david rigby

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.

The "big 5" (in no particular order) are Mercer, Hewitt, Aon, Wyatt, and Towers Perrin. Kwasha Lipton has not existed as a separate company for a few years. It is now part of Pricewaterhousecoopers. Of course, there are many other firms of various sizes. Many plan documents are also done by law firms. It is common, but not universal, that whoever produces a plan document will also provide the SPD.

"...the 4/3 rule says that all projected accruals in the future will not exceed the current accrual rate." Almost. This rule is found in IRC 411(B)(1(B) and is referred to as the "133-1/3 Percent Rule". It states that the accrual rate for any later year is not more than 133-1/3% of the accrual rate of any prior year.

"Feel free to read into that whatever you want." Gee, do you think that's what they were thinking?

Correct points. Opportunity for consulting advice: If there is a risk that the T-H aggregation group (DB plan + DC plan) will be top-heavy, then it might be worth some planning so as to minimize the problems with which plan gives the T-H accrual. Rule of thumb: it is usually cheaper to give it in the DB plan, but there may be other valid HR-related reasons or benefits-related reasons to give it in the DC plan. For example, if the DC plan has a profit-sharing feature that is expected to be utilized, then that might be the cheapest, and might also be the easiest to administer.

You also have a potential problem that the former employee is deceased, or will be deceased at the time the beneficiary "shows up". By putting the benefit in the form of an IRA, savings bond, etc. then someone will have to transfer ownership to the beneficiary.

Depends mostly on the plan provisions. Many plans do not pay out until the employee has incurred a "break-in-service". (There are usual exceptions when the distribution is on account of death or disability or retirement.) A BIS is defined as a plan year in which the employee works 500 or fewer hours. After that BIS has been achieved, the plan might make distribution "as soon as administratively practical." Example, assume the plan year is a calendar year, and EE severs employment on May 1, 2001. Most full-time employees will have worked about 650-700 hours in those 4 months. Therefore, this EE will not have a BIS until 12/31/2002, assuming not rehired. EE should read the summary plan description to see what plan does in this case.

I would not do the second recommendation, but the first might be useful. I guess we are assuming that this is a DC plan, since there is a program to handle this for DB plans.

Active employee? Where is the harm? Where is the need to file a claim? If we are focusing on an error, that usually means (to me anyway) a data correction. If so, the employee should bring that to the attention of the plan sponsor. But beware, sometimes a data correction might not affect the benefit. Plan provisions still apply. If the "error" is related to an interpretation of plan provisions, then my advice is unchanged: bring it to the attention of the employer, and ask for a response. In any case, the employer should respond with its analysis of the facts and/or plan interpretation.