david rigby

Under @Peter Gulia's (not so) hypothetical situation, I would do as instructed by the plan's PA: process as if the reported compensation meets the required plan definition. Why? Because I have already done my consulting duty to point out the potential problem with the 1099, which means I know (not suspect) that the potential problem has been identified and communicated to the proper person. It's not my job to police a correction. Note my use of the word "potential". It's not my job to know or determine if the original information (ie, the 1099) was a mistake. IOW, I would be making a consulting mistake if I assume the first information is correct; perhaps it was not. I'm not faulting @Paul I's response above, but my read of his comment is that he is assuming the first census data is "more correct" than later data, which I will not do. That said, I would alert my E&O insurance carrier and my own legal counsel. And, in case you are wondering, I am an Enrolled Actuary so I have a right to practice before the IRS, or at least I could before my retirement and change to inactive status.

I'm unsure why you care. It appears the original questioner is recording census data for a DB and/or DC plan. But, after you have provided your annual reminder of the plan definition, isn't it the job of the PA to provide the census data, not your job to audit it? It appears the PA has done more than that, by telling you about a 1099. Your proper response is (might be) to say, "That's not what the plan says. So, if you want me to include this, I will assume, unless you tell me otherwise, that you are correcting the 1099 and issuing a W-2, but that is your task to do, not mine. I don't need to see any of the form(s), but if you later tell me it was not done, then I will use that information to exclude this compensation per section X.x of the plan document." OR, you could say the opposite, "Per x.x of the plan document, this is excluded. When you tell me it has been corrected, I will include it." IOW, you have done your consulting duty to remind the PA about the possible error/inconsistency, and that only the PA can fix it. If you have a relationship with the plan sponsor's accountant and/or ERISA counsel and/or payroll vendor, you might casually mention this, hoping a comment from that other person will also carry some weight to get it fixed, whatever that fix is.

Does the plan document address this?

Opt out of what? Employee deferral? That's pretty easy to accomplish. Employer match on employee deferrals? Same easy process. The NHCE may not have an option, because the terms of the plan control. The EE's reason doesn't matter. Why should the plan/Employer go to extra expense/trouble because the NHCE doesn't want the money? Remind the EE that the EE is not required to take a distribution (except at time for RMD). You might review other prior discussion threads on this topic. For example, https://benefitslink.com/boards/topic/69943-religious-exemption-from-plan-participation/ https://benefitslink.com/boards/topic/71385-no-investments-allowed-by-religion-in-plan-allowed/

The answer to your question is YES.

Is this a one-person plan? Why would a "residue" be only partially distributed (at the next convenient date) for a terminated plan?

Good point. Yes, my holdings are "Admiral" shares, but (now that you mention it) I'm unsure exactly what is showing up on the Yahoo website. Time for research!

The 415 regs address this issue. Have you reviewed the reg? The 100% pay limit is what it is, and the actuarial increases cannot exceed it. Therefore, you will have to determine (as best you can) the precise point in time at which the increases reached that limit and create an immediate benefit commencement date. A BCD means you must offer the retiree all the payment form options available under the terms of the plan. This means some determination of retroactive payments. No comment about how you determine a J&S benefit if that is chosen, because there are some other facts needed for that discussion. Also not opining on whether there is any issue w/r/t late payment under RMD requirements.

I happen to have some of that fund in one of my IRAs. My usual look at that fund is thru Yahoo Finance; just put in the ticker symbol. That site says Inception Date is Sept. 10, 2010. The historical data available at that site is 365 days of unit price, but also several years of rate of return, both annual and quarterly. BTW, your method of producing a "ballpark" will fail (badly) if there have been any additions (EE and/or ER contributions) to that account in the intervening years.

Seems important enough to include review by the ERISA attorney for the plan. I'll bet the recordkeeper has discussed it with its own attorney and/or E&O insurance provider.

Is this a DB plan, with future recurring payments? A DC plan with no future payments? A DC plan with one or more future payments?

I suggest the info provided by @QDROphile is the best summary. Neither the plan sponsor nor any TPA should waste any more time on this. A couple of other points: The action/inaction of the participant is not relevant. That is, if there could have been a QDRO, it's up to the (former) spouse to take care of that. Don't blame the participant; don't take any action to encourage or discourage it. The plan account balance and/or value of a DB plan benefit have no bearing on any action or inaction.

The Plan Administrator does NOT take orders from the attorney or financial advisor for the participant or beneficiary or estate. The PA is charged with following the terms of the written plan document. I hope that is obvious.

Divorced in 2016, but terminating the plan now? Why is J's former spouse relevant?

In addition, there is likely a Reportable Event, since the original post told us "PBGC-covered". You might find help (perhaps a similar fact pattern) in the PBGC Blue Books, found here: https://www.pbgc.gov/employers-practitioners/legal-resources/blue-books. Note also the cumulative index found here: https://www.ccactuaries.org/docs/default-source/meetings-and-education-documents/2019-blue-book-index.pdf.

Agree with @Peter Gulia. More than a few years ago, that exact pattern happened to me: hired for a January 1 (Tuesday, holiday, office closed) start date, first hours worked on January 2 (Wednesday). But I was paid for the entire month, so the ER (wisely) treated me as employed on January 1.

Carol, thanks for all your contributions, on your webpage and on these Message Boards, as well as your standards of excellence. You will enjoy retirement!

The PA has no interest in the method of division, but (as @QDROphile correctly states) the PA can "refuse to do the math". Preferably, this condition is already stipulated in the plan's written QDRO procedures. You did review those procedures, didn't you?

The original poster could probably benefit from reading/re-reading the top-heavy statute, section 416 of the Internal Revenue Code: https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section416&num=0&edition=prelim and the regulations: https://www.ecfr.gov/current/title-26/section-1.416-1. (Regs in Q&A format.)

Wow! Sounds like a scheme to skim off a fee. Why would the PA want to assist that? Never look for trouble.

A few thoughts (there are probably other relevant questions): Are the facts presented accurate? Are the facts presented complete? Did the buy-sell agreement contain any provisions relevant to the future of the plan? Did the buy-sell agreement alter (or attempt to alter) any plan provision of the A plan? Does A still exist or is it a wholly owned subsidiary of B? What does the A plan say about a distributable event? Does anyone in authority at B know what's going on? Has legal counsel for B made any statements about this?

I would think twice (thrice) before taking this assignment. The facts presented do not bode well for a good consultant/client relationship.

As I read the implications here: (1) the owner can afford to pay more into the plan, and (2) the 100% pay limit has not been reached. If my interpretation is accurate, the simplest way for the owner to accomplish his/her goal might be to amend the plan to unfreeze. Have I missed something?

Consider buying into an existing TPA? That is, look for a TPA that has an owner who might be retiring 5 years from now. Get legal advice from attorney with relevant experience.

"...take a lump sum..." implies there is a distributable event. Is there? By the way, the RMD at 4/1/26 is not based on the accrued benefit at 12/31/25, but on the AB at 12/31/24. (Of course, the participant can take more than the RMD.)