Effen

Agree. The article does a nice job explaining the issues and solutions. I am including a link to the referenced article. https://www.asppa.org/news/browse-topics/defined-benefit-plan-termination-funding-deficiency

1. We don't really know yet how to complete the 2019 SB. We don't know if delaying the deposit until 1/1/2021 is treated as an unpaid 2019 contribution, or if there will be an extension on the 5500 due date, or if there will be a way to apply it to 2019. Personally, I think treating it as an unpaid minimum is the most logical. Either way, it is definitely not $0. The due date has been delayed, but the amount due isn't $0. 2. First question, why is the 2020 MRC =$0? You are not permitted to recognize the benefits waiver to determine the MRC. At the very least the 2020 MRC will exist because they never paid 2019. The unpaid amount from 2019 becomes part of the MRC in 2020. One way to handle this is if he doesn't make either the 2019 or 2020 MRC, both would eventually be subject to 10% excise tax. Once the plan is terminated and the assets are distributed, you are no longer required to file 5500s. Therefore, the sponsor can probably get out of the MRC, but they would owe a 10% excise tax on the unpaid amounts. The IRS might try to force him to pay the full MRC, but I don't think they would waste the effort for a one life plan, assuming there weren't other issues. If he is bankrupt, maybe he gets out of the 10% excise tax as well, but the IRS will fight harder for that. Also, just as an aside, the "majority owner waiver" is a PBGC thing, not an IRS thing. One life plans are generally not covered by PBGC. The plan document should already contain language related to the distribution of assets upon termination, included provisions for excess assets, and insufficient assets.

The rule is: "A private-sector qualified defined benefit plan is exempt from PBGC coverage if: It has not covered more than 25 active participants at any time since ERISA was enacted (September 2, 1974), and. It is established and maintained by a “professional service employer.”". Your plan document defines who is an active participant. If at any point you had more than 25, you are covered by PBGC. It doesn't really matter how many you have at the beginning of the year, or the end of the year. It is an "any day" test. Can you provide more detail around, "By some definitions there are 26 actives, 24 actives, and 22 actives"?

I have had one that requested that I not certify a range AFTAP. Plan is deemed to be < 80% and we sent notices that lump sums were restricted. Restrictions probably get lifted once I certify the final AFTAP. I actually have the opposite question, what if they want to use the prior year's AFTAP to avoid a suspension? If the sponsor elects to use the prior, do we still need to certify the current year's AFTAP, or is there just no current year's AFTAP?

I don't know, you have years of him representing himself as "married", and now he is saying he was never married. If I am the PA, I think I would want more information. He could just be lying again because he doesn't want to get spousal consent. Not sure what else you can ask him to do, but I would continue to reach out to PNHS and get her side of the story. Maybe you just pay him a J&S pending resolution? If he really was never married, and has signed that affidavit, you should inform him that you will be suing him and PNHS for fraud to recover years of excess medical coverage. Unfortunately, you probably can't hold his pension benefit as payment for the medical fraud, but I am sure those damages will be significant and he admitted he committed fraud. You need to talk to an attorney and file suit against both parties.

I definitely agree with Mike that the NOIT should have contained the language to begin with, but since it didn't, and some elected a lump sum, you can argue they don't need to know. I suppose someone could argue that they might have selected an annuity if they knew who you were buying it from, but that is probably a stretch. Unless you are going to give them the option of revising their election, not sure what the purpose would be served by waiting the 45 days to pay them, but waiting would be the conservative answer. Regarding Cathyw - the allocation of the excess assets just needs to be non-discriminatory. You don't have to give it to everyone, you just can't discriminate in favor of HCEs. There are an infinite number of acceptable solutions. Assuming the two you mentioned would not be discriminatory, they both seem viable.

No, they can pay the lump sums, but they can't purchase the annuity until 45 days after the participants are notified. if you are allocating excess assets, I suggest you wait until you purchase the annuity before paying lump sums. You won't know what your excess is until the annuity is purchased.

That is what some believe. You should let the sponsor's attorney make the call. I have done a few plan terminations that way, but in general, we typically use the 1-yr break rule, assuming the plan has deemed distribution language.

I assume you are asking who s/b treated at 100% vested on a plan termination? The answer is probably in the plan document, so you will need to read those sections you typically just skim. You will likely get several answers, and therefore, you should consult with an ERISA attorney to provide a recommendation to the sponsor. Definitely, anyone who has not had a one year break in service s/b 100% vested. That means, anyone who worked at least 500 hours in the prior plan year, but check document at the break in service language may be different. Many will argue that you need to vest anyone who hasn't had 5 break years - again, check your document. Some argue that any partially vested deferred vested should be 100% vested, but you should check your document to see if it has "deemed cash out" language. Deemed cash out language would say something like any non-vested participant is deemed to have been paid. If it is a bigger plan, with a lot of terminated participants, you will want to discuss it with the sponsor and the attorney. The PBGC will look at this if they audit, so you will want to document whatever you decide.

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.