Fielding Mellish

Plan Document says a participant can get a hardship distribution for the safe harbor reasons. Participant submits documentation for medical expenses (say $1,000) and also to prevent foreclosure (say $10,000). Asking for $11,000 in one distribution to cover both. Is that permissible? Assume the plan language doesn't speak to that. Thank you.

Ok, thanks.

Thanks. More than anything I wanted to see if anyone knew of any rules/regulations out there that said a plan cannot provide loans from amounts rolled into the plan.

Participant has an account in a money purchase pension plan and an account with a 401(k) plan. Participant meets the requirements for a lump sum distribution from the MPPP. He takes the lump sum, and then timely rolls it over into his 401(k). The 401(k) permits loans to participants. Can the participant use the amount rolled over into the 401(k) for a loan? Assume he meets all the other requirements for a loan under the plan document but the plan document doesn't speak to whether a participant can use money rolled into the 401(k) plan for a loan. Thanks.

Defined benefit plan has a provision that says that if a participant dies before retirement, his/her beneficiary can elect an alternate death benefit instead of a Qualified Pre-Retirement Survivor Annuity. The alternate death benefit is a lump sum payment of 100% of the contributions made to the Plan on the participant's behalf. If a beneficiary chooses the alternate death benefit, is the plan's administrator required to withhold any taxes on the payment? If so, how much? Thanks.

Plan document says that, among other options, a participant can elect nearly equal installments over a specified period of years (with remaining payments to a beneficiary if participant dies before full distribution), or non periodic installments. My base question is, when do payments rise from the level of being nonperiodic to becoming periodic? A participant wants to receive $1,000/month. But, he wants it to be subject to change (like if he needs more or less for a specific time period). Can the participant go the Plan each month for a distribution? Or would that rise to the level of periodic? Or am I just reading way too far into this? Thanks.

Defined benefit plan governed by ERISA. Currently, an employee becomes a participant in the Plan once he/she works "x" hours in a year. Once he/she is a participant, he/she gets a Year of Vesting Credit for each year that he/she works "y" hours. Can the Plan be amended to say that, after the effective date of the amendment, any new employee must work "a" hours in a year (with "a" being more than "x"), and then that employee must earn "b" hours each year to get a Year of Vesting Credit (where "b" is more than "y")? In other words, can a plan be amended to require more hours to become a participant and get a year of vesting credit for new employees while still keeping the old rules for current employees? Thanks.

I have a multiemployer H&W Plan ("Plan 1") that terminated earlier this year. All the participants became covered by a different plan ("Plan 2"). Retirees were covered under Plan 1 and the amount they had to pay for coverage was pretty cheap. Retiree coverage under Plan 2 is much more expensive. When Plan 1 terminated, after paying claims, there was still a good chunk of money left. The Trustees decided to use that money to pay part of the retiree coverage in Plan 2. The idea was to pay part of it for a year, thereby giving retirees a year to figure out what they wanted to do (exchanges or buy their own plan) and to plan ahead for the increased premiums with Plan 2. However, Plan 1 is now pretty much out of money. Right before Plan 1 terminated, there were a couple out of the blue large claims that killed a lot of assets. We didn't find out about them for a while just due to the lag in claims being submitted. So, it looks like Plan 1 is not going to have enough money to continue paying the retiree coverage for the full year that it promised. My question is, is Plan 1 required to give notice to the retirees that it will not be paying the amount? If so, how far in advance does the notice need to go out? Keep in mind, Plan 1 is not paying claims. It is merely providing a subsidy to the retirees to help them pay their premiums to Plan 2. Plan 1 does not pay any benefit claims anymore. Thanks.

Thanks all. It's a multiemployer plan in that it is collectively bargained with a labor union. I have several different plans like this. Some say beneficiary must take it in a lump sum right away and some say the beneficiary has all the options as a participant (except the QJSA). My problem is that I've received guidance from some people who should know that (1) anything but a lump sum is prohibited by the law; and (2) you can offer whatever you want. In other words, I'm getting some conflicting advice. I wondered if anyone had ever run into some true authority from the IRS either from an agent or from a rev. proc, PLR, or Code/Regulation section.

Multiemployer defined contribution plan qualified under 401(a). Unmarried participant dies. A proper beneficiary designation form was completed naming the participant's sister as beneficiary. Can the plan have provision stating that the beneficiary can leave the money in the plan and elect any distribution (other than a QJSA) that the participant could have chosen? For example, lump sum, periodic installments, non-periodic installments. Or, does ERISA or the Code require that the plan state that the beneficiary must receive a lump sum or roll the money over to his/her own IRA? I have recently heard conflicting advice on this. One very large investment house remains adamant that the plan MUST distribute the money in a lump sum to the beneficiary. They said that the plan is there for participants and alternate payees only. I had another person say that, no, the beneficiary can leave the money in the plan. Have any of you ever dealt with this? Thanks.

Yes, very touchy subject. I believe the Plan's benefit application requires a signature attesting that the participant's intent is to retire and not return to work.

Thanks all for your responses. I failed to mention this is a multiemployer plan. Sorry about that. We run into this issue more for people who retire prior to normal retirement age. For example, if a plan has a 30 and out benefit, or if an early retirement benefit is heavily subsidized. I know PLR 201147038 talked about people taking advantage of an early retirement benefit solely to lock in benefits, then return to work the next day, or soon thereafter, with their benefits being suspended under 2530.203-3. I just wanted to see if you guys knew of any prohibition to the 90-day rule for someone who is at or over normal retirement age. Thanks again.

Plan says that in order to receive a retirement benefit, participant cannot work for a contributing employer for 90 days from the effective date of the participant's retirement. So participant retires from Employer ABC on January 1, 2016 at age 65 (the Plan's normal retirement age). Per the Plan's rules, participant cannot go back to work for Employer ABC for 90 days. On day 91, participant can go back to work for Employer ABC. Assume normal suspension of benefit provisions aren't applicable. Is the 90 day provision permissible? Thanks.

I didn't think it would be necessary (and really hoped it wouldn't be). Now, these are individually designed plans, if that makes a difference. Though I doubt it. I just wasn't sure if this would be considered a totally new plan that would need a DL.

Money purchase plan Trustees want to convert to a profit sharing plan. No other significant changes. Really want to do it so they don't have to credit participant accounts if there's a delinquent employer. Also may want to allow for hardship distributions. Anyway, I know that a 204(h) notice must be timely distributed and that the MPPP assets have to keep their MPPP character (so there has to be separate accounting). But the biggest question I have is, does the "new" plan have to file for a determination letter, especially considering the new determination letter rules? Thoughts? Thanks.

Plan wants to add hardship distributions, but the Trustees want to limit the number of times a participant can take a hardship. For example, a participant is allowed a maximum of 2 hardship distributions total. In my experience, a Plan can make the hardship distribution rules pretty much whatever it wants, especially if it limits the hardship options to the safe harbors contemplated by IRS regulations. But I haven't seen any regs saying if a Plan can limit the number over the Participant's time in the Plan. Is there anything that would prohibit the Trustees from adopting such a provision? Thanks.

What if the Plan is a money purchase plan? Can the plan treat the unrecoverable delinquencies as a plan expense and credit the participant's accounts as a plan expense?

Question 1: Plan is a multiemployer DC plan classified as a profit-sharing plan. Employee contributions are not permitted. All contributions are from employers only as dictated by a Collective Bargaining Agreement. Can that plan allow hardship withdrawals? Question 2: Assume that the Plan can add hardship withdrawals. It adds the safe-harbor hardship withdrawal language effective July 1, 2016. Are participants able to access their entire account balances come July 1? Or is it only on money that is contributed on or after July 1, 2016? Thanks.

Defined benefit plan subject to ERISA. Is there guidance out there, or has anyone ever dealt with, the proper amount of investment diversification for a defined benefit plan? For example, a $13MM fund. Is there anything out there that says how many different investment types the Plan should have? Or is it left to the discretion of the Trustees? Thanks.

Defined benefit plan. Participant has 9 years of vesting service. Plan has 5 year cliff vesting. Participant is unmarried and dies without having ever listed a beneficiary with the Plan. He does have several children, though. But, again, never filled out a form naming any of them as a beneficiary. Plan administrator is saying no benefits are payable. Is that correct? If not, to whom should benefits be paid? And when? And in what amount? Assume the Plan document is silent. Thanks.

Multiemployer health plan is terminating. Plan has already notified participants and Plan amendment has been approved terminating the Plan. Plan's Trust Document gives Trustees authority to terminate. Does anyone have any experience with this, specifically as to what governmental filings are required? Are there government agencies that must be notified? I know the Plan will need to file a proper tax return (Plan's auditor taking care of that). But is there anything more? I just want to make sure the Plan isn't missing anything. Thanks.

Related question. Participants in the National Guard have 2 weeks of training every summer. When they are engaged in that training, are they covered by USERRA? In other words, does an employer have to make contributions to both the defined benefit and defined contribution plans for those 2 weeks? Or is that not considered "active duty" for USERRA purposes?

A health plan terminated effective Dec. 31 and its members all joined a new health plan on January 1. A participant went into the hospital on December 30 and was discharged on January 2. What plan is responsible for those charges? And why? Thank you.

Thanks all. AndyH, to your point, that's something we thought of. However, the Plan stated that the only way to defer commencement was through written instructions. Later, the Plan was changed to say that if you didn't take the benefit right away, that was a deemed election to defer. But fund counsel didn't think that was applicable considering the timing of when the person went inactive, hit retirement age, etc. Thanks again.

Ongoing multiemployer defined benefit plan (so not terminating). A Participant vested in a benefit over 30 years ago, then left and was never heard from again. Assume for the sake of argument that the Plan's administrator did what it was supposed to do in trying to locate him, but to no avail. Well, the guy just surfaced and is applying for his benefit. Per the terms of the Plan, benefits commence 60 days after the close of the Plan Year in which the participant turns 64 unless the Participant elected otherwise. Obviously, that did not happen. So, for this guy, his benefit should have commenced in 1998. He turned 70 1/2 in about 2003 or so. So, my question. I'm assuming that we now pay him his benefit retroactive to 1998 when his benefit should have commenced. But, do we need to do anything regarding the RMD that was missed? Or will that be encompassed by the fact that we're paying it back to when he was 64? I know there are big tax consequences to the Participant if he doesn't start the RMD when he's supposed to. I'm considering going through EPCRS (just considering it, not definitely doing it). Your thoughts? Anyone go through this? Thanks.