EPCRSGuru

Wow. Assuming this is a participant-directed plan, at the very least this appears to violate the fee disclosure regulations, which state that participants need notice of a change at least 30 but not more than 90 days prior to the effective date. There is an exception for "unforeseeable events" but I would hardly think this qualifies--the Vanguard change was announced well in advance. Unfortunately, the requirement seems to fall on the Plan Administrator, who would suffer the legal consequences of non-compliance.

Participant specifically elected a benefit that provided an annuity for his lifetime and 50% of that benefit to his spouse if she survives him. He had the option of electing a single life annuity or a lump sum distribution with spousal consent, and did not. He completed forms, checked 4 boxes, selected the annuity starting date, and entered the required information about his spouse. There was nothing automatic about this process. We have sent him our claim procedures and invited him to file. This is going to be my first claim in 12 years. We are curious to hear his reasons for wanting to make the switch. As for the DOL benefit advisors who take participant complaints, I can tell you that they are very, very thorough. I once had to provide massive amounts of documentation to prove that an early retirement benefit enhancement program did not exist. Apparently some nameless supervisor might have hypothesized that an early retirement incentive program might someday be offered, and this participant was off to the races. Cue a DOL inquiry that I had to respond to with payroll records, plan documents, SPDs, SARs, benefit election forms, previous letters to participant saying that such a program did not exist and was never contemplated, AND a copy of his benefit calculation. Another DOL inquiry was to prove that working fewer than 200 hours of service in any of the applicable eligibility computation periods did not qualify as working 1,000 hours or more, which is what the plan requires for entry. DOL complaints seem to have picked up--don't know why.

I wish it were that simple. When I say "stubborn" I mean beyond the point of all reason.

I have a stubborn married person who wants to retroactively rescind his election of a J&S annuity to get a lump sum. Obviously the answer is no, no, a thousand times no, but I am having trouble getting through to him. Any suggestions?

Attorney advice is appropriate here. An attorney of my acquaintance has recommended what he calls the "impossibility standard." We use it from time to time when people who have no children elect a dependent care FSA instead of a health care FSA, elect a pre-retirement survivor annuity when they are unmarried, etc. I would think your example would definitely qualify as impossible!

Google "sham termination". It is edifying.

Given the level of expertise on this Board this info might be too basic, but you can apply to the Social Security Administration to have limited access to their online database to confirm a SSN. Once authorized, you can input name, DOB and SSN and immediately find out if the SSN is valid for that participant or not. It will not give you a correct SSN, will just confirm or reject one you already have. You can also batch process large numbers of SSNs, which is helpful for ACA reporting for covered dependents. It is called Social Security Business Services Online. In this case it will give you "official" proof that the SSN you have for this employee has not been legally assigned to them. Tangentially-related stories--we had an employee who, when preparing for his retirement, wanted to know why his "prior service" was not included in his pension. We had no record of prior service despite excellent records going back many decades and asked him for details. He claimed we had employed him many years ago under a fake name and SSN when he was in the country illegally. We did have a record for someone with that name who had been fired for job abandonment, and we told him if he could provide records (leases, utility bills, pay stubs, or anything else) that could plausibly link him to that name and address/SSN, we would give him prior service credit. That was the end of that. We also had a participant whose 401(k) enrollment kicked out of the recordkeeper's system since another client's employee had the same SSN and the SSA confirmed that our employee was not the legitimate holder. Of all the SSNs available, how unlucky for him that he had to pick one that was already associated with an account at that particular mutual fund vendor. And before you ask, it turns out that the company that did our background checks only checked to see that the SSN had been officially issued and had not been reported as deceased. They did not take the additional step of making sure it belonged to the person who was using it. We have since fixed that.

Don't know where you are located, but New England has an agency that has been in business for decades called BTHR Solutions (formerly Bene-Temps). https://bthrsolutions.com/ My company uses them for open enrollment, covering longer absences, etc. and have hired a number of their temps are regular employees. They offer their staff benefits including a 401(k).

Yes, the required refunds have been made so the money part is OK. But the contribution (and earnings, if any) did not come out of the plan as a distribution to the participant with a 1099. The $750 came back to the company and went back to the employee through the payroll system in 2021. The accounting records look as though the extra $750 never happened unless you look deeply. And yes, CuseFan, I agree that there is a bigger problem than just the limit. It is also unclear how the extra $750 was contributed in the first place because normally the payroll system cuts people off when they hit the maximum for their age.

Posting for an ex-colleague. Their company is paid bi-weekly and had 27 pay periods in 2020 instead of the normal 26. One of their payroll people miscalculated their own 401(k) contribution, intending to contribute the maximum $19500 over 26 pay checks, but instead overcontributed by $750 because of the extra paycheck. But instead of having the excess paid to them out of the plan like you are supposed to, the payroll person took it upon themselves to adjust their own W-2 and adjust their own paycheck so that they could get the money back from the employer instead of taking it out of the plan. No 1099 issued, no earnings on the excess. It is a large company and no one is likely to notice but my colleague thinks this is a problem. I am being careful not to express my opinion but I sure know what I think. How big a problem is this, if it is?

Cash balance plan (employer investment management) with additional defined contributions to a participant-managed investment account. Both based on a percentage of compensation. No participant contributions. Don't know the dollar amounts yet but these are not highly-compensated people and the amounts are not likely to be large from an employer perspective, and definitely want to do the right thing for them. Wish I knew why it took until now to decide they were underpaid or their jobs were mis-classified or whatever happened.

We have two employees who retired in December 2020. Shortly before their retirement, their pay rate was adjusted retroactive to JUNE, 2020 but the compensation is only being paid to them now, in late March/early April. This is after the 2 1/2 months referred to in the regs. The payment is regular compensation for services performed during their normal working hours and in all respects meets the definition of compensation under our plan, The payment would have been paid to the employees prior to their severance from employment if the employees had continued working, BUT The payment is not being made by "the later of 2½ months after severance from employment or the end of the limitation year that includes the date of severance from employment with the employer maintaining the plan." Our limitation year is the calendar year. I believe this means that the employer cannot make corrective contributions to their accounts to reflect the retroactive pay change. For the sake of equity, we would probably make a compensatory payment outside the plan but I think the participants would prefer a contribution. Any thoughts, anyone?

OMG Lance!!! I deleted my original account on this site because of him. He was really something.

I suspect that this is not purely a legal question, but also a question about what is the right thing to do. Having said that, my (large) employer did a comprehensive revision of its 403(b) plan investment lineup in September of 2010 and in 2018 we still had very senior people calling asking very irately what we had done with their account in Mutual Fund Company X, and how dare we. And our communications included letters, brochures, emails, and in-person and online meetings. I feel your pain.

I work in HR and have an account with the SSA for their Business Services Online service. There was a lot of paperwork to get access to it but once I did it made my life tremendously easier. We are decentralized and we do find typos in SSAs from time to time, not to mention the occasional fraudulent number. https://www.ssa.gov/bso/bsowelcome.htm A few years ago, I volunteered to help our health and welfare people with their ACA reporting when the IRS kicked out hundreds of our submissions, claiming that the SSNs were wrong. When I submitted the so-called "bad" SSNs to the SSA online they all came back as correct. IRS was clearly wrong and I would not rely on IRS-provided info.

Ok.... On line 6(f) of the 2019 5500 (total participant count) we reported 26,988 participants, which is correct. BUT on line 6(g) (participants with account balances) we reported 988. Obviously a brain freeze on the part of the filer. It is not a small plan and it has over $1 billion in assets. We have a difference of opinion--it is worth amending? I think it is a red flag to have such a discrepancy between participants and the number of account balances.

I am a big fan of PBI and have used them on a number of occasions for special projects in addition to their weekly death reporting service. Their customer support is outstanding.

Wow, Peter, thank you very much!

Has anyone yet come up with a creative solution to the problem of obtaining spousal consent for a distribution when a) our offices are shut down for the foreseeable future and b) participants and spouses are reluctant to leave their homes to see a Notary? Zoom-witnessed signatures with identification, for example?

Three of my plans incorporate 401(a)(9) by reference and at first glance I don't think I need an amendment, but, surprisingly enough, I am getting pushback from management who does not want to change the RMD rules for our plans. Can anyone think of any good reasons to retain the age 70 1/2 required beginning date?

I am not a health and welfare person but am very curious--can't anyone be named as a life insurance beneficiary regardless of relationship? I can see why there are strict requirements for something like medical coverage, but why does the life insurance company care. (And kudos to that employee!)

My understanding is that the timing is the same (30-90 days in advance) regardless of whether there is an increase or a decrease. However, I understand the DOL recognizes that there are some cases in which that much advance notice is not possible, and in that case notice can be provided as soon as reasonably practicable. The example the DOL uses in that case is one in which an investment is eliminated because it is no longer prudent. This is not exactly on point, but FWIW we have sent change notices after the fact when a vendor has retroactively reduced quarterly fees. We felt that the fiduciary's responsibility for keeping participant fees/expenses as low as possible outweighed the advance disclosure requirement. (I hope I am right!)

Agree with ratherbereading, but also, are there any corporate actions (such as something in Board or Trustee meeting minutes) evidencing their intentions? How has it been communicated the participants? Has the payroll system been updated to accept the contributions? If implementation steps have been taken I believe it is OK.

I will be interested in the responses from people more expert than I, because I had similar questions. I was never able to find samples or much helpful information. We decided to take the opportunity to create a nice marketing piece that encourages people to defer. We send it out every December and include the updated 415 maximums and contribution limits. We send it to all eligibles, whether or not contributing, and explain the logistics of enrolling and changing contributions. It seemed like a chore at the beginning but it turned out to be very effective and fun to create.

Thanks to you both. Was this really effective in 2007 and I missed it somehow?