002 is probably incorrect. Labeling the change as an "asset out" and an "asset in" combination was wrong. I'd amend and go forth with 001 and the *only* plan....

I agree with Cuse.... If they are eligible, they should be benefiting. If they later choose NOT to claim a benefit, so be it, but currently, make the contribution. Who knows, maybe a bene will make the claim after death, or the spouse, or they can give the money to their Chruch - BUT the plan is the plan, and if it requires a benefit for an eligible employee (regardless of how reluctant they may be), make the contribution.

Thirds.... A "prudent" fiduciary would only escheat AFTER all other reasonable steps had been taken, AND after the requisite amount of time with "no known" beneficiaries locatable. Otherwise, it's an abuse of escheatment process and a possible fiduciary breach.

I disagree - I think the plan fiduciaries have a duty to try and resolve who has beneficial ownership of assets in the trust. I think it would be unwise for the account to lie fallow - with no one managing it. Absent direction from the participant or bene's, the plan sponsor HAS A FIDUCIARY RESPONSIBILITY to step in and actively manage the investments. Hence, the reason they should try to find someone to take charge of the account. We do it all the time on behalf of our client plan sponsors, and very actively do so with abandoned plans for that reason. That's why we always try to find out the small estate process for the jurisdiction in question, and will even point the potential bene's to the "affidavit" or other forms they may need. Indiana let's a bene to administer the assets WITHOUT a probate filing, for estates of less than $50,000. Ohio lets you do it with a simply affidavit filing in probate court for estates less than $25,000 (may be higher now).

Most states have an "abbreviated" process for handling "small" estates - that usually don't involve anything more than filing the appropriate form with the probate court and then handling things without court supervision. Some states go so far as allowing one to actually administer the small estate with NO filing with the probate court - upon presenting an affidavit on the appropriate form or with the appropriate language to whomever holds the assets. We see these all the time and simply have to verify that it is on the right form/language. Search for "small estate" and the state where the decedent lived to see what's required in that jurisdiction.

Your employer is wrong. Under no scenario that I can think of is their "correction" plausible. Ask for their rationale to not abide by your "current" deferral election - that is an issue INDEPENDENT of what they should be doing to correct the past. If all else fails, call your closest DOL office and ask to speak to a "retirement plan benefit consultant" and tell them your story.

Our approach is to take the balance as of the date of the force-out - UNLESS there is an identified (and payable) receivable. in which case we wait. I don't see a future profit sharing contribution not yet payable to be an issue. It will, of course, cause there to be a need for a secondary distribution.

I would add a fourth option (AFTER updating your resume) - let the IRS and/or DOL know. The DOL allows anonymous "tips" and even though this appears to be an IRS issue, it would get some attention. I have actually seen this done - where a former employee turned in a former employer (a TPA that mishandled it's own plan) and there was a full blown investigation resulting in additional contributions to the plan.

If the plan doesn't allow for partial distributions, then it would be a problem - and a precedent that could cause future problems. Either amend the plan (if the plan sponsor wants) or have her roll the distribution to an IRA where she can take out what she wants, when she wants it.

1. I don't know. You tell me if there are two plans or one. That is a fact you need to provide. 2. I don't know. You tell me if they are part of a controlled group/affiliated service group. Are the two locations just two locations of "one" company, or are they each a separate entity? Who are the owners? If they are "separate" entities are they under sufficiently common ownership (a mathematical test that results in the answer with certainty) to be a controlled group? If they aren't a controlled group, what attributes of an ASG do they have? I don't mean to be flippant - but you need to provide a lot more facts for anyone to determine what the scenario is, and even what your question is (or should be).

Anyone who's 'handle' is "Doghouse' must exist - The Cosmos is not that clever as to create it by accident.

A plan that size should have a consultant for a variety of reasons, let along guiding the plan fiduciaries through the fiduciary process of selecting services providers (including retaining the existing service providers should their RFP process lead them to that conclusion) - who may themselves be fiduciaries. The question really revolves around whether or not the plan fiduciaries (internal to the plan sponsor) are "expert" enough to meet the standard of a "prudent expert" in the RFP process. I doubt it - they all have "day jobs" too, and the "corporate" objectives need to be balanced against the plan's interests - and they may be divergent. Lots of consultants out there who would do it: Mercer, Towers, Buck (national players) and lots and lots of regional players....

Just say no. It's their burden to prove that they have a "legal" reason to claim 100% vesting, otherwise, just ignore them. We often get people (including lawyers) who claim that if they don't get their way, they are going to sue! My response is, "OK. Please copy me on the complaint when filed so we can immediately respond." Never had one follow through on it.

I think there is an additional issue in that 1) the beneficiary designation was NOT effective without the spousal consent; and 2) can or does the ineffective beneficiary designation survive the death of the participant? Playing devils advocate here, but what's to stop someone from saying the participant "withdrew" the ineffective beneficiary designation because the spouse never signed it? In other words, the participant "gave up" and died believing that he would leave his benefit to his surviving spouse. That's probably not the case in the current situation, but it is a question that could arise unless the plan, as QDROphile suggests, contains language that clearly allows the bene form to survive the participant's death AND that is clearly communicated to participants so they are aware of the "default" actions taken should their bene form not be consented to prior to death. Just thinking (like a lawyer) out loud....

Disclaiming is somewhat of a "state law" issue - and the laws vary from state to state - so it is imperative to get counsel involved who can determine if it would be appropriate, and what the requirements/consequences are. For example, some state don't allow "partial" disclaimers. Others may - but too what extent is an issue. As far as simply "paying it" as everyone wants to do - you've hit upon the age old question - "who would complain it you did?" That, unfortunately is a difficult question - because 1) who are the potential takers of the benefit under other scenarios (other potential heirs, kids of the surviving spouse, former spouse,); and 2) what "different" tax consequences result and may their be an issue there as well (e.g. if the spouse takes all, then there would be a further (potential) tax consequence when they die, etc.). My "opinion" is that the consent can not be given now - it had to be given before the participant died. Chances of something ever coming of it if everyone (known) agrees? Hard to say but not high.

They can... but a few things to keep in mind: 1) A start-up for a "few" employees is not really economical for many service providers. They should be prepared for "above average" costs; 2) Assets need to be held within the jurisdiction of U.S. District Courts. That generally means the situs of the trust is in the U.S. which generally means a U.S. based trustee; 3) Choice of plan sponsor might be of concern as well. The one's I've done had a "U.S." subsidiary (a corporation based in the U.S.) which employs the U.S. based employees. That makes it easy - make the U.S. sub the sponsor. If not (and just having an EIN doesn't mean they do), there are some interesting legal and fiduciary issues that may be impacted by Canadian law that the company should investigate with international counsel (one versed in both Canadian law and ERISA); finally, the plan should be drafted very carefully to ensure only the intended employees are included - especially if people bounce across the border occasionally.

The accountant is correct. Participant complaints are handled by a DOL "benefits consultant" and they are simply there to try and resolve disputes without going into a full blown audit (which they will do if the inquiry leads them to believe that an auditable issue exists - but then they pass it off to an investigator). The process is pretty informal. If the information provided by the accountant provides the answer, the benefits consultant will relay that to the participant and that pretty much ends it. I've seen this work from both sides (as a participant who turned in a former employer) and as a service provider who's employees contacted the DOL. Unless the matter is turned over to an "investigator" it's probably resolved....

I would never suggest that - because I can't even imagine that a B/D would ever make such a representation.... If they did, I'd turn them in to the DOL/SEC/FINRA and Good Housekeeping to have their Seal of Approval revoked. I'm merely suggesting that instead of proving it can't be done, make them prove it can be (and clearly, at least in my mind,it is a PT). Unless it's Joe's Car Emporioum and Brokerage House, they wouldn't even think of allowing one of their brokers to do it.

I don't have my research available anymore, but I had to go through this a number of years ago where the daughter was the FA. It clearly is a PT, and the easiest tack would be for you to suggest that the son's B/D or RIA to provide a written statement that it is NOT. That would be the best protection (and they aren't going to do it...).

Yea, well, one year is eons for a client who sees this as a cloud hanging over their heads.

It is amazing how into the weeds they have gotten. Our GA contracts, for example, have to be approved by the state regulators in each state we sell them - which is all of them except NY. For consistency, they charge a set ""asset based fee" - universally, across the entire product line - BUT, then a "credit" is given back to the plan based on pricing (and attainment of certain asset levels). They have questioned who earns the "float" on the charge taken before the credit is given - and test the employer to see if they know how it all works, and how much money is involved. They like to interview the CEO - who isn't as focused on this as maybe others - but they want to see if the top of the house is knowledgeable about the "weeds." It's clear also that the agents don't understand GA's and separate accounts, and asked us repeatedly why the participants can't just invest in mutual funds directly instead of through our separate accounts within the GA product. It's simple - insurance companies can't sell investments "directly" and have to do so through an insurance product. We think fees are transparent (and are not more than the NAV products we also sell through a different channel and in some cases less), but the DOL is simply confused. They've also questions the "crediting rate" for our general account stable value product - and are questioning why it isn't more (thinking we are skimming fees somewhere within the general account that isn't disclosed. Our SVF sets a crediting rate at the beginning of the year for the entire year, and they then have questioned what happens if we earn more than we credit on the account. Of course, we make money. But the converse is true as well - that is, if the general accounts makes less money than the crediting rate, we then lose money. I doubt if the average CEO would fully understand - and hence the trap is set. Stuff like that.

Oh, it's gotten a lot of attention - and they won't let go of the client. We have one open audit that is approaching it's one year anniversary, and that alone is causing the client's temper to be shown. Our General Counsel's office has told the DOL that if they want to audit us, "bring it on," but let our clients go! They won't.