david rigby

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".

Good advice above. My suggestion is to carefully inspect all the relevant filings and dates. For example, your checklist should include: making sure there is no typo (especially the EIN) on the 5500 and/or PBGC filing(s). verifying (don't assume) the exact date each payment was made. For example, if the 09/15 payment was made on 09/16, that is late.

IMHO, this is two (related) questions. Yes, best practice is to gather as much data as possible, using whatever source(s) are reliable. In addition, this is a great opportunity to assist participants with reviewing/updating any beneficiary information, while reminding them (1) not updating might mean a distribution could go to someone not intended (eg, ex-spouse), and (2) it is the participant's responsibility to provide future updates.

Is there a possibility the participant has "returned to his/her home country"? You won't know unless you ask other employees, former neighbors, etc. In my pre-retirement life, whenever we got this response, we made the assumption (use your own judgment) that the EE will never return to employer location and therefore we treated it as a participant-elected permanent forfeiture. With lots of documentation of course. Another help for you might be some prior discussion threads. Try the Search feature, with the phrase "missing participant" or "home country".

I agree with @Peter Gulia. In addition, the PA should consider whether ANY communication from the ex-wife might be considered a claim. If so, that would enable the PA / Administrative Committee to determine NOW whether a benefit is payable to the ex-wife. In the alternative, the plan might tell the ex-wife to get a QDRO, only to later conclude there is no benefit payable; this alternative means the ex-wife bears the legal cost for no ultimate value. The PA will have to make the determination either way, so I suggest it's better to do it now.

Sort of. The original post stated, "trying to terminate". If this means the plan has been amended to terminate, and the processing is ongoing, then the statement in the box is (at least approximately) correct. However, if the "trying to terminate" phrase means something like "planning a termination", then the plan can certainly investigate any missing participant and distribute according to plan provisions, as long as there is not a resolution and/or amendment to terminate the plan.

Any possibility that the "professional service employer" exemption could apply?

For the record, the Gray Book is owned by The Enrolled Actuaries Meeting (and the Conference of Consulting Actuaries). The part above following the word "Commentary" is from the ACOPA and is NOT part of the Gray Book. Also, as I read the original question posted above, the premise of Q&A 2011-7 does not relate, so the Q&A may not be relevant to this discussion.

Wow, this situation raises more than one red flag. Asking if it can be done should come after someone asks lots of questions, the first of which is, "why do you want to do it that way?" @CuseFan poses a very good question: "...buyer knows its plan has issues and wants it to go away?"

Here is another thread:

There has been prior discussion on this topic. Perhaps the Search feature will help you. There was also a Q&A in a prior Gray Book, and a verbal Q&A at a prior Enrolled Actuaries meeting. The IRS is sympathetic to such timing issues, so you can use 12/31/24 as the final date for Plan B for all purposes. Note that one second after midnight on 12/31/24, the Plan B assets are owned by Plan A, no matter where those assets are located; the "received" date is not relevant.

Great question. For the most part, the DB plans I saw had no alternative procedure or standard. In some documents, the definition reads as follows: "Total and Permanent Disability means a physical and mental condition of a Participant resulting from bodily injury, disease, or mental disorder which renders such Participant incapable of continuing any gainful occupation and which condition constitutes total disability under the federal Social Security Act". Careful reading reveals that this definition does not explicitly require the participant to apply for (and receive) SS disability; it's possible a plan's administrative committee might interpret it that way in the examples you provide, especially leaning on the word "constitute". However, I never saw it happen.

Is there a definition of "official inflation-adjusted amount"? Since citizens/taxpayers are entitled to interpret the Internal Revenue Code on their own, would a statute-defined increase not apply solely because the IRS has not made any identifying statement? What if the IRS never issues any "official" statement? Can such failure to issue a notice be equivalent to "no increase applies"? Is it reasonable to not increase the 402g limit merely because the IRS ignored/failed to issue some "official" document, especially since you know it should be increased? Similarly, what about an increase in the 415(b) limit, knowing that some participant purposely waited for that increase before taking a LS distribution from his/her DB plan? IMHO, issuing EE communication that ignores an increase (i.e., using the prior year amounts) or failing to apply a statute-defined increase seems to abdicate reasonableness and common sense. In case you cannot determine from my rhetoric, my suggestion would be to calculate any applicable limit as best you can. (There is at least one publicly available calculation spreadsheet here on BenefitsLink. Several private parties, actuarial consulting firms, CPA firms, attorneys, etc. also do the same.)

"Small amount" is (usually) relative to the plan size, and whether there might reasonably be "unpaid and/or unbilled" expenses.

No dispute with prior advice. Possibly relevant is the change of actuarial firms: was the plan sponsor less than forthcoming with the prior actuary, and/or less than willing to pay fees? I'm suggesting the delay might be explained by plan sponsor actions and/or inactions that caused the prior actuary to "drop out". This is not an excuse, but it might be an explanation.

No one reading here will have any information that is more important than reading the actual plan document(s) and annuity document(s).

Just thinking out loud, are you sure this option is no longer available?

A few other discussion threads here touch on taxation w/r/t estate. In a nutshell, an estate is not a natural person, so it cannot open (or add to) an IRA. Therefore, assuming the distribution is a lump sum, the distribution to the estate is NOT rollable. Therefore, the 20% withholding does not apply. Therefore, the "other default" withholding applies: 10%. However, as mentioned in the instructions to Form W-4R and/or Form W-4P, an estate has the right (just like any other recipient) to elect zero withholding. Therefore, the plan administrator must provide the opportunity to make such election (eg, put a copy of the forms in the hands of the estate administrator). But, before that, the plan needs ERISA legal advice to confirm whether or not the "...QDRO requires the distribution in this case to be made to the estate." (OK, I admit to being skeptical. It is not common for a QDRO to do so, and it seems unlikely the QDRO can override what the plan says about the spouse's right to name his/her own beneficiary.) If the payment to the "former spouse" is the remainder of a "ten-year-certain-and-life" form of payment (or something similar), that might be one case where the remaining payments* go to an estate; however, before jumping to such conclusion, it is important to determine whether the spouse has already elected a beneficiary. Thus, my urging to get legal review. *Note this example might have "remaining payments" as a monthly/quarterly annuity or a lump sum, maybe an option. It seems likely the estate should request a lump sum if given the option.

Regardless of other concerns, whenever I hear this phrase, my initial response is, "What reasoning have they given you?" If there is none given, has it been requested? (Close the first loop before opening other loops.)

Please review the actual plan language. It may already answer the question. Or it might rule out a particular alternative.

Are you saying you want to freeze the benefit for the HCE(s) only? That sounds non-discriminatory to me. Don't forget to consider how/what would happen at some future date when/if the HCE is unfrozen.

Does "location" come into play when evaluating whether disaster relief applies? For example: Suppose plan sponsor's main location is not in disaster area (as declared by IRS/DOL/etc.), but it's HR department is in such area, and this causes delay in filing of Form 5500? Similarly, suppose plan sponsor is not affected by natural disaster but the vendor who prepares 5500 is in disaster area? Corollary, suppose plan sponsor is not in disaster area nor is "main office" of the vendor, but the vendor's remote employee with such responsibility is in such disaster area?

In general, most plans do not allow any form of payment to be changed after the commencement date. Very likely, a joint and survivor benefit cannot be changed. Therefore, the choice of beneficiary has already been made; you both choose the other spouse. Important: this selection of spouse as beneficiary does not mean, "whoever is my spouse at my date of death", but instead it means "whoever is my spouse at the time my payments begin", so that subsequent divorce is not relevant. Usually, so you should verify. You state in original post, "...the beneficiary was to be revoked...". Since each person's benefit is in pay status, any "revocation" would be an impermissible change under the plan. The divorce decree has no authority to alter the plan. Also, your children and/or trust will not be relevant, since no beneficiary change is permitted. Also, it is unlikely a QDRO could change anything because a QDRO has no authority to require the plan to do something outside of existing plan provisions. As far as I can tell from your description, there is nothing to be done. Whichever of you (exes) outlives the other will receive the relevant survivor benefit from the deceased's benefit form, and no one else will get anything. A few plans might allow some type of change, but it is extremely rare; you should verify within the paperwork you received at the time of your election. For what it's worth, in my 40+ years as a pension actuary, I saw exactly zero plans that permitted a change of joint and survivor form or beneficiary after the payment commencement date.

How old are the participants? Is the benefit equal to the 415 limit?

Agree. However, there might be another possible action that comes first: increase the benefit formula, even if only slightly. It may get you to the same place, but it has the potential to eliminate any excess allocation, especially if you get the excess down to some small amount that will be absorbed by the final expenses.