david rigby

Additionally, practitioners should note that the 80/120 rule is administrative and regulatory in nature. It is NOT a statute; thus, not appropriate to assume its application extends to anything else.

Although not recently, we used to see mistakes where Plan A contribution was mistakenly deposited into Plan B. The solution was simple: just transfer it to the correct location/trust. If you need an adjustment for earnings, make a reasonable estimate and do it. But do it immediately, and document it completely.

Duplicate post. Replies here: https://benefitslink.com/boards/topic/80743-a-real-problem/

As usual, @Effen states the issue better than I. For participants in their early 40s, I suggest there is a potential future surplus but NO current surplus, since many things could happen in the next 2 decades to affect the plan's funded status. If you want a discussion of these many things, I'll be glad to recommend an experienced consulting actuary, since the list of such items is very long, Overspending on life insurance now will benefit only the person receiving the commission. It would be more prudent to evaluate any surplus closer to actual retirement rather than assuming it must be "absorbed" now.

Exactly! Whenever I see the phrases "husband and wife" and "cash balance" and "overfunded", I wonder if the last one is true. Has there been a real 415 test? A consulting actuary would ask lots of questions, which might include: Why is a husband/wife plan structured as cash balance rather than traditional DB? Do the participant(s) have health status that impairs insurability? What is the magnitude of any "overfunding"? What are the ages of the participants? How soon do the participants plan to retire/cease working? Are there others (e.g., children) that might join the business? Do the participants plan to choose a lump sum distribution (at some later date) or choose a J&S payment form? Does the business also have a DC plan? A really good consulting actuary will explain to the plan sponsor how these questions are inter-related.

Interesting Q. After reviewing the definition of BIS in IRC 411(a)(6)(A), and then reading how that definition is applied in subsequent subparagraphs, my suggested answer is NO. I wonder if the questioner has inquired about this unusual provision, specifically asking whoever wrote the document originally if that person/law firm can defend or explain.

Another Q that may have already been addressed by the parties: Why terminate? If the buyer will accept it, the seller can avoid the aggravation and expense of a plan termination.

Before providing a direct answer to the question, your consulting actuary will ask some important questions. Likely, the first one is (or should be), "why do you want to do this?" The answer should be deliberately and completely identified, because there may be more than one way to accomplish your goal. If you are unsure of the answer, your consulting actuary will have some follow-up Qs to help you with your deliberation. (BTW, if your actuary does not ask this/these question(s), send me a private message and I can suggest some other names for you.)

Sure, explore that process. But get review by the plan's ERISA attorney. Also, consider whether you need review by your own attorney also.

1. Review the document to determine if it helps with your question. 2. Hire a pension actuary to assist you, especially one that has done several plan terminations. That actuary has probably seen similar situations and might recommend some solutions. One solution might include "creative" communication to encourage the participant and/or spouse to sign. For example, many years ago, I had an unresponsive participant with a LS of around $4000 (the LS limit at the time was $3500). We advised the participant that, if there was no response by X date, the plan would be required to purchase an immediate J&S annuity (because we already knew that no insurer was willing to sell a deferred J&S), and the approximate benefit would be about $20 per month. BTW, it worked and the participant completed the form for LS payout.

Can it be created on 12/31 such that no accrual occurs until the next year?

Entirely unacceptable, whether or not (as @Peter Gulia correctly points out) the transaction was "whole" or "partial". The most obvious issue: if there are unvested $$, the seller should have either (1) amended prior to the sale to provide 100% vesting for all current participants, or (2) included a similar provision in the buy/sell agreement. This issue has been on the radar screen of benefit professionals and attorneys for decades, so omission is unconscionable. There may be other similar issues, e.g., (a) modifying the participation requirement if current (non-participant) employees might be affected; (b) nature and responsibility of employee communication; (c) identifying responsibility for govt filings; (d) are there any non-qualified benefit plans; etc. If a stock sale (implied but not certain in the original post) and the seller was worried about inheriting liability, then the seller's advisors (legal and/or benefit consultant) were asleep at the wheel. Probably also the buyer's advisors.

Comments from @Paul I are reasonable. and helpful. There may be another situation to consider (and prepare for). Maybe the participant is "incapacitated", and the caller was a relative (perhaps an adult child) who is assisting with a legitimate disbursement. Imagine, for example, that the participant has some cognitive issues, but there is not (yet) any formal diagnosis or power of attorney to allow the adult child to take unilateral action. Of course, it's also possible that it's both: a relative who is "helping" and also committing fraud. Use your imagination to include any other scenarios that might require the plan sponsor to be wary and/or know what steps are required.

Well done! I can echo, after 40+ years as an actuary, it was difficult to "let go", so I endorse your gradual approach. Retirement is great!

You should review the many prior discussion threads for more ideas and concerns. A search term of "missing" might be helpful. Probably an important part of this process is interviewing current and former employees who know/knew the missing employee. Perhaps interviewing former neighbors. This step is likely undertaken by the employer (not by any TPA). Because the plan sponsor wants a real answer, do not be sucked in by the "last known mailing address" excuse; this is (in very practical terms) a "cop-out". And the sponsor should eventually be prepared to deal with a response similar to "returned to his/her home country".