Peter Gulia

If you really mean a qualified termination administrator as 29 C.F.R. 2578.1(g) defines that term, there usually is no selection because a QTA must already "hold[] assets of the plan that is considered abandoned[.]" If someone will appoint a fiduciary, limiting a selection by geography might be unnecessary; and someone elsewhere might have experience administering abandoned plans or have other capabilities that make his or her service efficient or effective for the plan's exclusive purpose.

A quick look at the regulatory agenda http://www.reginfo.gov/public/do/eAgendaMain;jsessionid=3CE3C61A96992CC5E2D3540CE845BF1B?operation=OPERATION_GET_AGENCY_RULE_LIST&currentPub=true&agencyCode=&showStage=active&agencyCd=1500 suggests there is no project open.

GMK, thank you for the further ideas. BenefitsLink mavens all: Do IRA custodians ask an IRA applicant to furnish the distributing plan's IRS determination letter? Or does an IRA custodian accept the applicant's written representation that the source of the rollover contribution is an eligible retirement plan?

Belgarath, thank you for the further perspective. By the way, it would not be me or my firm doing the restatement/determination work.

GMK, thank you for the information about when preapproved documents for an ESOP might become available.

This is a real situation currently faced by a paying client that asked for my advice. (As happens more often than one might like, ERISA lawyers sometimes get called to a sad or even dire situation after the bad stuff was done.) While the usual mode for many practitioners is to assume it's worthwhile to get a determination (or reliance on a preapproved document), I'm thinking about what reasons I could explain to a plan fiduciary who is trying sincerely to meet her responsibility of incurring only those plan-administration expenses that are reasonable and for the exclusive purpose of providing retirement benefits to the plan's participants and their beneficiaries. In this plan's circumstances, the expense of getting an IRS determination would lower participants' account balances and would weaken the cash flow needed to pay for investment-management and other services.

If the circumstances are that the employer will not incur any expense to obtain an IRS determination and the plan's administrator is evaluating whether it is prudent for the plan to incur such an expense, how should a plan fiduciary evaluate the idea that, while all participants share in an expense, some (perhaps many) participants are unlikely to benefit from this expense? (The plan's administrator anticipates that many future distributees will not face a third person's request for "proof" that the plan's document stated provisions that met IRC 401 tax-qualification conditions.)

You might not find a rule or regulation that explicitly commands when such an amount must be credited to a participant's account. The rule you refer to, 29 C.F.R. 2510.3-102, governs when an amount is treated as a plan's asset. But it's at least possible that a plan could have circumstances in which an amount belongs to the plan but might not yet be allocated among participants' accounts. When an amount ought to be allocated to a participant's individual account is governed by other law, including ERISA sections 402-408, the written plan, and other documents governing the plan or its trust.

jpod, thank you for your helpful observations. Even if having a determination remains an entry condition for an IRS correction program, wouldn't such a condition be met by having a determination that, according to the IRS, has not expired? Likewise, if a distributee asks a bank to accept a rollover into an IRA, would such a custodian be willing to rely on a determination that the IRS states has not expired?

For an employee stock ownership plan (with employer securities that never traded and never will), the employer has stated the plan as an individually-designed plan. The employer is a Cycle A employer. In 2011, it applied for the IRS’s determination, which the IRS furnished in 2014. The 2014 determination states it was based on the 2010 Cumulative List. As I read the 2015 Cumulative List, I see nothing that would call for adding, deleting, or changing any provision of this plan. Likewise, as I think about recent years’ changes in tax law, I can’t think of any that necessitates a change in this plan’s text. Notice 2016–03 states: “Rev. Proc. 2007–44 will be modified to provide that expiration dates included in determination letters issued prior to January 4, 2016, are no longer operative. Future guidance will clarify the extent to which an employer may rely on a determination letter after a subsequent change in law or plan amendment.” I am wondering whether it now makes sense to apply for a determination. If (i) the determination the plan already holds does not expire, (ii) there has been no tax-law change that matters to this plan, and (iii) there has been no amendment of the plan since the most recent determination, what value (if any) could be obtained by seeking a determination now? For whatever expense one might incur to obtain another determination, what value is provided? (I’m not presuming a conclusion; I really want to know what BenefitsLink mavens think.)

Ivena, thank you for describing the economics. And GMK is right that many of us need (and welcome) help on health plans and employee-benefits topics beyond retirement plans.

Thanks again. It is so that an adverse-selection subgroup within a wider community-grated group can result in inefficient or even unfair pricing for others. But isn't the point of community rating to cause some better risks to subsidize some worse risks? Do many or most small-business employers in the small-group market present somewhat similar risks of not knowing how an employer's subgroup will change in health and participation from one year to the next? Any BenefitsLink mavens want to weigh in with other thoughts?

Ivena, thank you so much! For others who want to refer to these provisions, I add below hyperlinks to the compilations in the United States Code. Public Health Service Act § 2701 [Fair Health Insurance Premiums] 42 U.S.C. § 300gg https://www.gpo.gov/fdsys/pkg/USCODE-2014-title42/pdf/USCODE-2014-title42-chap6A-subchapXXV-partA-subpart1-sec300gg.pdf Public Health Service Act § 2702 [Guaranteed Availability of Coverage] 42 U.S.C. § 300gg-1 https://www.gpo.gov/fdsys/pkg/USCODE-2014-title42/pdf/USCODE-2014-title42-chap6A-subchapXXV-partA-subpart1-sec300gg-1.pdf Public Health Service Act § 2703 [Guaranteed Renewability of Coverage] 42 U.S.C. § 300gg-2 https://www.gpo.gov/fdsys/pkg/USCODE-2014-title42/pdf/USCODE-2014-title42-chap6A-subchapXXV-partA-subpart1-sec300gg-2.pdf Public Health Service Act § 2703(b)(3) states: “A health insurance issuer may nonrenew or discontinue health insurance coverage offered in connection with a health insurance coverage offered in the group or individual market based only on one or more of the following: . . . In the case of a group health plan, the plan sponsor has failed to comply with a material provision relating to employer contribution or group participation rules, pursuant to applicable State law.” Does this mean a health insurer may nonrenew a group contract (perhaps one that had its initial enrollment in an open-enrollment period) merely because an insufficient number of eligible employees choose coverage? Is it fair that a worker could be denied health coverage because his coworker refuses to enroll?

Thanks again, Chaz, Ivena, and Flyboyjohn, for helpful observations. And please understand, none of what the employer is considering is based on my advice. The only advice I've given so far is to push back on the ostensible underwriting requirement. Flyboyjohn (and anyone who might point me to it), while I'm ready to do my own legal research, if your recall can speed my search, what is the law source making no longer legal a minimum-participation requirement?

My 2 cents, I was generally agreeing with your observations in post #9. That a factor can buy a receivable so cheaply might suggest that it ought never to have been regarded as an obligation, much less a debt. I know many people who have the good sense to ignore the collection efforts. You're right that it's a shame that anyone should have to deal with the circumstances you describe.

That a factor can buy these receivables at a price of four-tenths of one penny on the dollar might teach us something about the quality of the ostensible "debt".

I appreciate everyone's help and some good analysis. But we haven't exactly handled my originating query. An employer, without any compulsion to do so and not because the employer faces a play-or-pay excise tax, wants to help those of its employees who want health coverage. The counts of total employees, full-time employees, and full-time-equivalent employees all are below 50. The group health insurance contract is a standard (non-skinny) coverage that provides at least minimum value. The employer is willing to pay for most, but not all, of the premium for employee-only coverage. The portion the employer is willing to pay results in keeping the participant contribution within the ACA affordable range for every employee. Despite what the employer considers a decent offer, the percentage (within those who do not have coverage other than through the employer) of eligible employees who would enroll is insufficient to meet the insurer's underwriting requirement. The employer is thinking of saying to its employees: If you want to be our full-time employee, you must show you have health coverage by other means or enroll in our group health insurance. If you do neither, we will not continue you as our full-time employee; we'll restrict your workweek to three eight-hour shifts or two ten-hour shifts. (The employer is not worried about attracting sufficient employees.) Would doing so be contrary to law?

What, if anything, does the plan's document say about the circumstances in which the plan's administrator must, may, or must not recognize a participant's agent? If the plan's document is silent or ambiguous, what does the administrator's plan-administration procedures states? What does the plan's claims procedures state? What does the plan's summary plan description state? Has the plan's administrator read the participant's power-of-attorney document to discern which powers it grants the would-be agent?

Thank you for the help. Does the mention of 100 full-time employees mean a different rule applies for an employer that has fewer than 100 FTEs? (The employer I ask about has 35 employees.) Is the rule an Affordable Care Act provision or a State's law for group health insurance contracts?

Smart.

For QDROphile's point about whether a business organization that is not a bank, trust company, or other financial institution may serve as a trustee, check relevant States' laws. While many States’ laws prohibit a corporation that’s not a bank or trust company from engaging in a business of serving as a trustee or other fiduciary, a State’s law might permit a corporation to serve as the trustee of a trust for an employee-benefit plan for the corporation’s employees. For example, Pennsylvania’s Banking Code permits a non-bank corporation to act as trustee of a trust “for the benefit of [the corporation’s] own employe[e]s[.]” 7 Pa. Stat. § 106(a)(iii). https://govt.westlaw.com/pac/Document/NDECBA6206BE411E28981FA740B828C88?viewType=FullText&originationContext=documenttoc&transitionType=CategoryPageItem&contextData=(sc.Default) I used to have a many-States survey, but no longer maintain it.

Consider (1) whether the corporation's documents correctly state the directors' (or a delegated-to committee's) resolution or other act approving the desired allocations of each shareholder-employee's compensation; (2) whether the retirement plan's documents state the desired provisions; (3) whether the corporation's Form 1120-S, Schedule K-1s, and other tax and information returns are consistent with (1) and (2); and (4) whether the corporation's financial statements, even if not audited or reviewed, are consistent with the desired allocations. Of course, some (or even all) of this might be beyond the task of the retirement plan's TPA. But in my experience sometimes the retirement-services practitioner needs to lead other professionals.

An employer asked me: "Is it legal" for an employer to require, as a condition of employment, that its employee have health coverage (somehow, not necessarily under the employer's plan)? The employer pays most, but not all, of the premium for an employee enrolled under its group health insurance contract. The employer told me a health insurance salesperson suggested the idea as a way to get a sufficient percentage of employees to meet an insurer's underwriting requirement. The workforce is low-paid and does not fear the play-or-pay excise tax. Several employees refuse to do anything about getting health coverage. Beyond employee-benefits issues, what kinds of employment-law problems might result from refusing to continue an employee if he does not furnish proof of health coverage?

Observing these different views about whether it makes sense to pay a distribution (whether to an IRA custodian, or under an abandoned-property regime) or account for a right to restore a forfeiture, I wonder whether a typical plan's administrator has a choice. Does a typical prototype or volume-submitter document grant the administrator discretion to decide the mode for paying or forfeiting a benefit? Or does a typical plan state the provision?

In at least one case, the court found that the trustee's selection of valuation dates was not an honest exercise of discretion, but rather was a disloyal effort to shift an allocation of investment losses from his account to those of former partners and employees. Janeiro v. Urological Surgery Prof'l Ass'n, 457 F.3d 130 (1st Cir. 2006). What do BenefitsLink mavens think about specifying in advance the conditions under which a plan will use an interim valuation?