rocknrolls2

Yes, it is. Agreement was reached between the parties of the prrcentage payable to each prior to the annuity starting date and the participant was paid solely his percentage.

A married couple were divorced and had agreed that the participant's spouse would share in a portion of benefits otherwise payable to the employee. A QDRO was drafted but was intensely litigated. In the interim, the employee retired and began receiving the agreed upon portion of pension benefits in the form of a straight life annuity. Ten years later, a draft QDRO which appears to be acceptable to both parties to the former marriage was submitted to the plan. If the plan determines that the proposed order is qualified, can payments to the ex-spouse be made retroactively to the annuity starting date? Please note: that there is no issue of a reannuitization here based on the DOL Regulations at 29 CFR Section 2530.206 because it is being paid as an annuity for the life of the employee only. Therefore, when the employee dies, all payments (even to the former spouse who survives the employee) cease.

Write to HR demanding a written copy of the plan document and SPD. Not only should you be eligible forlost earnings but the employer has to kick in an employer contribution according to IRS correction procedures. The employer has to provide the plan document and SPD within 30 days of your written request. If they keep stalling, hire an attorney to go after them.

I know that there were numerous lawsuits filef following HHS' issuance of final regulations under Section 1557 of the Affordable Care Act. These lawsuits challenged the validity of the regulations and HHS rescinded a portion of these regulations. As a result of these suits, are the section and the regulations still on the books? Thanks in advance.

Prior to the acquisition of the sponsor of Plan B, I question how (unless the owners were the only employees), Plan A was able to pass coverage. In this context, the best solution going forward would be to urge the client to merge the plans.

I agree with Peter on this point. Since one way for the employer to lift the responsibility and liability for the plan is to purchase an annuity contract as part of the termination process, the drafters of ERISA considered that to be an effective method of terminating the plan. I also know that case law has cut both ways on whether ERISA preempts state escheat laws. I think the best way to crystallize the conflicting cases is to realize that the only case stating that the escheat law was not preempted involved life insurance which is exemption from preemption via the Savings Clause. On the retirement plan side, however, the consistent message (prior to the FAB) has been that ERISA preempts the state escheat laws. In the scenario you describe, the issue arises with the participant who becomes missing after issuance of the annuity contract and termination of the plan. In that context, it would appear, ERISA would no longer apply, in which case, the state escheat law preemption issue would be moot. Since you raise a perfectly valid point about this, perhaps a better way to deal this is to lobby Congress to amend ERISA to clarify that state escheat laws would be preempted by ERISA even following termination of the plan. For historical context, I know that in the early 1990s, participant suits for breach of fiduciary duty involving the purchase of Executive Life annuity contracts upon plan termination had been dismissed since the court deemed that, following the annuity contract's purchase, ERISA ceased to apply. As a result of this, legislation enacted in 1994 added paragraph (9) to ERISA Section 502(a) to authorize suits by participants in such situations. If you go down this road, you would be proactively preventing a problem from occurring. Otherwise, as Peter suggested, it might become impossible to terminate a defined benefit plan without purchasing an annuity contract.

IMHO, not enough facts are known to provide a definitive answer. First look at the plan document. Does it credit service using the counting hours method or usimg the elapsed time method? It would also help to know what the employee's date of hire is. If the hours counting method is used, do eligibility computation periods after the first year switch to to the plan yesr or do they remain 12-month periods that start on the anniversary of the date of hire? One other factor is whether eligibility determinations continue in spite of the suspension of benefit accruals. For this, you need to obtain the plan amendment imposing the suspension. Once this information has been assembled, it will be easier to determine whether and when the employee in your example became eligible.

To further stir the pot on the inanity of NJ's taxation (I am a resident), NJ also does not allow an income tax exclusion for pre-tax contributions to cafeteria plans, flexible spending accounts and 132(f) transit accounts. Even though it has an exclusion for contributions to a cafeteria plan, most employers' concept of a cafeteria plan do not satisfy the conditions for the income exclusion section.

I represent a multiemployer apprenticeship fund which leases office space from its building to a union appointing trustees to the fund. From my reading of the 2025 VFCP, it does not appear that the leasing of office space between the union and the fund is eligible for correction under VFCP. Does anyone think differently on this?

But has the bonus check been paid to the 2 owners? If the answer is yes, no deferral allowed.

Thank you, Peter. Those are excellent points to consider in dealing with this issue. And thank you, Frank (fmsinc) for the helpful case references.

Peter, To answer your questions: the death benefit is provided by a life insurance contract under an ERISA governed plan. The SPD is the plan document. The SPD provides that the designated beneficiary needs to file a claim for life insurance within one year from the employee's date of death. If no claim is timely filed and the whereabouts of the beneficiary are unknown, the disposition of the benefit will be determined by the provisions of the claim policy of the life insurance carrier indicated in the summary of benefits insert. If the plan were to be amended to adopt a missing participant policy, which should require that the whereabouts of the beneficiary be attempted in spite of his or her deportation and such attempt is unsuccessful, even though it is after the fact, since we are not talking about a qualified retirement plan and there is no vesting for welfare benefits (absent a plan provision to the contrary), could the plan treat the beneficiary as having predeceased the participant? I could see that such a provision could apply prospectively, but I am concerned that the amendment would not be valid retroactively.

A participant of a welfare benefit fund passed away. However, his primary beneficiary has been deported and the plan officials have been unsuccessful in attempt to locate her. Can the plan treat the beneficiary as having predeceased the participant and make the benefit payable to any contingent beneficiary or, if none, the plan's default beneficiary? Alternative, can the plan treat the beneficiary as a missing beneficiary and treat the death benefit as it would with respect to any other missing participant or beneficiary under the plan?

I agree with Peter that, from a plan document standpoint, an amendment to require mandatory automatic enrollment is likely within the remedial amendment period. However, because this is a mandatory requirement for plans that do not satisfy the grandfather rule or are church or government plans, there is an operational aspect to this that would require correction. Effective for the 2025 plan year, automatic enrollment should have been implemented for the plan's participants. For that, it would make sense to provide qualified nonelective contributions allocated to the accounts of participant who were not already making elective deferrals to the plan in the amount of the missed deferral opportunity, as per Rev. Proc. 2021-30.

You have not explained who owns which percentages of ABC Company. That would be needed to make a determination.

Brian and Peter, You have raised some pretty good points, I agree.

Following up on this, in the responses citing state wage payment laws, I have seen a number of cases holding that such laws are preempted by ERISA (even applying the more narrow view of preemption that the courts now seem to be following). I know that refunding the overcharge (versus overpayment) is the right thing to do and that it is also the right an ethical thing to include interest, but I am not convinced that reliance on state wage payment laws, in itself, is something compelling the employer or trustee to do so. Any thoughts on that point would be especially welcomed.

The group health plan is self-funded. The participant contributions are deposited into a trust. The employer also contributes for a portion of the premiums.

Employee A works for Company X. For 2025, A elected family medical coverage under X's health plan. Family coverage costs the employee $275 in monthly premium payments. Employee A was actually charged $300 per month for such coverage. X's health plan discovers the error in the third quarter of 2025. Is X required to repay A the amount of the extra premium amount? Is X required to include interest on the reimbursed premium amount?

From my experience, there was a lot of discussion of creating a correction program akin to EPCRS, to deal with 409A violations. That appears to have fallen by the wayside. Unless there is pressure to rekindle the idea, I think it is likely to go nowhere for the foreseeable future. What complicates this further is that the prospect of top execs facing significant tax exposure does not necessarily tear at the heart strings of many of the key policymakers in Washington.

Thanks David and Peter, One thing that likely also played a factor at the time Manhart and Norris were decided was that the "glass ceiling" was substantially lower than it is today. I know from the experience of two brilliant highly-motivated adult daughters, who have moved rapidly up the corporate ladders of their respective careers, only to run smack into the glass ceiling as it currently stands.

I am working with a client with a defined benefit plan for collectively bargained employees. The overwhelming majority of the participants are male. The plan uses the RP-2014 blue collar male table for actuarial equivalence for participants and the RP-2014 blue collar female table for beneficiaries. In 1983, the US Supreme Court decided Arizona Governing Committee v. Norris, which held that the use of sec-based tables violated Title VII of the Civil Rights Act. Has anything developed which has changed this result in the interim? Or can this be justified by using a table for a single gender for all participants, regardless of actual gender? Thanks!

Although I am an attorney, this is not legal advice to anyone. Consult with the plan's legal counsel. They will tell you to do one of two things: (1) file a lawsuit in federal court called an interpleader in which the plan offers to pay the money to the party determined to be entitled to it by the court -- you may need to deposit the account balance with the court. The court will decide --and your client avoids the worry of paying twice and of having to fight to get the money back from the party who was determined not to be entitled to the account; or (2) decide the claim with counsel's advice and pay the person to whom it is properly payable. As far as disclosing materials submitted by the spouse, I know that the ERISA requirements do not compel the plan to share that information with the other person, with two exceptions: (1) if you grant the wife's appeal and inform the daughter that she is not entitled to the benefit, the claims procedure regulations require you to share the information with the claimant; and (2) if someone sues, the mother and daughter will be parties to the lawsuit and their attorneys will be entitled to relevant documents during discovery in the litigation. To short-circuit the process and maybe resolve this short of litigation, I would suggest that you share the information with the daughter and that you propose interpleader as an amicable way to resolve the issue. But Remember, I am not the plan's lawyer -- you will need to defer to him or her for the final recommenation.

IMHO, in addition to the inevitable failure of the coverage test, this is no way for the owners to be running a business. It is basically saying, if we like you, you're in, if we don't like you, you're out and if we don't like you, we can keep you out by paying a few thousand bucks more to keep you out. It is bound to cause resentment, mistrust and ill-feeling for the employer and among the employees. Moreover, to discourage this chicanery, you should be charging a nuisance fee for putting up with the inconvenience of constructing all kinds of crazy hoops to try to squeak their inanely complex structure squeak through compliance testing.

Thank you, Brian, for your thorough and detailed answer. However, while I agree that the personal benefit account should be considered a group health plan for ERISA purposes, what causes me to lean on the opposite side of this fence are the following: (1) the account can pay other types of benefits including severance and supplemental unemployment, and, in some cases, disability benefits; and (2) the personal benefit account is not a primary payor. Do these facts, in any way, change your conclusion?