Effen

Until we get some regulations, I don't think anyone knows for sure. The Cares Act didn't specifically exclude defined benefit plans, the question is how much of the contribution can be satisfied with the loan.

sounds like his prior "theoretical" question turned into reality.

I have two small plans going through a distress. The biggest hurdle is getting the attention of someone at the PBGC. I find this is very difficult for small plans. If you can get a person to talk to, just be upfront with them and advise your client to do the same. The PBGC is very diligent about looking for hidden assets so warn you client they will need to open their books. Also, try to bill your services frequently because you often don't get a lot of warning before the PBGC takes the trust assets. The PBGC will pay for your services, but might be easier to get paid before the PBGC has control We were worried they would force the owner to take a benefit cut, but so far, they haven't. For one plan with about 10 people, the PBGC moved relatively quickly once we got their attention, about 4 months. I have another plan with 5 people we have been pleading with them to take over for 3 or 4 years. The sponsor hasn't filed any 5500s or paid PBGC premiums for years but we just can't seem to find anyone who cares. So, mixed bag.

What specifically does the document say about the 50 J&S Option?

That is actually troubling than whether they use their ASA designation or not. That said, I agree with RatherbeReading, your OP is likely a non-issue. You can look on the SOA website and see if credentials are current. www.soa.org. However, if the person is not listed on the SOA site, it doesn't necessarily mean he isn't a valid EA, it could just mean he is no longer a member of any professional organization. Some people don't like paying dues.

From what I am reading, 5500s, and now PBGC filings, have been extended, but so far, no extension for AFNs.

If you are saying she was not married at the time of her benefit commencement, then your mother committed fraud and the plan should be informed. "My mom was married 1996 when she did the QJSA." - don't know what "did the QJSA" means? Maybe you are referring to a QPSA which confirms marital status in case a participant dies prior to retirement. Either way, this "doing" would not impact her retirement election because it happened more than 180 days prior to commencement. In other words, it is not a valid election of a form of payment. It was just informational. "Fast forward to divorce 2006....The divorce gave them each their own accounts" = apparently it really didn't since there was no QDRO. Although the divorce decree can require it, it doesn't actually happen without a QDRO. "When she retired 2011, she filled out her benefit elections", "They did say however that when she retired her election had named a “beneficiary “ for her ERISA QJSA pension and that her election form stated “married”" - this was fraud and should invalidate her election. That likely won't help you, but the plan should stop paying the "beneficiary" - although if a Joint and Survivor is permitted to non-spousal beneficiaries, the plan might take the position - no harm, no foul and keep paying the person she requested.

What does the benefit election form she signed say? Were you able to get a copy?

The delay doesn't have any impact on deductions or MRC timing. There was no extension on 5500s or the timing for deductible contributions. I agree that if they want to deduct the contribution for 2019, it must be deposited by 9/15/20. Not just the excess of the MRC, but all of it. Also, if they don't make the deposit by 9/15/20, they will likely show an unpaid minimum on the 2019 SB. The excise tax is waived on the unpaid minimum (aka: deficiency), and the IRS/PBGC notification is waived, but I don't think it can be attributed to the 2019 plan year. There may be additional relief that changes this, but as it stands currently, if they delay a 2019 plan year contribution until 1/1/21, they can't deduct it in 2019 and they can't show attribute it to the 2019 plan year. It would need to be treated as a 2020 or 2021 contribution.

No, you don't get to count it. Yes, it is a "double whammy". you don't get credit in the assets so your 2019 MRC is higher, and the unpaid minimum amount is still due.

Cue Mr. Blue Sky...

My understanding is ABC and other lobbyist are working with Congress on relief. They expect something to be passed before the Easter break. They are talking about extending deadlines, as well as other interest rate and investment smoothing methods to lesson the funding impact on plan sponsors. Likely nothing in the next few days, but maybe in the next few weeks.

It has been a long time since I had to allocate excess assets, and I couldn't find confirmation on this point. If a plan terminates during 2019, but doesn't allocate the excess assets until 2020, is the benefit increase attributed to the allocation of the excess treated as a benefit earned in 2019 or 2020?

There must be a DRO for each plan. You can't have a DRO that covers multiple plans, therefore, the absence of a DRO related to the pension plan would mean there is no obligation to split the pension benefit.

I don't believe individually designed plans are permitted to submit for a D letters anymore, except on the original document and termination. The old cycle system is no longer.

Then you may have some options if the owners want to share the pain.

"Would this come from the company and/or any additional waiver for each of the three partners, as the remaining participants can not be affected." That is correct. Again, not sure if this is a PBGC covered plan. If it is PBGC covered, than you are defiantly correct. The non-substantial owners must receive their entire benefit. If it is not covered by PBGC, the plan probably has language about prorating the benefits based on available assets. Not very popular, and typically the partners take the hit, but if it is not covered by the PBGC, it is possible to spread the shortfall among all participants. "How does one defer the decision to take the annuity when he must do "something" with the benefit that is due? Or is he buying an annuity that promises the payment at his NRD?" That is basically correct, except the plan is buying the annuity, not "he". The participant is NOT required to "do something" until NRD, and even then he could defer until MRD, and even then if he continues to do nothing the plan should just commence the QJSA. The plan's termination can't take away any existing options. The participant isn't even permitted to make an election more than 180 days prior to the commencement date, so legally, they aren't permitted to elect a payment date more than 180 days in the future. Their option is to elect an immediate payment (lump sum or annuity), or to defer their election to a later date, when the same options must be available. Yes, the annuity you purchase must provide all available options. Recognizing, sometimes this isn't possible because there is no market, so you do the best you can, with guidance from the Plan's ERISA attorney.

"Let's assume a worst case scenario - a participant elects the annuity of "x", which equates to the lump sum." - it won't. The annuity will likely be 15%-30% more than the cash balance account value. "The annuity could cost more or less than the actuarial equivalent." Not "could", but "would" "At that point the plan would either pay more or less than they would have if the participant had elected the lump sum." Not an option. The Plan would need to provide the benefit required by the plan document. If that is an annuity, and it costs more than the cash balance account value, the plan still must provide it. "I assume no one should be paid until. ALL election forms received and the owners waive at that time." True Dat! "Who then is the owner of the annuity"" The participant will own the annuity contract "and is this an immediate or deferred annuity" Depends on the situation. If the participant wants an immediate annuity, it will be an immediate. If they are choosing not to make an election then it is a deferred annuity. Note, they aren't electing a deferred annuity, they are electing to defer their decision. The contract you purchase still must include the option for a lump sum and the interest crediting rate stipulated by the document. This may be very difficult to find, which is why Mike P just responded with a simple "plays havoc". It can be very difficult to find a carrier willing to provide this annuity. Is this a PBGC covered plan? If so, you may have additional issues to deal with.

This is really an interesting question. I thought it would be a simple answer, but after digging, I don't see any real definition of Normal Retirement Date in any regulations. Yes, it is most common to say the NRD is the first of the month following NRA, but I did see something in the Pension Distribution Answer Book that said first day of the plan year following NRA was acceptable. Regardless of the relationship between NRA and NRD, RR 81-211 is clear that the participant must be 100% vested as of NRA. The 411 Regs also require a suspension of benefits notice or an actuarial increase if a participants benefits are delayed beyond Normal Retirement Age, therefore, in your situation, if benefits aren't paid until NRD, you might need to provide a suspension of benefits notice or an actuarial increase. I would definitely talk to the person who drafted the document and get their opinion.

Yep, all good questions that the QDRO should address.

I don't know, but I would think the AP would have the same rights to the annuity stream as they had for the lump sum. I doubt there is anything the spouse can do to stop the Participant from making a valid election. Once the annuity is in pay status, it likely can't be changed back to a lump sum if the two later get divorced. However, you scenario implies a QDRO already exists that provides for a lump sum to the AP. In that case, the P can't do something in violation of the QDRO, and the Plan Administrator shouldn't allow the optional form of payment to be elected. Just like in a DB plan when the participant wants a lump sum but they can't have it because a QDRO requires an annuity payment.

Yes, 401(a)(26) will apply, but there is an exemption for plans that benefit only NHCEs. In other words, if you freeze the accruals for HCEs, not just participation, you would be exempt from (a)(26) going forward.

Come on. Seriously? What is the point of Plan B if Plan A is already funding a benefit at the 415 limit? What is the saying...pigs get fat, hogs get slaughtered. If the client cares more about deductions than they do actually being able to get money out of the plan, maybe Old Ned Ryerson has a 412(e) plan for them.

Sounds like you have a good handle on it. I have no issues with anything you said. Keep in mind that even though the numbers may not be significant to a small closely held company swimming in cash, if/when that company is sold, they may become very important, so you want to be able to defend whatever you use. Keep in mind that outsiders may read your disclosures and you have an obligation not to mislead them. Also, take a look at the new exposure draft of ASOP 4 released today. In your specific example, we know the curve dropped about 100bps during 2019. If 4.50% was ok at 12/31/18, I would be looking for something less than 3.50% as of 12/31/19. Not sure how you could reasonably justify 4.0%. You are allowed to use 4.0%, but need to state that you don't think it is reasonable. That may be ok, if the numbers really don't matter. If they argue about putting in the disclaimer, than you can counter with, "well, i guess these numbers do matter to someone". Also, don't forget about all the other assumptions. Is your mortality assumption reasonable and does it include improvement?

Again, the answer to everything is in the signed benefit election form. You need to get a copy from the Plan Administrator. If you are the executor of the estate, ask for a copy on behalf of the estate. I would think you have a right to see it, and they have to provide it to you. If they were divorced before the benefit commenced, then the ex-spouse is not relevant. She was not married at the time the benefit commenced, so no QJSA (that provided spousal coverage - see David's post) would apply. No, the ex-spouse would not be a "default beneficiary". The only way the ex-spouse would be considered to be the beneficiary of a QJSA is if one, or both, of your parents committed fraud. You need to see the signed election. It will provide the answer.