Peter Gulia

If the plan’s administrator (or other responsible plan fiduciary) had approved the service provider’s distribution-processing fee (including for plan-termination distributions), applying the approved fee might be a reasoned method. Think carefully about what the resulting Form 1099-R tax-information report will look like. Will the trustee’s, custodian’s, or other payer’s software generate a 1099-R report if a distribution’s amount is $0.00? Think about how the plan’s administrator (usually, the employer) will make and keep evidence that each zeroed-out distributee was paid all that was due her. This is not advice to anyone.

While my observation is limited by situations my clients have told me about, I never heard that an EBSA investigator asserted that a summary annual report was untimely because filing the Form 5500 report by its unextended due date meant there was no extension of the time for delivering the related SAR.

What is this participant’s age? Has she reached normal retirement age (under the plan’s provisions)? Has she reached the plan’s required beginning date? If she reached normal retirement age, does the plan require an affirmative election if one prefers to delay the pension? Or does the plan treat the absence of a claim as an election to delay? This is not advice to anyone.

An advantage of getting an extension of the time for filing a Form 5500 report (even if the plan’s administrator believes none of the extra time will be used) is setting up a delay about when one must deliver the summary annual report. Some administrators prefer to bunch all yearly communications into one delivery. Imagine a calendar-year plan that delivers in November or by December 1: • summary annual report (for the year ended almost a year ago), • revised summary plan description or summary of material modifications, • 401(k)/(m) safe harbor notice, • notice of automatic contribution arrangements, • notice of qualified default investment alternative, • notice about diversifying out of employer securities, and • rule 404a-5 information about account fees and investment expenses. Some might question whether bunching this many communications is appropriate disclosure. But for a plan that has a meaningful number of people who get paper, rather than electronic, disclosures, the efficiencies and expense savings might make this prudent.

If the seller’s former employees and their beneficiaries are covered by the seller’s health plan after those former employees no longer are the seller’s employees, which person—seller or buyer—pays an employer’s expense, and which gets income tax deductions?

Don’t assume; read the pooled employer plan’s participation agreement and all documents that affect relations and allocations of responsibilities between the PEP’s administrator and the participating employer. One might be surprised by how many responsibilities a PEP’s documents can allocate to a participating employer.

Doesn't the plan-termination amendment that already was done provide that the final distribution that ends the plan is a single-sum distribution of the participant's, beneficiary's, or alternate payee's whole account? Else, how would one end a plan?

Here’s the tax law point your query seems to ask about: “Such term [an “eligible employer”] shall not include an employer if, during the 3-taxable year period immediately preceding the 1st taxable year for which the credit under this section is otherwise allowable for a qualified employer plan of the employer, the employer or any member of any controlled group including the employer (or any predecessor of either) established or maintained a qualified employer plan with respect to which contributions were made, or benefits were accrued, for substantially the same employees as are in the qualified employer plan.” Internal Revenue Code of 1986 (26 U.S.C.) § 45E(c)(2) (emphasis added). I.R.C. § 45E(d)(2)’s definition for an “eligible employer plan” refers to “a qualified employer plan within the meaning of section 4972(d).” I.R.C. § 4972(d)(1)(A)(iv) includes among four kinds of qualified employer plans “any simple retirement account (within the meaning of section 408(p)).” There is no Federal tax law rule or regulation that interprets Internal Revenue Code § 45E. Ask your tax lawyer or certified public accountant about what fits or doesn’t for your circumstances. Understand that many retirement-plan practitioners (deliberately) don’t provide advice about the § 45E tax credit. This is not advice to anyone.

Your firm should buy Derrin Watson’s Who’s the Employer? The first time you use it will save you from incorrect advice or missed opportunities, either of which can be malpractice. Each next time, you’ll work more efficiently so you and the partners won’t waste unbillable time.

ERISA § 404(a)(1)(D) commands a plan’s administrator to administer the plan according to the written plan. And Internal Revenue Code § 401(a) or § 403(b) too in concept calls one to administer such a plan according to its written plan. Yet, tax law’s so-called remedial-amendment regimes tell a plan administrator not to rely on the written plan but rather to follow one’s assumptions about a to-be-written plan the plan sponsor might not make until December 31, 2026. The document “with an approval date of 8/7/2017” one imagines has text that states provisions no later than those of 2016. For about ten years, a plan’s administrator must discern which provisions of the written plan remain applicable and which provisions one presumes will be retroactively changed or added, discerning these differences with nothing in the text of the written plan say which is which. What purpose does “the” plan document serve?

Is the distribution-processing fee $100? Or is some other expense charge also involved? What does the plan’s governing document provide? What does the summary plan description explain? What does the most recent 404a-5 communication disclose? Does the recordkeeper process, and the payer tax-report, a Form 1099-R showing a distribution of $0.00? For each service provider involved, what does its service agreement provide?

I know those who do the TPA, recordkeeping, or operations work abhor the PLESAs. But my note above isn’t an idle hypothetical; its question is a live one from a real employer (not my client, but my client’s client). Although my client tried to talk the employer out of providing PLESAs, the employer persists in seeking to provide it (and has its own business reasons for desiring to do so). Is it proper to charge the PLESA accounts a bigger share of plan-administration expenses than is charged against non-PLESA accounts?

It’s regrettable that an IRA’s beneficiary let a custodian combine accounts with different histories and attributes. (Did the beneficiary, whichever one is your advisee, assent, expressly or impliedly, to the combination of accounts? Has the time for objecting to an account statement or transaction confirmation run out?) An adviser might warn one’s advisee that an individual remains responsible for correct minimum distributions, even if a custodian’s accounting no longer provides needed information. Yet, an adviser who’s comfortable with full-picture counseling might explain also that the IRS has little resources to detect mistakes in the amounts of minimum distributions. An adviser would provide advice that fits with one’s professional conduct. This is not advice to anyone.

A plan sponsor, an employer, or a plan administrator might prefer to show as its address an address at which the person wants to receive mail. It could be bad if EBSA or IRS sends a notice to the address shown on the most recently filed Form 5500 report, the employer or administrator does not get the notice, and is charged with having failed to respond timely to the notice. I have worked on matters in which the plan’s administrator, as a safety caution, was unwilling to show an address of where the employer or administrator worked. In one, the Form 5500 reported a lawyer’s office address. In another, the administrator rented a Post Office box and put that address on the Form 5500. This is not advice to anyone.

Imagine an individual-account (defined-contribution) plan for which the employer never pays any plan-administration expense; all is borne by individuals’ accounts. Imagine the plan includes an arrangement for pension-linked emergency savings accounts. Assume the ERISA § 801(c) conditions for a PLESA make it more expensive to administer those accounts than the non-PLESA accounts. While honoring the constraint against a charge for a PLESA account’s distributions, may the plan’s fiduciary set different plan-administration expense allocations between the PLESA and non-PLESA accounts?

“A partner’s distributive share of any item or class of items of income, gain, loss, deduction, or credit of the partnership shall be determined by the partnership agreement, unless otherwise provided by section 704 and paragraphs (b) through (e) of this section.” 26 C.F.R. § 1.704-1(a) https://www.ecfr.gov/current/title-26/part-1/section-1.704-1#p-1.704-1(a). A partnership agreement of a professional-services firm, especially an accounting or law firm, often includes allocations with formulas designed so an allocation regarding the firm’s pension expense approximates the expense attributable to each individual partner. For pension expense attributable to people other than partners and their beneficiaries, an allocation might be general regarding a whole firm or a whole department of a firm, or might be particular regarding those associates and other employees accounted for in the partner’s cost structure.

Perhaps another reason for a plan's administrator or its service provider to design a claim form that recites, with text following the tax law rule, the allowable reasons, and calls the claimant to certify she meets one.

Brian Gilmore, thank you for giving so generously to our learning. Even if one accepts the executive agency’s rule as a reasoned interpretation of Congress’s statute: 29 C.F.R. § 1630.14 has 30 uses of the word employee, but no use of spouse, dependent, beneficiary, or participant. If one reads only the text of this rule, there might be some ambiguities about whether an employee-benefit plan’s condition regarding a medical examination of an employee’s spouse is, in particular circumstances, “a subterfuge for violating the [equal-employment provisions of the Americans with Disabilities Act] or other laws prohibiting employment discrimination[.]” 29 C.F.R. § 1630.14(d)(1) https://www.ecfr.gov/current/title-29/part-1630/section-1630.14#p-1630.14(d)(1). Further, ERISA, the Public Health Service Act, the Internal Revenue Code, the Affordable Care Act, and other Federal and (not superseded) State laws might affect the plan sponsor’s choices. These and other laws might matter in how an employer and plan sponsor thinks about questions of the kind Bcompliance2003 describes. It’s complex enough that one would want information and advice from a team of employment, employee-benefits, and other lawyers.

I imagine the questions are about whether “the normal retirement age is not earlier than the earliest age that is reasonably representative of the typical retirement age for the industry in which the covered workforce is employed.” 26 C.F.R. § 1.401(a)-1(b)(2)(iv) https://www.ecfr.gov/current/title-26/part-1/section-1.401(a)-1#p-1.401(a)-1(b)(2)(iv). Even if this plan is for only one worker, might the employer’s business—and the “industry” in which the business operates—be a little wider than just boxing prizefights? For example, does the worker intend, after retiring from being a boxer, to become a teacher, coach, or trainer? If so, might that business, even if done by a separate business organization, be regarded as the same employer and “industry” (whatever that word might mean in the context) as the prizefighting employer? I have no experience with an issue of this kind, so look to other BenefitsLink neighbors for practical guidance.

Paul I and Bill Presson, thank you for your impressive thinking.

Until recently, many employee-benefits lawyers advised an employer not to provide an automatic-contribution arrangement. Why? Because an employer might administer the arrangement imperfectly, sometimes missing some people, and that would call for corrections and expense. Have law changes made those worries smaller? Are the exposures smaller? Are the fixes less expensive? Here’s why I’m thinking about this: A charity, unadvised until now, provides an automatic-contribution arrangement for its § 403(b) plan. The default is 3% of pay, with yearly increases until 6% of pay. I believe the charity will have lapses and errors that result in failing to start elective deferrals for people to be auto-enrolled. I believe the charity is unable to design and implement work methods to avoid inevitable lapses and errors. The automatic-contribution arrangement is not needed to meet any coverage or nondiscrimination rule. Internal Revenue Code § 414A does not require an automatic-contribution arrangement because the plan’s elective-deferral arrangement was established before December 29, 2022. Should the plan sponsor continue, or get rid of, the automatic-contribution arrangement? If you suggest keeping the arrangement, what can I say about why the charity’s exposure to corrections is only a small risk?

The news release cites sources about which acts might get a delay. Those include: 26 C.F.R. § 301.7508A-1(c) https://www.ecfr.gov/current/title-26/part-301/section-301.7508A-1#p-301.7508A-1(c). A health plan’s administrator might want its lawyer’s or certified public accountant’s advice to find that the PCORI “fee” is an excise tax and is administered by the Internal Revenue Service (unlike a firearms tax or harbor maintenance tax, which are administered by other agencies). This is not advice to anyone.

Another consequence might be an unavailability of a professional—lawyer, accountant, actuary, enrolled retirement plan agent, third-party administrator, or otherwise. Some professionals might accept such a client if one is paid her advance retainer in an amount one estimates as enough to cover more time than one expects to work, after carefully considering the extra difficulties of working for a troublesome client. With the advance retainer periodically replenished, to avoid a risk of nonpayment for the next bit of work. Others might be unavailable no matter how big a fee one might earn.

The Notice points to a rule about the meaning of “officer”. 17 C.F.R. § 240.16a-1(f) https://www.ecfr.gov/current/title-17/part-240/section-240.16a-1#p-240.16a-1(f).

Thank you!!!