david rigby

Prior discussions might be helpful: http://www.benefitslink.com/boards/index.php?showtopic=7164

At the risk of saying something stupid, the 415 issue might need another perspective. If the correction of such a small percent (with imputed earnings) causes a 415 problem, there must also be another plan. What do the two (or more) plans say about co-ordinating with each other with respect to the 415 limit? (I'm not sure this is even relevant; any comments?)

I agree with last two comments by R. and Hans. Of course, the plans in question must be within the controlled group.

Another point, if in fact the plan is being terminated, is what language the plan has about "deemed distributions".

My understanding is that Proposed Reg had an effective date of 1/1/1990. However, I don't know if there is any guidance since then. Also, since that portion of the reg was issued after the change in IRC 411(B)(1)(H) [changed was in OBRA 87 I think, to be effective i/1/1988], the emphasis was to recognize benefit accruals and service after NRA. And it was considered to have retroactive effect for any participants over NRA (of course excluding any whose benefit had already commenced).

IRS Proposed Reg. 1.411(B)-2(B)(4) indicates that if the notice is not given and if the benefit does not commence, then the plan must define the benefit at "late" retirement date as the greater of: the benefit accrued using service after NRD, or the actuarial equivalent of the NR benefit.

I'm no expert, but it sounds right to me. Even if it were paid (rather than using the problematic word "assigned") to another party, I think the Participant would be taxable recipient.

Disagree. There may be dishonesty, perhaps fraud. But that is between the ER and the EE, not the plan. The plan does not define "legitimate employee". The plan relies on the plan administrator to supply DATA in the determination of an eligible employee, then the plan uses that data to determine which employees are eligible. Just because there was fraud does not mean that the person was not an employee. If that person somehow "illegitimately became an employee", the employer cannot reverse that action, reverse paychecks, reverse the filing of W-2s. BTW, just because the person supplied a "false SSN" in the process of getting hired, does not mean that this SSN already belongs to someone else. Might be a non-existent number.

The orginal question posed a situation where there were employees supplying false data. That, in itself, is not an ERISA issue. It very well might be an employment issue, but the qualified plan is unaffected until the employment status changes. What if the EE is fired? If not vested, no big deal. If vested, then the ex-EE is probably entitled to the benefit earned. Looks to me like that person was a legitimate participant.

Fair enough. Regular users of this site would probably agree with my assesment that BenefitsLink is the best information sharing website in the Employee Benefits arena. Therefore, an easy way to begin addressing your question might be to do a search on the Message Boards. You could also do a search on the entire website: http://benefitslink.com/ Perhaps some of these will help. Then Message Board users will be glad to try helping with more specific questions. Hang in there!

I agree with philip. To me, common sense says that giving false SSN (or any other data) does not change the employment relationship, and hence would not alter whether they are participants.

And here is a brief online article (requires Adobe Acrobat Reader): http://www.grsnet.com/rr990401f.pdf

Most important question is whether the plan was also amended to freeze, both accruals and new entrants.

This might also be useful. http://www.benefitslink.com/qa_columns/eso...sop/index.shtml

A shareholder has elected non-recognition under IRC 1042. The shareholder remains an active employee and a participant in the ESOP and does not share in the allocation of stock subject to the 1042 election. Shares allocated to terminated vested participants are distributed to and reregistered in the name of the terminated vested participant. If the ESOP reacquires this same stock, is the selling shareholder prohibited from receiving an allocation of the reacquired stock? Cites?

According to proposed reg. 1.411(B)-2(B)(4), no qualified plan is required to provide the suspension of benefits notice. If it is not provided, and if payments do not begin at NR, then the actual benefit at "late commencement date" must be the greater of (a) the benefit earned under the plan as of the actual severance of employment, including service earned after, or (B) the actuarial equivalent of the normal retirement benefit. Note that the reg uses NRA, note NRD. Admittedly this is a proposed reg. issued in April 1988, but all documents I have seen since have incorporated this.

And as Carol so correctly reminds us, there could be other statutes (at the state or local level) that have relevance to non-discrimination issues.

Good document providers: McKay Hochman Corbel More generally: http://www.benefitslink.com/yellowpages/docuprep.shtml

What type of plan is this? What does the plan say about death benefits? Is there a surviving spouse?

This may be implied but just in case: Could there be another plan in the top-heavy aggregation group? If so, check to see what it's T-H minimum provisions are.

Common sense (oops, that is usually not relevant) would say that the participant should not be penalized due to the error of another, the best example of which is a check lost in the mail. This seems to be especially true when there is an easy remedy of voiding the distribution.

That is kind of the way I feel about this. One point: a QDRO does not create a new participant, only rights/benefits for an alternate payee, so I don't think the ex-spouse is an HCE, althought might be subject to certain HCE restrictions.

Assuming the payment form is a life annuity and that benefits are payable monthly: if the benefit is assumed to commence at 55-11/12, then the 5.54% factor is 76.1831 (mutlitply by monthly amount), if the benefit is assumed to commence at 65, then the 5.54% factor is 160.4951 (multiply ditto). (Others might get slightly different factors if they are more precise with rounding.)

To the best of my knowledge, that table is not on the SOA website. I will email the table to you if you like. (I assume you mean the table of q's.)

NRA is defined, at least with respect to vesting, as the age at which an employee will attain 100% vesting without regard to service. See IRC 411(a)(8). Earlier of - the NRA as defined in the plan, or - the later of: age 65 and the 5th anniversary of plan participation. NRD is defined in the plan.