Effen

Just Google 4204 sale and you will see a lot of articles. My limited experience is they can be very tricky to properly maneuver and require experienced legal counsel. The liability that is created by an improper sale can be disastrous.

I thought your first post was clear. I am closing this thread to avoid double posting.

On the surface, it was an employer contribution. As I saw on another question - if it is not an employer contribution, what was it? If there was nothing specifically stated in the agreement when they made the deposit, I don't know why they would ignore it. The employer can appeal and ask the Trustees to reconsider. If they can demonstrate that they have any documentation that they were told it would not be considered for withdrawal purposes, then they might have an argument. Unfortunately, they should have thought about this before they made a large payment.

Basil - multiemployers are a different animal. No simple answer to that question. You will need to talk with Fund actuaries/attorney.

I can't address how it might impact the qualified status of a volume submitter plan document, but you would be legally permitted to exclude any HCEs that you want. You will need to contact the document provider and ask if this type of adjustment impacts the determination letter.

I am sure others will chime in, but you seem like you did what you needed to do, but you will likely need an US based attorney to represent you. Does Grumman still exist? Just because Fidelity is acting as plan administrator doesn't absolve Grumman from responsibility. It appears you did everything that was required, but Fidelity just doesn't have the records. You should ask Fidelity for a copy of Grumman's QDRO policy. Typically even the hint of a QDRO is enough to cause the PA to stop any payments that might be allocated to you. IOW, if the benefit is in pay status - your information to Fidelity should cause them to at least escrow "your" portion going forward until things are resolved. Also, if the participant commenced retirement payments, he was likely legally obligated to inform Fidelity/Grumman that a QDRO existed. If he didn't, you will need to sue him for your portion of the value of the payments he received. The participant might also be guilty of fraud. If payments have not commenced, and regarding future payments if they have, you should be in a good spot, but you will need to continue to work with Fidelity and/or go to Grumman directly. They may just kick you back to Fidelity, but the squeaky wheel gets attention.

What state?

I agree with Mike. Many plans that offer highly subsidized early retirement benefits only offer them to those participants who go directly from active to retired status. IOW, in order to receive the subsidy, you must be eligible to retire at the time you separate from service. If you terminate prior to being eligible to receive a retirement benefit, often a different set of early retirement reductions would apply. You might want to re-check the document to make sure the unreduced early applies to all terminated participants. Either way, you do not need to provide an early retirement subsidy to a participant who didn't make a timely request. I guess that assumes they received an SPD and the benefit was clearly defined in the SPD, IOW, if they were never notified the benefit exists, the DOL may take an interest.

Not disagreeing with Mike, but 8/12 would definitely NOT be ok. The plan didn't exist on 8/12/20 since it was terminated on 5/31/20. I think your val date would be 5/31.

I can only speak for myself, but the issue became more important after an IRS response to a graybook question. I don't recall the year, but think it was early 2010s? IRS has subsequently echoed same position, which is, if you don't issue an SOBN, you need to provide BOTH the age/service, plus the actuarial increase. In your example, your procedures are not in compliance with the document. Your are not following plan provisions by not supplying a SOBN to people working beyond NRD. You must provide the rollup to avoid a 411(d)(6) cut back on the existing AB, and the IRS would argue that you need to provide the additional accrual because you never suspended the benefit. Current IRS position is that your plan must specifically include "greater of the two" language in order to offset the accrual by the rollup. Without that explicit language, you need to give both. I think some of this was codified in the first sets of 417(e) regulations.

Best place to start is to ask your accountant and/or attorney for recommendations. Like most things in life, you get what you pay for. It might be help to scan some of the other threads on this board to gain an understanding of the potential issues. You should be able to find someone willing to do the work for < 2K for a solo db. Location doesn't really matter, but if you tell us what city you are near, someone will likely PM you.

Your question is probably beyond the scope of this board. I suggest you contact a local tax advisor.

Jinx

1) Maybe. Review the rules for Qualified Replacement Plan. They can reduce the excise tax on whatever they can allocate within 7 years. They might be able to use up the entire $500K of excess. Make sure they understand it counts as an annual addition. IOW, if they allocate $58K of the excess assets each year, there is no room for any employer contributions. Also, be aware of earnings on the excess assets they transferred also need to be allocated, so most people invest conservatively. 2) Sure, they can start a new one tomorrow. They won't be able to put any money into it, but they can have one. You only get one 415 limit per employer. If they hit the 415 limit in the DB, they are likely done. If COLAs increase the 415 limit in the future, it might make sense in a few years, but not as likely to happen with the current Congress. If they worked for a new employer (less than 50% ownership) they might be able to fund a different 415 limit.

? There are no two sides on a dilemma. This is all pretty black and white. You just need to do some research and figure out which is correct. Don't take on risk for a client just because they are unwillingly to pay for something outside your area of expertise.

I meant you need to talk to the plan's actuary and ERISA counsel and work through these issues. I believe if the plan permits the beneficiary to take a lump sum in leu of monthly payments (you need to work with ERISA counsel to ensure this is permitted), the beneficiary cannot rollover the MRD amount applicable for the year of payment. These rules are tricky for DB plans so you will need to read the regs. Yes, the beneficiary can rollover a lump sum, part of it will not be eligible for rollover due to MRDs. Whose MRDs govern after the rollover I am not sure.

https://www.asppa.org/news-resources/browse-topics/suspension-benefits-part-1 2530.203-3,Department of Labor,Suspension of pension benefits upon reemployment of retirees

Brokers can help them place the annuity, but everything has a cost. Nothing prohibiting the sponsor going directly to the insurance company and skipping the middle man. There are only two or three that will quote at that size.

I don't know the answer to your direct question, but my initial concern was 1.401(a)(4)-5 Plan amendments and plan terminations. (a) (2) Facts-and-circumstances determination. Whether the timing of a plan amendment or series of plan amendments has the effect of discriminating significantly in favor of HCEs or former HCEs is determined at the time the plan amendment first becomes effective for purposes of section 401(a), based on all of the relevant facts and circumstances If the amendment benefited the HCE, you should make sure the timing of the amendment was not discriminatory.

Another thought is that the 2020 contribution isn't due until 9/15/21. For the 2021 valuation it might be reasonable to assume < 1000 hours, plus the plan will have a gain since there was no accrual in 2020 - add ARPA to all that, and the 2021 MRC will likely be very low. Also, you can probably reduce the 2020 MRC significantly by applying the ARPA changes. Maybe you can't eliminate 2020's MRC, but between 2020 and 2021, total cash outlay can be significantly reduced.

You need to talk to the plan's actuary and ERISA counsel and work through these issues.

You are correct. After reviewing SPD, it appears no spousal consent would have been required. SPD is public and can be found with google search

Spouse would have had to consent to that option.

No, deductions don't carry over like that. They can be deducted in the fiscal year deposited, or the preceding fiscal year if deposited before the due date of the tax return, but they can't be deducted in a subsequent fiscal year. There might be exceptions if the deposit exceeded the maximum deductible amount, but I am not sure.

There is a lot here, but my experience is the IRS will never know, unless you tell them, or a participant sends a complaint to the DOL. That doesn't excuse the late 204(h), but you should make sure the attorney explains risk/reward to the client. I have always struggled with this whole concept. There are places that state a plan must provide a timely 204(h) notice in order for the freeze to be effective. That implies, if no 204(h), then no freeze or accrual reduction can be effective. However, if that is really true, why is there a stated excise tax for a late 204(h) notice? How can a required timely notice be "late"? That implies the first rule has exceptions - yes, costly ones, but exceptions. That begs the question, if the notices is late, does that mean the freeze is still effective? How late can a notice be and still have an effective freeze? I guess yours is a situation where the tax might be effective - but it is a pretty big smack. Personal opinion is I think you would be relatively safe to give additional accruals for the extra 30 days. Not sure what your plan provisions are, but the additional 30 days may not result in any additional benefits. I know you said there were additional accruals, but you might want to closely examine the plan's provisions and confirm. For example, if the plan had a 1000 hour rule, did anyone really qualify? Just a thought. If the IRS ever comes calling, you can show the notice was incorrect, but you rectified the situation. Definitely get an ERISA attorney involved so they can explain the risk/reward of their options. Is this something you can file under VCP? Maybe give an IRS agent, or ex-agent, a call and get an opinion without exposing the clients name.