My 2 cents

Is it safe to assume that any increases in compensation will more than cover any increases in the premium? I would expect that a $100 increase in pay would not result in a $200 increase in the premium. Not so? I would not think that a mid-year increase in premium would not equate to a change in status that would allow a mid-year change in election. But I don't practice in that area, so I don't know.

Who will protect the unsophisticated, essentially innumerate 401(k) participants with little or no understanding of economics (who have little hope of a decent lifestyle after they can no longer work outside of their 401(k) plan)? Don't they deserve to have their accounts invested in ways that are solely for their benefit and not for the benefit of overpaid financial advisors? Feel sorry for them and not for those who felt that they could not remain in the business unless they could take advantage of the rank and file participants. Too many investment firms seems to be operating under a mission statement something like "a fool and his money are soon parted, and who better to benefit from that than us?"

Sure, as long as January 1 is also an entry date...

Vesting service cannot be frozen away. Good practice would probably call for granting full vesting when accruals are frozen (to keep there from being any kind of "partial termination" issue), but if full vesting is not granted, it is impermissible to deny ongoing employees the opportunity to grow into full vesting after accruals are frozen. The same is true for early retirement benefits. If a plan had an unreduced early retirement benefit for participants with 25 years of service and the plan terminated when a participant had 7 years of service, any annuity to be purchased would have to make provision for an unreduced early retirement benefit if the participant worked for another 18 years (i.e., the benefit earned for 7 years of service would become payable without reduction if the person remained in employment for 18 years after the plan was terminated and the annuity purchased). One can surely do no less if the plan is merely amended to freeze accruals.

It is my understanding that the ability to grow into early retirement benefits (subsidized or not) is part of the accrued benefit, and that even terminating the plan cannot by itself prevent the participant (if still employed by the sponsor) from growing into being eligible for the early retirement benefit.

Had she promptly taken the money out of the plan and rolled it over to an IRA, by about now they would have passed into legend as far as this plan's Top-Heavy status were concerned. Since the money never left the plan AND she is an employee, those funds probably count against the top-heavy fraction.

Right. So, obviously, if one has 180 days to file with the PBGC, the distribution deadline can easily go past one year after the effective date of termination, even if one is not waiting for a determination letter for the IRS. While things can be done more quickly, they can certainly extend beyond 12 months.

If there is a one-year requirement, it would apply mainly to defined contribution plans, not defined benefit plans (especially if operating under the jurisdiction of the PBGC). A plan terminating as of 12/31/16 has until late June to file with the PBGC and IRS, and the IRS is not likely to issue a determination letter (especially these days) quickly enough to be able to permit the distribution of all benefits by 12/31/17.

Yes, thank you. That seems to come pretty close to the good old days!

My take on this: That could depend on whether there was an eligibility year with 1,000+ hours worked. First eligibility year (presuming hired 3/1/15): 3/1/15 to 2/29/16 Second eligibility year (matters only if did not work 1,000+ hours in first eligibility year): Calendar 2016 (during which did not work 1,000+ hours) Stated that worked 1,000+ hours 3/1/15 to 5/1/16. If worked 1,000 hours in 3/1/15 to 2/29/16 eligibility year, then would become a participant on first entry date thereafter as an employee (i.e., 7/1/17). If did not work 1,000 hours in the first eligibility year, then could not enter 7/1/17 unless plan would permit entry if worked 1,000 hours between 1/1/17 and 6/30/17. If did not (or if plan requires completion of an eligibility year with 1,000 hours), would enter 1/1/18.

What I miss is being able to just see topics that have received posts since the last time I was here. An undifferentiated list of unread posts makes it harder to keep up with the newest posts (and I consider it a disadvantage that when I do look at a post from the list of unread posts, it disappears when I go back to the list and I can't even tell what I am returning from). I liked the old feature that showed threads that have since been updated in bold and those whose latest post was read by me as unbolded. Is there a setting that will show things like that?

If they are working in this country, legally or not, then for coverage and non-discrimination testing purposes, they are NOT "excludible". You must put them in the denominator of the testing fractions, and if there are enough of them, then you will not be able to pass. You only get to exclude employees NOT working in the United States and NOT receiving any US compensation (non-resident aliens with no US income are the ones who may legitimately be excluded for testing purposes). The above presumes that you have no highly compensated employees who are here illegally. I suppose if you could exclude them, it might help the testing. As pointed out above, the employer is guilty of a crime if they employ people who are here illegally. So they ought not to knowingly employ anybody who is here illegally. If employer claims that they are not employing anyone who is here illegally, what sense does it make to explicitly exclude them from the plan? Let us not forget that, whether the employee is here legally or not, the employer MUST pay OASDI taxes on their compensation.

It is my understanding that if someone is authorized to work here in the United States, they can obtain a Social Security Number. To the best of my knowledge (and I just tried to look this up on a Social Security website), there is no requirement at all involving being a citizen or owing allegiance to the United States. If they are here to work, they can and should obtain a Social Security Number. And (as the website pointed out) there is no cost to do so.

Is it possible that the proceeds, which are with respect to overpayments made by or on behalf of the participant while the participant was alive, would be payable to the participant's estate, and not to the beneficiary at all?

My thoughts on this: 1. Unless the intention is to roll all amounts over to an IRA, every penny of every payment is taxable as ordinary income anyway. Not withholding the 20% just makes it that much harder to come up with the cash later to pay the taxes owed. The 20% withholding is not a tax, it is an advance tax payment. Wanting to get a distribution without making sufficient provision for withholding of the taxes that will, almost certainly, have to be paid strikes me as foolish. 2. This is all prior to the age at which minimum distributions are required. Why don't they just roll the entire benefit/balance over to an IRA? Are withdrawals from IRAs subject to minimum withholding? 3. I suspect that a varying percentage of a varying balance is not going to meet the requirements for being substantially equal.

When the IRS says "resident alien", the term has a specific meaning. Is it permissible for a pension plan to use a conflicting definition of "resident alien" or must the term encompass someone if and only if the IRS would consider that person a resident alien? Isn't the burden of determining whether an employee or a potential employee is here legally on the employer?

While it can be argued that allowing the alternate payee to elect a joint form with the alternate payee's new spouse as joint annuitant would not "affect the Participant's separate interest in any way", I suspect that the exception in 414(p)(4)(A)(iii) that permits the plan to not allow the alternate payee to elect such a joint form is there because requiring that the Participant stand by and watch the ex-spouse elect an option that benefits the (to use an old-fashioned term) home wrecker to whom the alternate payee is now married, using benefits that the Participant had in fact earned, could be highly offensive to the Participant.

Are you sure that it doesn't say that the option cannot be a qualified joint and survivor annuity with the alternate payee's spouse as the spouse? If the plan allows the election of a joint and survivor option where the joint annuitant is not restricted to the spouse, it's a bit shakier to prohibit selection of a joint form with the alternate payee's current spouse as joint annuitant. However, wouldn't it seem a bit questionable to require the participant to forego some of his or her benefits in order to not only pay benefits to the ex-spouse who left them but also to provide survivor benefits to the person who stole the spouse away? As I recall, it is permissible to restrict such options with respect to the alternate payee, at least under some circumstances.

His mother is threatening to evict him for non-payment of rent? That's cold.

I remember that thread. I think that thread was mostly about whether one could honor an order to pay some of the participant's benefit to a child support agency on behalf of the participant's child. I think that the answer to that question should be "yes" since it is for support of a dependent of the participant. I think the answer here should be "no", since it does not appear that ERISA makes any provision for diverting pension benefits for the support of someone other than a spouse or dependent of the participant (or in rare instances tax liens on the participant).

True that! As usual, what does the plan say?

Sounds like a good time for an interpleader! Give the money (you have to pay the same amount in either case, right?) to the court and let the ex-spouse and the sister fight over it while you go on to spend your time productively.

Just wondering how it happens that you have the responsibility to issue 1099-Rs but don't have access to information concerning reportable distributions? If the 2015 distributions were in any way taxable, isn't it mandatory that the recipients' 2015 tax filings be amended to correctly show the distributions (with interest and penalties probably due)? Whether to use 2015 1099-Rs or 2016 1099-Rs is the least of anyone's worries!

Don't the DOL rules limit alternate payees to a spouse, former spouse, child or other dependent of a participant? Is it said anywhere that benefits payable to a beneficiary of a deceased participant (and this entire discussion is only possible if the participant is deceased) can be diverted to someone else for any reason? Perhaps the plan MUST pay the death benefit to the beneficiary and the child support enforcement agency can do no better than to try to get at those funds once they have been paid to the beneficiary.

If the plan uses the elapsed time method, aren't they required to recognize, as service, periods of severance of less than a year?