My 2 cents

Is this completely defensible under the standard ERISA fiduciary rules? Has sufficient research been performed to ensure that the investment is safe and suitable for the plan participants? Who would want to invest in something like this (excluding anyone possibly having a financial interest in the alternative investment or the LLC, which cannot be used as a reason for offering the investment since it would represent self-dealing and presumably violate the fiduciary rules if not a prohibited transaction)? Aren't there safer investments that have potential returns adequate for purposes of a 401(k)?

It is my understanding that the fractional rule won't work for cash balance accruals. You probably have to satisfy the 133% rule. It is my understanding that passing the accrual rules in a cash balance situation is limited to comparing the current or any future plan year's expected accrual (expressed in terms of a monthly benefit payable at a given future time, presumably as of Normal Retirement Age (such as 65 - none of that fakery of saying that NRA is the completion of 3 or 5 years of service without regard to age) to that of any subsequent plan year, and being able to demonstrate that all such comparisons come in with the later year's accrual not exceeding 133% of the earlier year's.. It is a basic fact of the process of determining whether a plan meets the accrual rules that it is utterly irrelevant how one got to the current accrued benefit, especially when using the 133% choice. Passing the accrual rules only involves comparing accruals for the current and future plan years.

Plans not subject to ERISA (such as governmental plans) are not subject to ERISA's spousal consent requirements, but if the state requires it (or there is spousal consent language in the plan document) then spousal consent might be required. Non-governmental plans are generally subject to ERISA's spousal consent requirements. Irrespective of issues concerning spousal consent, nearly all (all?) pension plans must carry out the provisions of QDROs, which are not automatic when the participants divorce. Further, I don't think that divorce must occur for there to be a valid QDRO, but most QDROs are issued in the divorce context. Perhaps a suitable court DRO should be sought in some separation cases. The primary burden for obtaining a DRO falls on the non-participant claimant. Obtaining a DRO after the death of the non-participant spouse is somewhat unclear. The biggest justification for QDROs is to provide for the support of dependents (i.e., the divorcing spouse), but under some circumstances there ought to be an equitable division of the pension. Whatever option the participant selected, there could be a DRO issued to direct that a portion of each monthly payment be diverted from the participant to the alternate payee without disturbing the elected option.

Surprising what people born in the last 40 years (hey, that's consistent with the person having been a co-worker for 15 years!) have never heard of. I myself am trying to get over the idea that "All the Single Ladies" is now considered an oldie. Inconceivable? You keep using that word. I do not think it means what you think it means.

Isn't it the job of the auditor of the TPA firm to ascertain whether the TPA firm is really doing what they say they are doing? The auditor may be willing to accept the Relius SOC1/SOC2 statements as evidence concerning the controls as followed by Relius, but if the TPA firm claims they are doing everything using Relius, the auditor should be verifying that. So even if the TPA firm is trying to fraudulently claim Relius's controls as their own, the auditor should be able to learn that it is not so. Otherwise, what use is the entire process?

Are there prohibitions against self-dealing under SDBAs? Like using account balance assets to buy into strip malls where the participant has an economic interest? Just wondering.

That older thread is really pretty old - it's from almost 20 years ago. Maybe some of the rules have been clarified a bit in the interim. As noted by ESOP Guy above, it appears to echo the idea that a minimum investment set at a level too high for most non-HCEs to access would probably be a discriminatory BRF.

And if the participant does and asserts that the balance is correct, would the account then be promptly paid out? Plus, it is not just one participant - there have been a number of claims that are not being fulfilled.

Sorry, but I cannot imagine that it could possibly take anything close to a year to have resolved this if the sponsor were making a diligent (which encompasses the phrase "money is no object") effort to establish what the account balances should be. The issues date back at least to August 2016, when claims that had been submitted were put on hold. The sponsor should have brought in one of the big national accounting or consulting firms to work on solving the problem. It sounds as though the task is more than the sponsor can handle without expert professional help. So expert professional help is necessary. If that's too expensive, then the sponsor should just throw in the towel and pay out the accounts requested on an as is basis. Embezzlers don't generally travel in packs, so absent something clear, it must be assumed that the participants are all entirely innocent. Remember, the participants are not obliged to search for and report discrepancies in their favor. Who was responsible for handling recordkeeping for the plan? I am still trying to figure out how anything like this could be subject to arbitration in the first place. No arbitrator would attempt to recalculate the true account balances. What issue would there be that would be arbitrable?

Suppose you are talking about a traditional defined benefit plan converted prospectively 2 or 3 years ago to have all new accruals under a cash balance formula. A participant with 20+ years of service has a grandfathered traditional benefit of $20,000 per year (worth $200,000) and a cash balance of $15,000. It is my understanding that one can pay up to half the value (assuming the PBGC guarantee limit is not applicable) in an accelerated form. If the annuity forms for the traditional benefit are not subject to restriction, it would be acceptable to permit the participant to cash out the $15,000 and take the rest as a non-accelerated annuity. The 436 limits do not apply to components separately. Of course, the answer would be different if the amount subject to cash-out was worth more than half, the traditional benefit could be taken in a form subject to 436 restrictions (i.e., as certain only or level payment options) or if the AFTAP were below 60%.

If, for argument's sake, all plan participants could in practice avail themselves of the investment but only the HCE chooses to do so. If adequately communicated and the minimum amount requirement is not burdensome to the rank and file participants, then there would presumably be no problem. Of those entering as new employees, how long does it take to accumulate enough to participate in that fund? There is a huge difference between a fund with a $1,000 minimum and a fund with a $25,000 minimum investment.

I imagine that an investment option with a sufficiently high minimum investment would not be acceptable under the non-discrimination rules. Why should it be? It is almost obvious that the rank and file are being excluded. Solution is probably for the HCE to invest after-tax money, outside the plan. The whole idea behind non-discrimination rules is that the plan is NOT to function as a tax-favored individual savings vehicle for one or more HCE's. If you want to play the game, you have to make it so that everyone else can do so too.

I am pretty sure that governmental plans, invariably exempt from all or most of ERISA and much of the Internal Revenue Code, never have to file 5500s. 5500s are required under ERISA.

Just wondering - wouldn't the TPA be obliged, under the applicable federal laws, to have an independent audit performed of its own practices and controls? Shouldn't an independent auditor have to scrutinize the TPA's controls with respect to the processes they follow? Just wondering also - would pointing to someone else's control analysis as though it took care of everything they do when they do not actually do things that way be some kind of fraud?

How would this differ from any other gambling enterprise? How could they not be taxable to the recipient the way that Super Bowl pools are? Yes, I know - who ever puts Super Bowl pool winnings on their 1040? Worry more about whether there are legal issues concerning running such a contest in the first place.

Just wondering - have you made clear to the non-responsive participants that no response means "buy me an annuity"? I still think that, for a sufficiently loaded-up premium, you should be able to find someone who will sell an annuity that involves deferral of benefits with a potential lump sum payout. If people actually want a deferred annuity, there is no alternative but to get them one, at whatever price is needed to obtain the offer.

1. Why do I have difficulty believing that the DOL or PBGC actually suggested going back to participants to ask them to change their elections? I would think that a better choice (such as it is) would be to offer a special cash payment outside the plan (to avoid discrimination issues) to the participant (and spouse!) to take a lump sum instead of an annuity. [Don't say it - bribe is such an ugly word!] 2. If you could buy individual annuity contracts to cover those who the PBGC would not accept for the missing participants program, how could the PBGC possibly have any objections? The DOL may want to make sure that fiduciary processes were followed in selecting the individual annuity provider, but they would have to judge safety with respect to the companies offering to sell the annuities. So what if there are much stronger companies if they won't sell the deferred annuities you need to buy? "Safest provider" is measured exclusively by comparing those companies willing to sell, and if there is only one such company, then (perforce) it must be the safest.

Wouldn't the employer trying to keep people from earning vesting credit be illegal?

That is a good idea in any event, but as ESOP Guy said, being frozen does not excuse a plan over 100 participants from having to get an auditor's report to attach to the 5500.

Is it not the case that if a participant with a benefit worth more than $5,000 wants to defer receipt, then a deferred annuity (preserving all plan benefit options and factors) must be purchased? Sure, it will be unattractive to an insurer, but you still have to find one to sell you such an annuity, and (as any government official will tell you) money is not really a consideration. The people who did not answer will either be unresponsive with known whereabouts or truly missing. It is my understanding that the former should be treated as though they elected deferred annuities and the latter can be turned over to the PBGC under their missing participants program.

Don't the PBGC regulations require that provision be made for such participants (if a defined benefit plan subject to PBGC jurisdiction)?

Rollover or cash payment, a 1099-R should have been issued. I agree with saying it was distributed.

One cannot provide administrative services without having a means to send emails secure. Just cannot be done.

Why not use some version of secure email? Anyway, faxes are so 1980's!

I don't work on ESOPs. Is Excludedables an ESOP term?