Peter Gulia

Thank you for the kind words. Without any expectation or hope for an engagement, my offer of free help to you, Belgarath, remains open. (I'm out-of-office Tuesday.)

Belgarath, I have experience with situations involving near-insolvent, insolvent, and bankrupt employers. I have some practical suggestions about how a fiduciary might get and use help. The ideas depend too much on the particular situation's facts to explain efficiently without a conversation. Feel fee to call me for those explanations. That the employer lacks money need not be an impediment to getting help and correcting what was or wasn't done.

Am I right in recalling that the limit on whether a participant contribution is an affordable portion of the employee/participant's pay refers to the amount required to get self-only coverage? If a participant chooses a self-plus-one or "family" coverage, how do the communications explain the formula for the limit on the participant contribution (recognizing that the limit's amount can vary according to wages and coverage choices)?

I'm curious: For a retirement plan that generally allows participants electronic access to one's account, does any recordkeeper allow an individual participant to instruct that she not have electronic access to her account?

Before one too quickly assumes that no notice is needed, ask for your lawyer's advice about law beyond ERISA, including: Would failing to give notice breach a provision of the deferred compensation agreement or some other contract? Most contracts are deemed to include an implied obligation of good faith and fair dealing, which often is interpreted as obligating a party not to act in a way that deprives or interferes with another party's opportunity to exercise his, her, or its rights under the contract. Would failing to give breach such an obligation? If a right or interest under the plan is a security, does anything in securities law call for a notice or disclosure?

401(k)athryn has solutions. For my curiosity and perhaps your mental challenge, does anyone think it's possible to express the contribution allocations in a formula that would be constant year-to-year?

Under the rule (29 C.F.R. § 2520.101-3), the notice must include the required information and “be written in a manner calculated to be understood by the average plan participant[.]” It’s possible to do so without using the word “blackout”. The rule itself defines “blackout period” as a period in which a participant, beneficiary, or alternate payee is temporarily restrained from doing something one could do in the plan’s ordinary administration. So translating “blackout period” as “no-transaction period” might, if it’s factually sound in the plan’s circumstances, be a sensible label (assuming the notice also includes the required information).

Beyond the task of reminding the employer to sign something once a year, is there any other reason why annual plan amendments could be a bad idea?

Since your query seems to be about what an employer's health plan could provide (and just to satisfy my curiosity so I learn something), why does the employer seek flexibility about covering a participant's stepchild only if the stepchild resides with the participant?

Scuba 401, ERISA § 401(b)(1) means the plan’s assets do not include a stock or bond the RIC “mutual” fund owns. My 2 cents, the originating post supposes some possibility that a plan fiduciary might face compromising interests based on the employer’s business. Considering an anonymous employer and plan fiduciary and now knowing what “that industry” and “those companies” refer to, I didn’t want to suggest any conclusion about the absence of a question to consider. Also, even if the fact that a fund (or a fund’s manager for another fund) invests, or could invest, in securities issued by the plan’s sponsor (or another party-in-interest) might not by itself necessarily lead to a prohibited transaction, a plan’s fiduciary nevertheless must act for the right exclusive purpose, and must not allow its best judgment as a fiduciary to be compromised by an interest other than the plan’s exclusive purpose. Without knowing the facts, we’re just imaging what questions Scuba 401’s client might have.

ERISA § 401(b)(1) [unofficially compiled as 29 U.S.C. § 1101(b)(1)] provides: For purposes of this part [part 4 of subtitle B of title I of ERISA]: In the case of a plan which invests in any security issued by an investment company registered under the Investment Company Act of 1940, the assets of such plan shall be deemed to include such security but shall not, solely by reason of such investment, be deemed to include any assets of such investment company. Thus, the plan’s asset is the share issued by the registered investment company, and not a proportionate interest in a RIC fund’s portfolio securities. However, for a plan established or maintained by an employer that has an investment-related business, other circumstances might raise prohibited-transaction, exclusive-purpose, and prudence issues that would not be faced by an employer that has no investment-related business. Some ERISA lawyers have practical experience with those issues.

Beyond the most recent cumulative list, one might scan the descriptions of documents collected on the IRS's "Recent Published Guidance" webpage. https://www.irs.gov/retirement-plans/recent-ep-published-guidance In my quick look, only two of those documents could affect the provisions of a mainstream 401(k) plan. Consider, however, that webpage states it was last updated on May 24.

Just a curiosity: If specifying the administrator's charge for the report is as simple as multiplying 25 cents by the number of pages, does the 5500 software count the number of pages (including those of uploaded attachments) and compute the arithmetic to fill-in the charge? Or is that too much to hope for?

Does anyone mention a charge more than $5.00 if the report is more than 20 pages?

We're preaching among the choir. I had already furnished to my friend a referral list of ESOP-specialist lawyers for her to suggest to the business founder. After the business founder rejected the idea of using any lawyer, my friend asked about service substitutes. But you've persuaded me I should advise my friend to extricate herself from the situation.

I agree with RatherBeGolfing's observation. But, leaving aside ESOP features, how many hundreds of thousands of retirement plans were created using document-assembly engines with the employer answering questions and marking selection boxes with little or no guidance from knowledgeable practitioners? And let me ask the second of my four questions a different way: If a user had hand-holding from someone like a BenefitsLink maven, which plan-documents system offers the best help in explaining (at least to the knowledgeable person) the available choices? If it matters, the user wants to establish an S corporation ESOP.

If, instead of using a law firm, an employer wants to make an employee stock ownership plan by using the assembly engine of FIS (Sungard) Relius, Wolters Kluwer ftwilliam, or another documents provider, which would you choose? Which has the most flexibility in choices of plan provisions? If the user lacks expert knowledge of ESOPs, which has a questionnaire or input system with the best help in discerning what the employer wants? Which provider's documents are easiest for an employer or its TPA to understand? What other factors should I consider in helping a friend select a plan-documents provider?

CMarkB, thank you!!!!!!!!!

A plan's administrator is pulling together its disclosure under 29 C.F.R. 2550.404a-5. Looking toward the plan year that begins with January 2017, the administrator will send a set of plan communications (some of which meet a 30 days' notice condition) by November 2016, and include in that set a 404a-5 disclosure. In that disclosure, must the investment alternatives' past-performance information be for the 1-, 5-, and 10-calendar-year periods ended December 31, 2015? Or may the past-performance information be for the 1-, 5-, and 10-year periods ended September 30, 2016?

Begin with considering whether State law empowers the particular employer to establish a 401(a) plan. If it does, consider what conditions State law requires for a valid and proper creation of the plan.

If your query is about what provisions a plan could state, include in your research this source: 26 C.F.R. §1.401(a)(9)-3 (Death before required beginning date). http://www.ecfr.gov/cgi-bin/text-idx?SID=b7164a4975c47a7cfc960c662879a745&mc=true&node=se26.6.1_1401_2a_3_29_3_63&rgn=div8

QDROphile is right that this kind of problem can be managed with clear documents. But a carefully stated retirement plan isn't enough. If the problem is - beyond tax withholdings, levies, and garnishments - two or more opportunities for wage reductions or deductions, the employer should consider all of its employee-benefit plans, fringe benefits, and other arrangements that have a possibility of a wage reduction or deduction. Imagine an employer that has payroll slots for health coverage, health flexible spending account, dependent care spending account, disability insurance, life insurance, transportation fringe, 401(k) elective deferrals, and a stock-purchase plan. It might be feasible to ask an enrolling employee for instructions on what to do when there isn't enough pay to fill all wage reductions and deductions. Or an employer might design a series of ordering rules. But to do either calls for someone to see all of the plans and arrangements. How many of us get an employer's request to work on more than one plan?

Fielding Mellish, your query described the plan as a multiemployer plan. Is the plan maintained by more than one employer and collectively bargained with a labor union? Or is the plan a multiple-employer plan, whether an "open MEP" or a multiple-employer plan with sufficient associations that the plan is reported as one plan? If the plan is not a single-employer plan, is there something about the plan's intended uses that led the plan's sponsor to a design choice about how quickly a beneficiary must take a distribution?

Filing a Form 5500 report might be desirable because the IRS counts a plan trust's Federal income tax statute of limitations from that filing. IRS Announcement 2007-63, 2007-30 Internal Revenue Bulletin (July 23, 2007). https://www.irs.gov/irb/2007-30_IRB/ar18.html?_ga=1.225184222.516109692.1475756708

Thank you, everyone, for the good help. While each client will make its own decisions, I'm inclined to suggest reporting Schedule C Part III, and using the "Explanation" element to state succinctly the facts. In some situations those facts might be as simple as 'the administrator selected another accountant' or 'the accountant did not offer the next engagement'.