Peter Gulia

Has anyone experienced a situation in which the IRS detected (without a taxpayer, employer, or custodian volunteering) not that a participant or IRA holder failed to begin a distribution but rather that a year's amount was less than the required minimum?

What about changing the tax Code so, for an individual-account (defined-contribution) retirement plan or an IRA, no minimum-distribution rule applies until an account is more than $250,000? And for those with bigger accounts, really apply and enforce the law?

Thank you!

Rather than media releases describing the order, has anyone seen the text of the order?

Yup. 18 U.S.C. 1027, a crime of making a false statement or concealing information required to be disclosed applies, literally, to "whoever". Thanks, Kevin C, for the reminder.

RatherBeGolfing, thank you for the further observations. Since Loving v. Internal Revenue Service, 742 F.3d 1013, 2014 BL 36052 (D.C. Cir. Feb. 11, 2014), it’s settled that the statute that grants the Treasury department power to make rules for practice before the Internal Revenue Service grants no power to regulate someone who is only a preparer. That decision (which the United States didn’t seek review of) and Ridgely v. Lew, 55 F. Supp. 3d 89 (D.D.C. July 16, 2014) say that “Circular 230” rules can’t apply until one has submitted a Form 2848 or other power-of-attorney to be recognized as a representative. (Penalties the IRS might impose on a preparer about a taxpayer’s inaccurate return are set by different statutes.) For many service providers to retirement plans’ administrators, the reason not to be associated (however remotely) with a Form 5500 report that includes a false statement is simply that it feels wrong. Thank you for helping me build an ASPPA continuing-education course.

Straightforward care not only to a client but also to civil society sure makes life simpler.

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?