david rigby

To be clear, "at least 25%". Another thing: has the seller explored the idea of having the buyer deal with it, via the buyer assuming the DB plan? Although the (apparent) reversion language might be a deterrent, there may be other reasons why the seller would encourage this option. There may be an advantage to the buyer which could result in a higher sale price. For example, if the buyer has an underfunded DB plan. (Every Enrolled Actuary will know how to find the answer to this question online. If so, you will kick yourself if you don't at least raise the subject with your client.) Don't laugh, real money on the table.

Lots to unpack. It's not clear what your client relationship is; TPA?, Actuary? Auditor? Something else? My sense of your phrasing is you are NOT the attorney; is that correct? If you are not the attorney, this seller should get its own legal advice, rather than use the advice of the buyer's attorney.

Correct, but I'm a bit concerned that something else is behind the original question. Any more details? What are you trying to accomplish?

Maybe it's just me, but there seems to be some missing information; specifically, the plan provisions that inform/guide the conclusion. If you appeal, you should request that information along with the reasoning for how those provisions lead to any particular conclusion, as well as pointing out the "shared payment" information. (Maybe they have already done this; we cannot be sure from your posting.) Also, your original post implies there was a 2012 plan amendment. You will want to know the specifics of that amendment, as well as the corresponding plan language immediately prior. You need to know the prior language so that your attorney can evaluate whether the plan change had an impact on your situation, and (if so) whether it was permissible to alter any rights you had under the Plan.

Forced rebalancing? It seems unlikely any recordkeeper would want to include this in its service agreement. Is there any advantage to doing so?

Corollary: if such limit is applied to one investment alternative (other than ER securities), would/should/must it apply to every alternative?

Does this "sponsor" have an attorney or accountant? If so, could you "persuade" such person(s) to educate the sponsor about how bad is this situation? If you do further work related to this plan, you should probably get paid in advance.

The seller could consider a spinoff. This most likely makes sense if the buyer wants to merge the spinoff into its own plan. There are pros and cons with this (or any other) process. (I won't list all the pros and cons here; that's a consulting project for which I would not get paid. In the meantime, you can give yourself some more background by searching these Message Boards; try a search word like "merge" or "spinoff".) In addition, there are other employment-related issues associated with any buy/sell arrangement, and those should be discussed in advance. The buyer and seller should (separately) engage competent ERISA counsel, preferably with M&A experience.

It's a reasonable question. I believe the answer is Yes. You should read the IRC 4980 statute here: https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section4980&num=0&edition=prelim

Well, you have a pretty good guess. 😉

Just a hunch, @BG5150 might be suggesting, "are there any state laws that describe some type of non-discrimination testing?"

TH years. See IRC 416(c)(1)(C) https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section416&num=0&edition=prelim

Better than counting zeros (because a number might not have any zeros), you can count the commas: one million has 2 commas, 1 billion has 3 commas, 1 trillion has 4 commas, etc.

Although not directly related to your filing question, who is paying for the software? Specifically, are the clients of XYZ subsidizing the clients of ABC?

IRA. If you put it in personal account, the net effect will be to (magically) change it from pre-tax dollars to already-taxed dollars.

Have you considered IRC 414(p)(4)(A)(iii)?

I believe (check the details yourself) that the filing deadline is extended but interest penalties (but not late penalty) may still apply.

@fmsinc Can you add a link to what you are quoting?

Don't know. The 04/04/25 IRS news release, first sentence, at this page, https://www.irs.gov/newsroom/, includes the phrase, "...2024 federal income tax returns and tax payments for tax year 2024 are due on..." Using only that language, the answer to your question would be NO. However, you need to do some more research on your own. BTW, the IRS does not control when PBGC filings are due. Have you checked the DOL website?

Ah, a great reason to hire an actuary! I'm retired, with expired continuing education, so I cannot do it for you, but can recommend several very good pension actuaries.

From the phrasing of the original question, "we" appears to be a TPA (or something similar). As @Peter Gulia states, your service agreement will be the first place to start. He also (correctly) implies that the action of the TPA may be guided by its own attorney, who will also pay attention to the comments/advice from the plan's attorney. Those are not the same person. I would never expect to "go to the wake and see the deceased." (My Dad was cremated.) One other way to consider "proof of death" might be whether there is a published obituary. (Sorry, I don't know if fraudulent obits are a thing.)

One might. But I seek to understand the issue better: suppose the distribution is on 10/1/25, and the plan sponsor shuts its doors on 10/02/25. Does this make any difference?

In addition to the above excellent comments, the answer to your question is YES.

If this is a 401k-plan, maybe the PY is affected by the 402(g) limit's effective date?

It might be prudent to verify exactly when this status occurred; i.e., if he changed to 1099-status on 1/1/25, that would differ from that status being effective sometime before that date.