MoJo

At the risk of opening a can of worms, from the IRS' perspective (at least as I read 2008-50) the "correct" approach to lost earnings calculation is 1) use the actual earning experience of the affected participant(*s) AND ONLY IF DOING SO IS IMPRACTICABLE, then 2) use the highest returning fund in the plan as the proxy, AND ONLY IF DOING SO IS IMPRACTICABLE; 3) use the DOL calculator. Now, as a practical matter, in my experience, the cost of having a record keeper calculate actual earnings is exorbitant relative to the error (hence, rendering it impracticable); the use of the highest earning fund is so far out of the range of the typical or average earnings as to be an extreme windfall (i.e. in this investing environment, it isn't unusual to see a 20%+ return for the highest fund when most of the affected participants are primarily in a SVF with a few other options returning 2 or 3%), so, the DOL calculator is used. BUT, is it not necessary to go through the analysis (at least as far as the IRS is concerned) before getting to the calculator (and of course, documenting the analysis)? That is what I recommend (and in virtually all cases, the calculator is used).

Why not just have Corp C assume responsibility for Corp B's plan, as successor sponsor, and not worry about a new plan, or a merger? Or, amend Corp B's plan to allow participation by members of the controlled group, then have Corp C become a participating employer (since all the employees are there)?

Well, I agree with you and Belgarath - BUT I would suggest that what you indicate needs to be done (identify, correct, document correction, implement procedures to prevent re-occurrence) ***IS*** "formal" and needs to be done with such rigor (and documented as such) so as to withstand scrutiny should the plan be audited, or should a participant question the error and correction method....

I think the answer depends on whether or not the TPA performs in an capacity as a fiduciary (not what they say they are, but what they actually do - and my experience is that some (many?) cross the line occasionally). If they are a fiduciary, then yes, they have a responsibility to correct the breaches of other fiduciaries, including turning the employer in to the DOL. A few years ago, the DOL attempted to "deputize" many service providers arguing that they had a responsibility to turn in employers with late deposits. Not sure if they ever attempted to enforce such a "mandate" and doubt it would have been successful. Now, does the TPA have a moral obligation? We can argue about that - but in my mind, if the TPA hasn't taken all necessary steps to get around the gatekeeper, then I as an client (or consultant, attorney) would not think very highly of the TPA (to whom I would look upon as one charged with keeping the client out of trouble).

Great question, and while I don't have the answer, I can assure you that the SDB business can be extremely enriching (to the provider). I used to work for a large bundled provider (discount broker parent) and the revenue assumed from SDB's for pricing purposes was between 100 and 200 bps - and that certainly wasn't from trading fees. Approximately 1/3 of the brokerage account assets were in cash and cash equivalents, which were cash cows for the firm, plus revenue from any mutual funds held in the brokerage accounts would be enough to make a fiduciary blush (on the retail (brokerage) side, pay to play on the platform is extremely lucrative).

Yes. In fact, you can "include" anyone you want, including non-resident aliens (provided they have income from which they can have an effective deferral). Based on what you've provided, there this person isn't in an excludeable class, so unless your plan has some weird exclusion provisions, they must be included, and even if you exclude them, they would have to be addressed in testing.....

I think there is no doubt but that you must abide by the terms of the plan and use his actual age for purposes of calculating the benefit. I know of no exception to that. What you are really asking is whether or not there is any recourse against him for his subterfuge. Well. If he hasn't yet retired, fire him. Not sure if that gets you anything, but 1) it'll feel better to you; 2) any benefits dependent on not being fired (for cause), if any, would no longer be available.

It's Friday. The brain is fried - and I didn't see that one coming at all!

If you are handling the money in any way but the most ministerial fashion, then I would argue you do have fiduciary responsibility. If you have the power to "missplace" a deposit, I would suggest you have more than a ministerial function.

It's Friday. I have a headache. I doubt any of my HS algebra teachers are still alive to verify.... Nonetheless, I voted for "2" then read AtA's application of the "rules" and decided I now have a bigger headache. Bottom line, Mr. Bill Gates says 288 (isn't this why we have Excel in the first place?)

I've had to deal with this issue in the past. As was noted, some take copies, others insist on an original - but ALL that wanted an original, returned it promptly. If the firm has a local office, ask if you can present the POA there, and keep it in your possession if possible. Otherwise, send it "registered" (not "certified") mail, and pay for proof of delivery so you can track it all the way. Good luck. Michael

I assume there is no beneficiary designation on file naming someone else to receive the benefits? Absent that, the money should be distributed pursuant to the terms of the plan (which means it probably goes to the estate of the decedent). No estate? Someone will have to open one. From there, who gets the money is determined under the state's laws (and at least gets the money out of the plan and out of your hair). Absent that, what does the plan provide with respect to "lost participants or beneficiaries"?

I used to have one (using Quattro Pro software) before the rules changed. Any one interested in collaborating on putting one together?

Perhaps the plan is in blackout as a result of the conversion?.....

Poje: I hate you. Merry Ho Ho!

Yes, but from those "10 laws" how many regulations/interpretations/bureaucracies have been created for enforcement purposes? How long is the Bible (and how many version are there)? Ever look at an org chart of the Vatican?

A few years ago, I took my aunt to see the "Stones" in concert - for her birthday (as we realized we wouldn't have too many more opportunities to do so). She's the same age as Mick. It wasn't his face she was admiring - but rather the "other end" which she claimed was "awesome" for a man of any age..... I was embarrassed when she climbed on her chair to get a better view....

I agree with Mr. Preston but would add a couple of cautions: First, "disclaiming" is a very technical process - with various deadlines and requirements that usually must be strictly adhered to (and consequences that range from invalidating the disclaimer to having tax consequences (both income and potentially gift) to the sisters if they improperly disclaim and the money does ultimately go to the children. Second, if the sisters disclaim, and the assets flow to the estate, then it will be taxable income (it's not rolloverable at that point) to someone (and I agree, the terms of the plan will govern, but in my experience, it would be normal for the assets to flow to the estate, rather than directly to the children of the intended beneficiaries). If the assets go to the sisters as named beneficiaries, they may be able to roll the assets over to a beneficiary IRA and preserve the tax deferral. Many moving parts here, and while their intentions may be munificent, there may be better ways to accomplish the goal (take the money and gift other, non-plan assets to their children, or take the money, and name their children as beneficiaries of their IRA's and wait...). Talk to a qualified advisory!

I'm not sure I agree. The article clearly states why annuities of the past are not a good idea for retirement plans. But there are other issues. Lack of retirement savings is an issue, but more important, lack of the education, tools and/or professional help in managing investment is, IMHO, far more significant an issue. We've been trying to turn participants into investors for 2 and half decades now with very marginal success. Auto features are both a response, and a partial solution. The problem is, post retirement, those tools go away. There are current efforts to provide fee transparent annuities that will eliminate or mitigate many the objections of annuities in the past. one of the benefits of having such a product as an investment choice in the plan is that it allows you to dollar cost average the return of the annuity over a working career - instead of being dependent on the interest rate environment at a single point in time - that of retirement. I would think that the multi-million dollar bonus individuals in the financial services industry would be able to come up with appropriate solutions.....

Yea. Yea. Whistle while you work..... That's it. I think I know have 7, 13, 14, and 15 as well.

I finally got #3 as well. You're right about it being old. Now I have this silly whistling tune running around in my head......

I got 2, 4, 19 and 21. Not too good. Thanks Tom for ruing my weekend.....

I'll say it. I'll second that.... Since I'm now rapidly approaching "that age," my appreciation of the value of a DB plan is increasing....

I read the article (and saw the author interviewed on CNBC yesterday), and while I agree the treatment is somewhat superficial, it points out some of the problems we in the industry have failed to address. Over the last 25 years or so we HAVE witnessed the transfer of retirement responsibility from professional money managers to employee participants and we HAVE NOT also transferred (successfully) the knowledge and tools for those employee participants to be able to have a reasonable chance at a successful retirement. We are only now beginning to see any penetration of advice products and managed accounts - which are necessary for those without an aptitude or interest in money management (which would be a majority of those out there, based on the stats of 1) the number of people who even access their accounts annually; 2) the number who do (or rather don't) diversify, rebalance, and otherwise employ even the most basic of investment tactics; and 3) the amount of money still held in cash and cash equivalents in qualified retirement plans). While the article focuses on retirement as an "event" (i.e. what the balance is on the date contributions stop), the author's real intent is to convey the total lack of preparation a participant has for making that balance last a lifetime. He could have equally as well pointed out that an annuity at retirement is also subkect to current economic conditions at the "event" horizon - that is, even if you through up your hands and admitted to not being able to manage money like a pro, and bough an annuity, do so at a single point in time subjects you to current interest rates which can have a huge impact on your payment stream (retire when rates are high and you'll get a better flow than if you retire when rates are low - like now.... As an industry, we haven't perfected a retirement annuity that allows a participant to "dollar cost average" in to a portable, cost effective solution to this problem (although there are some products out there, and others in development), and we'll have to re-address the issue of re-educating the masses to realize that they can't be the next Peter Lynch, no matter how hard the average participant tries, and that buying into a retirement annuity would be a good thing. For decades, we've been trying to educate people to be investors - and we need to realize that the best we can do (for them) is to educate them to be savers, and leave the investing to professionals. We've taught them that they are "in charge" and left them to their own devices - now we need to unlearn the "control" part of it and teach the proper use of delegation (through the right tools and products) for success. The reason for this article now is simply the beating the markets have taken over the last couple of years - that show the volatility of a DC account, and yet, we have no solution to that, except keep working, and save more.....

The reason you'd want to do it is simply to return the amount of the loan fee (with interest) back into the account. Otherwise, the account sees a permanent reduction of the amount of the loan fee - which over time could amount to more than just aq nominal amount.