david rigby

Don't forget to read the document.

Do you think the participant understands this? (In my observation, an emphatic NO.) If you think the answer is NO, then there may be some administrative responsibility to inform the participant.

Slow down just a bit. There might be multiple causes of this confusion. Is the current Plan Year in alignment with the 5500? If the PY begins 12/1, then you have incorrect 5500s. Is it possible the different dates apply to different plans? (eg, there was a prior acquisition or merger, or termination/restart).

What does the CBA say? What does the plan say? Just an opinion, but there might be some embarrassment at the union office for realizing they don't ALREADY have the relevant names and addresses. 🤨

One wonders if the "designers" of this program have thought about the non-discrimination issues. One also wonders if other aspects of the compensation package have been included in the planning (for example, vacation policy? are there stock options? is the timing of any bonus program relevant? flexible spending account? etc). I recommend two things: Learn more about early retirement programs by searching for prior discussions on these Message Boards, probably using a search term such as "early retirement window" or (even shorter) "window". Contact one (or more) of those with experience in such matter. As an aside, while this particular situation might not include a DB plan (just a guess), those who have the best/most experience in such matters are often pension actuaries, primarily because many of them have already thought thru these issues. It may also be useful to contact an ERISA attorney with such experience. Although I'm (mostly) retired, if you need a recommendation, I'll be glad to offer a few names.

Is it possible this client is "in play" (ie, a takeover for you) because the plan sponsor is not good at paying the actuary's invoices?

As I recall, the use of 417 rates is to provide a minimum PVAB. Is that what your research shows?

Don't assume too quickly. There may be a reason for the plan provision. Or possibly, it was a valid reason but is no longer. Good advice: make sure you consider all the alternatives before changing a plan provision. Read Larry Starr's comment here, with special attention to the concept of "remarried" and "children of prior marriage":

Important: if there are any transactions (e.g., EE contributions, ER contributions, withdrawals, loans) after the retro date, applying the AP's percentage at some later date (assuming this is an individual account plan) may produce an incorrect split. Read the QDRO order carefully and take this issue into account whenever reviewing a draft QDRO.

Read the document. It will already confirm the YES answer, with the caveat that a LS less than $5000 (or some other lesser amount defined in the document) is not subject to this J&S requirement.

What does this mean?

... and take note of the FICA implications.

Is it possible the 12-month rule is relevant?

All good thoughts above. Now, please allow a modification of the conditions: During 2024, all the VTs will be paid out, not as a plan termination, but as permitted by the plan. Assume all payments completed before December. The plan termination amendment will be effective 12/31/24. The PBGC form 500 will follow soon after, and then the form 501. A form 5500 will be due for the 2024 and 2025 plan years. No Schedule SB needed after 2024. This should(?) permit the trust to remain open until at least 12/31/25 (ie, one year after termination date), hoping audit expenses will be during 2025. Does this help?

DB plan expected to terminate in 2024. All remaining participants are VTs and all payments/lump sums are expected in 2024. Excess assets are anticipated. There is no possible Qualified Replacement Plan since there are no "overlapping participants". Plan sponsor want to maintain the plan's trust into 2025 so that such assets can be applied to anticipated 2025 audit expenses (PBGC audit or other agency). Review of DOL Advisory Opinion 97-03A indicates that reasonable such expenses can be covered by plan assets (at least that is my read of the AO). Since 12/31/24 assets are not zero, a 5500 will be required for 2025 plan year, but little or no other administrative tasks. If, after such audits, any remaining excess assets will be taken as a sponsor reversion, per the plan document. Is it reasonable for the sponsor to maintain the trust in anticipation of expenses? What if (for example), there is no 2025 audit, but the sponsor anticipates a PBGC audit will eventually occur in 2026; is there a time limit over which maintenance of the trust becomes unreasonable or in violation of some other rule? What other concerns have I overlooked?

"...upon written request..."

Caution. Be sure you understand the "95% rule". The exact language is: IRC Section 4980(d)(2)(A). It's not a bad idea to reread the entire text of 4980. https://www.law.cornell.edu/uscode/text/26/4980

This smells funny. As mentioned by @Bri, what is the supposed advantage of using an IRA vs. a plan trust? Why take the action of removing/terminating? As we have seen before, sometimes it's because of the "brother-in-law" influence. Is someone suggesting this course of action because the "suggester" might have a possible benefit? If you want to be an "order taker", just do what the plan owner says; if you want to be a consultant, ask questions.

You will need to understand exactly what is meant, or intended, by the "such other heirs" phrase. While (probably) rare, it could be open-ended.

NOT the same. There is different FICA taxation.

You might try the search feature. See upper right on this page.

Excellent point. No-where in the above discussion did anyone state that any type of split was already included in the divorce settlement. We won't make any assumptions, so your attorney will address this Q.

... and don't assume that 50% division is required. Other proportions are possible, which might be loosely described as "divorce horse-trading".

Just for the fun of it, let's do some role-playing: Has anyone discussed with the plan sponsor why there is whole life insurance in a qualified plan? The audience here does not need to know, but the sponsor should know the limited circumstances under which such insurance is useful in a plan. Hint: "the agent (brother-in-law?) recommends it" is not a valid reason.

Regulation by a memo that has no force of law. A perfect example of how the entire regulatory structure (401a, 403b, etc) is BROKEN and should be replaced from the ground up (ie, it could be substantially simpler).