Effen

My opinion would be that you can still change your election upon plan termination, or change of employment status. We have terminated several plans post 15-49, offering lump sums to retirees, and didn't have any problems with the IRS or PBGC. (Yes, some of those were audited by the PBGC post termination.) It does need to be in your document, and you should always work through ERISA counsel.

Either year is acceptable.

If you have access to the ACOPA board, there is a current thread discussing this exact topic, that you might also find very helpful. It is titled "412(d)(2) Amendment?"

Sounds like a plan. Not a very good plan, but a plan. Again, RMD is not relevant. Even the RMD wasn't being paid, and the sole participant died, the plan's death benefit would be paid. If that didn't absorb all of the assets, they would revert to the sponsor - with a healthy excise tax. They may then flow back to the estate. In your questions, if the participant elected a J&100 and both were killed at same time, there would likely be a large reversion and large excise tax. Why not allow the primary to take a lump sum, then he could roll that to an IRA and let the IRA handle the MRDs? He might be stuck if you already started the J&100, but he could change his election when the plan is terminated - assuming the plan document allowed for the change. If you are trying to preserve the benefit for the next generation, electing a J&100 doesn't make much sense.

favorite answer...what does the plan say? If he truly elected a J&100, then the spouse gets the life annuity for her lifetime. Can she convert that to a lump sum? Does the plan give her this option? Most plans don't, but some do. You could also amend it to provide the option, if so desired. However, did he really make an election at RMD, or did the plan pay him a J&100 by default? If it was a default election, does the plan allow him, or his beneficiary, to make an actual election upon actual retirement or death? You are mixing a lot of concepts in your statements in the 2nd paragraph. What "waiver had previously been executed" that would impact her ability to get a lump sum? Also, I don't think the spouses option has anything do with it being an RMD or not (unless you are arguing it was a default option). If he actually elected a J&100, I would say she just continues to receive the annuity, unless the plan specifically allows for a beneficiary to elect a lump sum, which in my experience is a rare provision - but it could be added. So, like many proper answers...what does the plan say?

I agree with Belgarath - best you can do it 3-yr cliff due to Top Heavy.

I agree with David. No issues in deleting someone who was never reported, and if they weren't reported in the past, that isn't your problem - or just report them again if you feel the need. I never knew you could get SSA from FreeERISA. I would have thought privacy concerns would have stopped that.

Why do you care?

No, that does not violate the 133% rule. That is completely fine. The accrual in year 1 was 10% and the accrual in year 2 was 10% - therefore, your accrual rate did not change. The 133% rule is looking for backloading - that is accrual rates that increase as you get closer to retirement age. It is testing the change of the rate of accrual, not the actual $.

I know this isn't the question, but you said, "owner is the last one paid out. He makes small contribution to hit his 415 limit for his rollover". Does that mean there were other employees who were paid out first? Was his accrued benefit = 415 maximum at the time of termination? I just wanted to make sure he didn't pay everyone out, then make a contribution to create excess assets which he allocated to himself up to the 415 maximum, which would be a clear violation of 1.401(a)(4)-1(b)(4)

First, these are legal questions and should be discussed with an attorney. If it is a church plan, are you sure they are subject to ERISA? In other words, VCP/SCP may not apply since they aren't subject to ERISA. Are you saying the one that has been participating since the mid 80s doesn't have any signed agreements? I would probably punt to an attorney who would likely prepare a participation agreement for the newer employer ASAP.

Mutual of Omaha would probably take them. If you are waiting until early 2018, you can also try One America and Pacific Life. A lot of insurance companies won't bid on anything less than $5 million. It is also more difficult to place contracts in the 4th quarter as insurance companies are focused on the larger contracts. If you can't find a company to deal with you directly, you can go to Dietrich or Brentwood. They both have open contracts with several companies and can usually place an annuity of any size - of course they will charge a healthy fee for this service.

I see a number of issues and potential solutions: 1) If you make a valid attempt to contact the participants (paid locator service, documented searches and returned or ignored mailings) I believe you cannot be faulted for not paying the MRD. The tax penalties are on the participants, but the plan needs to comply with its terms. If you document you made a valid attempt to contact them, then I think the plan is off the hook. 2) If you know where they are, but don't know if they are married, I would inform the participant that they will be receiving the life only payment and that if they provide a SDOB, the amount may be lower. I don't believe any participant consent or election is necessary for MRDs, but they are typically obtained. Do nothing without plan's counsel's blessing.

The impact of the new mortality varies by age. Less at older ages, more at younger ages. I was seeing about 3.7% @65 and 4.7% at 25. (using 2.05, 3.61, 4.27)

I am not so sure. I think if he owned 50% of the prior entity, you can count the compensation. Someone will chime in with a confirmation of the percentage, but I believe it is 50%.

Form over function, and YES the IRS will have a big problem with it if you do it in the original plan draft. They must be separate amendments or the plan will fail the accrual rules. I tried exactly what you are expressing and the IRS played the dream crusher. Just do an amendment. I don't see any problem doing them both at the same time, but waiting until 2018 to increase the formula would be fine as well.

Maybe you should let them know that Puerto Rico is part of the United States... But seriously, this is probably a licensing issue. The companies you have talked to are probably not licensed to do business in PR - like some companies are not licensed in NY. There must be insurance companies inside PR that can help you.

It may be overkill, but I think PensioPro has a benefit distribution tracking module in their software. It might be an expensive solution, unless you are already using it.

Maybe you made a $5 error in the calculation of the present value of the contributions?

I don't believe you have any legitimate fixes, other than forcing IRA rollovers if < 5000, or purchasing an annuity if greater. Bigger problem is you probably won't be able to buy an annuity if you don't have an SSN or an address. Insurance companies don't want your problems either. If you have an SSN, we have had good luck with various search firms - Penchecks & Berwyn Group. Berwyn offers a "relative search", which can be helpful. If you don't have an SSN, I really don't know what you are supposed to do. I would suggest that you work with counsel and come up with a reasonable solution, but likely there is no "right" answer, just degrees of "wrong".

Notice 2017-49 that just came (within past two hours). Funding relief until January 28 if an Affected Plan. Notice 2017-49 Hurricane Funding Relief.pdf

I think those are only legal in Colorado, but I hear you can have them in California, as long as you don't sell them.

Yes, thank you. I recognize there are other ways to handle this and we are discussing various options. I was really just focusing on this one particular option. This is a traditional retirement benefit and the salaried group contains enough NHCEs to get through 410(b) using the ABT. I was really just trying to avoid the extra work of doing an (a)(4) test, but now that I have looked at it, I think it would pass anyway. But, if I don't need to do it, I would rather not. Since the decision makers are the HCEs currently in the plan, freezing their benefit isn't all that appealing to them. Since they are provide a 5% PS contribution, it seemed like a fairly seamless solution to just slide it into a cash balance formula and continue on.

I would say the beneficiary's.

Thank you, that was helpful. Let me try to simplify my question. Plan A satisfies 410(b) and contains a safe harbor formula Plan B satisfies 410(b) and contains a safe harbor formula Some active employees are not covered by either Plan A or Plan B No active employee benefits in both Plan A and Plan B. If the plans are separate, Plan A will soon fail 401(a)(26). If I combine Plan A and Plan B into one plan in order to satisfy 401(a)(26), do I need to do general testing under 401(a)(4) or can I just say they are safe harbors and move on.