luissaha

Well, that's another way to look at it. The purported "alternate payee" is the child of the beneficiary, not the participant. So, this child would not technically be an alternate payee because he or she is not the child of the participant. This may be a better basis to deny the DRO. Thanks!

I received a DRO from a state child support enforcement agency attempting to grab some death benefits from a plan that are payable to the participant's designated beneficiary. Can a DRO attempting to assign benefits from a beneficiary (instead of a participant) be a QDRO? Anyone dealt with this situation before?

Is anyone aware of an outright prohibition on multiemployer defined benefit plans offering a lump sum buyout to vested terminated participants? I know there are restrictions on plans in critical or endangered status paying lump sums, but I have a green zone plan that wants to look at this possibility. Any help would be appreciated.

The plan defines beneficiary as a person or other entity designated by the participant who is or may become entitled to benefits under the plan. The plan has interpreted "other entity" to mean an estate, trust or charitable organization. The plan received a beneficiary designation form from a participant naming a funeral home as his beneficiary. I think the plan should reject it based on its past practice of interpreting "other entity" not to include a for-profit business, but does anyone know if the Internal Revenue Code or ERISA contains any prohibition on naming a for-profit business as a beneficiary for a retirement plan? Any help would be appreciated.

Thank you. That confirms my initial thoughts.

We have a participant who died with no beneficiary designation on file. Under the terms of the plan, his estate is the default beneficiary. We are ready to make the distribution to the estate, but I had a question on withholding. The distribution is in the form of a single, lump sum payment.This is not an eligible rollover distribution because the estate is the beneficiary, so are we required to send a 10% withholding notice and allow the executor to opt out of withholding? Not sure what to do here because we do not often make payments to estates.

Look at IRA Notice 2007-7, Q&A 16. Based on this, it appears to me that if the inherited IRA is established in the name of the trust, as beneficiary of the deceased plan participant, a direct trustee to trustee transfer is allowed.

A participant in a DB plan designated his trust as beneficiary for payment of death benefits. Upon his death, the trustee of the trust requested a direct rollover to an IRA established fbo the trust. I've never seen this. Can the plan rollover the money to the IRA? Any thoughts would be appreciated.

To clarify the above, should we be sending all SPD's via first class mail? I don't think post office will forward or return mail, if address is bad, if you mail other than first class.

Mailing updated SPD out in the next month. We know we have some bad addresses. We are going to mail via USPS with address correction requested. For the addresses we know are bad, should we be sending those via first class mail? I heard from our mail service that many plans do that, but they could not tell me why. I looked at the regulations, but could not find any guidance on point. any insight would be appreciated.

Participant in DB plan earns 5 years of service between 1980 and 1985, and leaves service. Plan at that time provides for a 10 year vesting schedule. After 5 years you are 50% vested, after 6 years 60%, etc. Plan is amended in 1995 to provide for 5-year cliff vesting. Participant returns to covered service in 2005 and earns 10 additional years of service. How do we treat the benefit accrued between 1980 and 1985 under the 10-year schedule? Does he get 50% of the accrued benefit under that schedule? Or, because of amendment to vesting schedule in 1995, does he now get 100% of that accrued benefit? The language of the vesting amendment is not clear. It just changes the schedule effective 1995. Does not explicitly say that it was meant to be retroactive. Any help would be appreciated.

Interest is based on market earnings, apparently. No, there is nothing in the plan document or SPD that mentions death benefits for the voluntary contribution account. I think they are relying on language that says participants are always 100% vested in their voluntary contributions. How can one be 100% vested and not receive 100% of contributions and interest? It's an interesting argument. I just can't find any authority that the plan has to pay out all of the voluntary contributions plus interest after the account is annuitized,

I should have included this in the original post. The plan does not address the issue directly. All it says it that voluntary contributions shall be distributed according to the form of benefit selected at retirement. I interpreted this to mean that if you chose to annuitize the voluntary contributions and receive them in the form of a single life annuity, there would be no benefits payable after death. I am concerned, however, because the plan would not be paying the total amount of the voluntary contributions to the participant. Is there some IRC requirement I might be missing that mandates the total amount of these contributions be paid, even though the participant elected to annuitize them?

A defined benefit plan provides for voluntary, after-tax contributions. The plan allows those contributions, plus credited interest, to be withdrawn in a lump sum at retirement, or to be annuitized and added to the monthly benefit otherwise payable under the plan. A participant who made significant voluntary contributions and elected to annuitize those amounts (in the form of a single life annuity) died shortly after retirement. The participant's children are inquiring as to payment of a "survivor benefit" relative to the portion of the voluntary contributions that have not been paid out due to death. To illustrate, the participant's voluntary contribution account, with interest, totaled $100,000 at retirement. This increased the monthly retirement benefit by $500/month. The participant received only $10,000 worth of monthly benefits attributable to the voluntary contributions. The children are claiming they should be paid $90,000. Is there any guidance out there on this? Any help would be appreciated.

Has anyone ever had to report a merger in the Summary Plan Information notice under ERISA Section 104(d)(1)(G)? Does one just list the actuarial value of assets and liabilities for each plan from the 5500 from the year preceding the merger? Any help would be appreciated.

We have a fund that is in the new "critical and declining status" for the 2015 plan year. The recently released regulations make it clear that the 2014 annual funding notice is not required to reflect any changes due to this new status because that notice applies to the 2014 plan year. For the 2015 plan year, we will have to use the new notice. But, what about notice of critical status due in 2015? It seems that this notice due in April 2015 must reflect that the plan is critical and declining status. This could create some confusion for participants and employers. Does anyone have any insight on how to mitigate the confusion? Would it be acceptable not to reference critial and decling status in the 2015 critical status notice and do it next year when the annual funding notice will be updated? Any thoughts would be appreciated.

Has anyone taken a look at the changes to the annual funding notice under MPRA? For a calendar year plan, are those changes applicable to this year's notice? The notice looks at the funded status of the plan for the 2014 plan year, but the effective date for the changes to the notice is "the date of the enactment of this Act." The MPRA was "enacted" in 2014, so are the changes effective now? Other sections of the MPRA are effective for the 2014 plan year. Will the DOL be publishing a new model notice? For the notice of critical status, it did not look like there were any changes to this section of ERISA, even though some different terminology is now being utlilized (i.e., critical and declining status). Am i missing something here? Were there any changes in the critical status notice requirements I missed?

My concern is the perceived need of the transferring-out plan to send the trust agreement amendment to the IRS for approval before sending the assets to the new plan. Essentially, they are asking for a determination letter, which could take a year or more. This would create an unnecessary delay, in my opinion, because there is no reason I can think of why this is needed.

Thanks for the help. I'm thinking this is just some sort of delay tactic. They don't want to transfer the assets for some reason, so they want to create some reason to justify why they can't send the money to the new plan. They can say, well, this amendment we passed requires IRS approval, so the accounts can't be sent until that happens.

Yes, but the plan is proposing to send only the Trust Agreement amendment to the IRS for review and approval, not the entire plan document and trust agrement as you would send for a determination letter. My concern is that if only the amendment is sent the IRS will not review it. The IRS will require them to submit the entire plan document and trust agreement for a determination letter. Also, why would the plan want to submit their own amendment (or their entire plan document and trust agreement) to the IRS for approval as part of the spin out? This does not make any sense to me.

We are working on a "spin-out" of assets from a multiemployer defined contribution plan. The assets from certain union members' accounts will be transfered to a new multiemployer defined contribution plan. The existing plan is in the process of adopting a trust agreement amendment authorizing the transfer, but they are insisting on sending the amendment to the IRS for approval prior to actually sending the assets to the new plan. Has anyone ever heard of sumitting such an amendment to the IRS for approval? Will the IRS approve such an amendment? Is there a process for seeking IRS approval for a trust agreement amendment? Any help would be appreciated.

Thanks for all of the comments. I think it makes sense to send the 204(h) notice. All of the money purchase plan accounts transferred over will retain the money purchase plan characteristics. That's all covered in the merger agreement. The merger agreement did not address the 204(h) notice. Apparently, other money purchase plans merged into this ps/401(k) plan did not send the notice, but it's not worth the risk.

What complicates this a little more is that the plans involved in the merger are multiemployer plans. The plans are jointly providing notice of the merger to the participants/beneficiaries in Plan A whose acounts are being transferred to Plan B. What is actually happening in conjunction with the merger is that the local union involved is simply amending its cba's with employers to require new contributions into Plan B. My thinking here is that this situation is similar to a case where an employer simply bargains out of one plan and into another. In a case like that, I don't believe a 204(h) notice would be required from the plan being bargained out of. Am i mistaken here?

Is a 204(h) notice required when a money purchase plan is merged into a profit sharing/401(k) plan involving 2 different plan sponsors? For example, Plan A is the money purchase plan and the plan sponsor is Employer A. Plan B is the 401(k) /profit sharing plan and the plan sponsor is Employer B. Plan A will be merged into Plan B. Does a 204 (h) notice need to be sent to the participants in Plan A? Any help would be appreciated.

Thanks for the information. Regarding the use of a preapproved document by a muiltiemployer plan, what I am now envisioning is adopting the preappoved plan (a MPPP with no contribution requirement) and trust just to hold that accounts transferred from the other plan. The other plan won't spinout the accounts until we get the favorable determination letter. I could likely convince the employers to contribute to the new 401(k) / profit sharing plan, as long as we've applied for a letter for that plan. Could this work? I think the other plan is being unreasonable requiring to get the letter before the transfer. The applicaiton should suffice.