Peter Gulia

RatherBeGolfing, thank you for your informed view. Anyone with a different outlook? In particular, are the stakes different if the TPA is not an IRS-recognized practitioner?

Have you ever had a situation in which you did not want to provide your usual service of electronic submission of a client’s Form 5500 report because you believe the report your client instructs you to submit would include a false statement? (Your draft was accurate and correct, but your client tells you to change an answer to one that is false.) How did you handle the situation? If you haven’t faced this situation, how would you handle it? Does a submitter have any responsibility for whether its client makes a truthful report?

The real question isn't what the IRS might think if ever a question became presented to the IRS. Rather, the practical question is what the ABC plan's administrator decides when Z submits her claim for a distribution. If, as Larry Starr suggests, ABC wants Z to be 100% vested, there might be nothing to worry about. Or if Z and ABC disagree about what Z is entitled to, one imagines they'll negotiate a solution.

Many recordkeepers use regimes for which a failure to "opt out" and expressly request paper is an implied or deemed assent to getting statements by electronic means. Here's the next question: How many retirement plans allocate an incremental charge on the account of a participant who requests paper statements?

Without evaluating which rules and other legal considerations a fiduciary might consider, wouldn't one want to tell the good news? Or is this about evaluating plan-administration expenses?

On the secondary question about whether one writes documents routinely to state an exclusion: Might a mainstream check-the-boxes document state a close-enough expression that doesn’t offend either of the views described above? Here’s what an adoption-agreement form of an IRS-“preapproved” document (licensed by CCF/FtWilliam.com) states: The term “Eligible Employee” shall not include: . . . . { } Any Employee who is included in a unit of Employees covered by a collective-bargaining agreement, if retirement benefits were the subject of good-faith bargaining, and if the collective-bargaining agreement does not provide for participation in this Plan. That text doesn’t state accurately what IRC § 410(b)(3)(A) sets as a not-to-be-counted category. But could a plan’s administrator interpret the paraphrase, the whole text, and the context to find an exclusion only if all conditions in IRC § 410(b)(3)(A) are met? And could using something like the quoted text be close-enough for both points brothers Roberts and Starr raised? If there is a unit, a collective-bargaining representative, a sufficient negotiation, and a sufficient collective-bargaining agreement, a plan’s administrator might interpret the exclusion to exclude those that labor-relations law calls an employer not to provide an unnegotiated benefit to. And if less than all the conditions are met, a plan’s administrator might interpret the exclusion to exclude no one. Because the mass-production documents are designed to be not-wrong for many potential situations, sometimes they might state enough of the questions to be asked to help orient a careful administrator.

For more information, Wolters Kluwer's Governmental Plans Answer Book. If a client wants reliance or guidance, call Carol Calhoun at Venable.

Has anyone built a case on the sponsor/administrator's admission that the service provider's draft SPD dead-ended with the administrator, and never was delivered to any participant or employee?

Here's an IRS interpretation that describes the presumption about 20% suggesting a termination. https://www.irs.gov/irb/2007-28_IRB#RR-2007-43 Beyond other uncertainties and ambiguities, one wonders how reliable a 20% presumption might be regarding a plan that has only three participants.

Might these facts (and the rest of the situation) suggest that ABC has not really deprived Z of a reasonable opportunity to remain employed (perhaps by herself)?

Although many employee-benefits practitioners are accustomed to thinking primarily in terms of Federal law, governmental plans require one to think about State and local law. A State's agency, instrumentality, or political subdivision (or an instrumentality of a political subdivision) has only the powers provided by State law, and often bears burdens and constraints provided by State law. A county, city, township, or other local unit might have further constraints under local law. Under some States' laws, a change to an employee-benefit plan might call for some degree of collective bargaining, negotiation, or at least communication with one more labor unions or other employee associations. And open-meetings and other procedural laws might affect a decision or restrain a power.

RTFD (Read The Fabulous Document) is a good admonition.

The key to the analysis seems to be that a participant who elects into the student-loan structure is not precluded from elective deferrals. In practical effect, a participant chooses whether she prefer to get the employer's contribution in response to 401(k) deferrals or student-loan repayments. That a participant can get the employer's contribution either way lets a participant choose how to allocate her limited resources between retirement savings and student-loan repayment without fear of losing the "match" the employer provides.

Along with what you've found so far and the further points you find, consider the potential implications of §1.401(a)(9)-8 Q&As 2 and 3 if beneficiaries' interests are accounted for as separate subaccounts. https://www.ecfr.gov/cgi-bin/text-idx?SID=783132f42d41792c69aae86a36162f51&mc=true&node=se26.6.1_1401_2a_3_29_3_68&rgn=div8

The originating post's description of what happened illustrates why a retirement plan's administrator should design its claims form and claims procedure to collect all facts the administrator needs to make fully informed decisions on claims.

Thanks!

For those who the need the details about the uses of life insurance with tax-qualified retirement plans, still the best book is Life Insurance Answer Book (3d ed. 2002), with Gary S. Lesser and Lawrence C. Starr as the lead authors and editors.

Does anyone have the number on how many ERPAs are so registered with the IRS?

PTE 92-6 (which amended PTE 77-8): https://www.gpo.gov/fdsys/pkg/FR-2002-09-03/pdf/02-22376.pdf

Bri, thank you for helping me.

Retirement plan documents now is mostly about IRS-preapproved documents, and seldom does an employer apply for a determination. Beyond Form 5300 applications, what is it that enrollment as a retirement plan agent permits an ERPA to do (that one could not do without enrollment)? Is it only about the Employee Plans Compliance Resolution System? Does the right to represent a taxpayer in the IRS’s examination of a Form 5500 report matter? Is there something else allowed for an ERPA (but precluded for others)?

To treat what happened as a mistake and not a transaction, the plan’s administrator would do a prudent investigation to satisfy itself that it understands what happened and finds the reporting would be truthful and not misleading. And recognizing that a prohibited transaction or a fiduciary’s lack of control always matters for a plan’s financial statements (even if all amounts are immaterial or even insignificant), the independent qualified public accountant might have some responsibilities. Further, a plan’s administrator might prefer to report a transaction (and its correction) in a Form 5500 schedule and in the IQPA report’s narrative. Doing so might result in the Secretary of Labor having knowledge that triggers ERISA § 413’s three-year statute of limitations.

To meet 26 C.F.R. § 1.401(k)-1(e)(6), a cash-or-deferred arrangement must not condition a benefit (beyond a matching contribution and a few others the rule allows) on “the employee’s electing to make or not to make elective contributions under the arrangement.” The linked-to Abbott Labs announcement suggests the employer’s nonelective contribution is tied to whether a participant made a student-loan repayment. But the news release doesn’t fully describe the plan’s provision. Under some I can imagine, there might be an argument that the employer’s nonelective contribution also is conditioned, at least indirectly, on whether the participant elected not to make § 401(k) elective contributions. If that is the provision, is the effect one that that 26 C.F.R. § 1.401(k)-1(e)(6) should preclude?

This situation suggests two key law issues, first under State law and then under Federal law: (1) If yesterday a court had ended Pat’s marriage to Sam, can a court tomorrow order that Pat and Sam were married yesterday? (2) If a State court’s order says Pat and Sam were married yesterday (and the order is a domestic-relations order within the meaning of ERISA § 206(d)(3)(B)(ii)), would following that order “require [the] plan to provide any type or form of benefit, or any option, not otherwise provided under the plan [or] require the plan to provide increased benefits (determined on the basis of actuarial value)[.]” ERISA § 206(d)(3)(D). It’s hard to do much about question 1. But employee-benefits practitioners might help some judges learn the legal, economic, and practical effects of question 2. A related point: The situation the originating post describes illustrates some usefulness of venue provisions in an employee-benefit plan’s governing document. If the plan’s administrator decides the revised order is not a QDRO and the would-be surviving spouse challenges that decision, would the plan’s employer/sponsor/administrator prefer that the challenger be compelled to proceed in Federal (rather than State) court and in the district the plan’s sponsor chose? Newbie’s committee has a lawyer and we don’t presume to advise either of them. As we use this thread for academic interest or professional development, among many court decisions about the issues raised one might read these: (1) Padgett v. Little, 172 Cal. App. 4th 830, 91 Cal. Rptr. 3d 475, 47 Empl. Benefits Cas. (BNA) 1050, 1061 (Cal. Ct. App. 2009) (A trial court exceeded its authority by using the ruse of a nunc pro tunc [now for then] order in its attempt to create an interest.). (2) Garcia-Tatupu v. Bert Bell/Peter Rozelle NFL Player Retirement Plan, 249 F. Supp. 3d 570 (D. Mass. 2017) (whether a nunc pro tunc order entitled a participant’s former spouse to a benefit turned on whether the former spouse’s interest had been established before the participant’s death so that the order did not create a new benefit not otherwise payable).

Chippy, should we assume that an employer-provided contribution allocated to a participant’s account because the participant made a student-loan repayment is not a matching contribution? 26 C.F.R. § 1.401(m)-2 https://www.ecfr.gov/cgi-bin/text-idx?SID=13eef7f159960c6c2f53a4aa6d7922c5&mc=true&node=se26.6.1_1401_2m_3_62&rgn=div8 If a retirement plan limits this allocation to non-highly-compensated participants (or limits the allocation for a highly-compensated employee to apply counting only the first $120,000 of compensation), how much should one worry about nondiscrimination?