My 2 cents

I have little or no involvement with these sorts of thing, but that was one terrific, informative post!

The method to be followed in correcting the error does not depend on whether the participant is a highly-compensated employee or a non-highly compensated employee, does it?

Try this: https://www.irs.gov/pub/irs-drop/n-16-50.pdf

Looks as though it's official (IRS Notice 2016-50) - the mandated mortality rates for 2017 (for all purposes related to the funding rules, including PBGC premiums, and also under IRC Section 417(e)) will be the same as they have been (with one more year of mortality improvements factored in). So there is no longer any danger that minimum funding or minimum lump sums for plan years beginning in 2017 will reflect, in any way, shape or form, the mortality tables and projection methodologies published by the Society of Actuaries in 2014. The use of static tables (no further mortality improvements) will continue to be acceptable at least through 2017 for all ERISA-related calculations. It remains to be seen how future mortality improvements will be taken into account after the IRS tables are changed for 2018 and later years (if future improvements are required at all).

If it is a one person plan with more than enough money to pay for the 415 limit, is there a mandatory taxable reversion to the employer of the excess?

Note that under ERISA (at least my understanding of ERISA), work a year and then have a 1-year break does NOT result in losing the first year. Service is not lost unless the break consists of 5 consecutive years.

Wouldn't the effective date be the date stated in the plan document, irrespective of when contributions started being made? So if the plan were signed in 2014 effective as of January 1, 2014 but no contributions were actually made until 2017, wouldn't the participants have been accruing vesting service since 1/1/14? Presumably, at the time the plan was established, the trust would also have been established, whether or not there were actual funds to invest? And wouldn't, in the example above, 5500 reporting been required for 2014, 2015 and 2016, notwithstanding there having been no assets?

And, of course, spousal consent is required when the plan says it is, even if spousal consent would otherwise not be required. Sometimes, for example, governmental defined benefit plans include spousal consent language, and (even though the plan is not required to follow the spousal consent rules by law) in those instances, spousal consent is required.

Taking the top-heavy contributions to which they are entitled away from the rank and file is what would be "very draconian", not making the owners cough up something for the non-owners.

Not sure about the software for 5500 preparation, but if 5 plans with 5 investment funds merge into one as of a given date, after that date, all 5 investment funds belong to the post-merger plan. Whether the assets are moved or not does not change this.

Just wondering - if they didn't sign anything, does a plan even exist?

Given that I don't personally know whether one can merge a 403(b) plan into a 401(a) plan (can one?), but I wish to point out that the consultant saying that they have merged many 403(b) plans into 401(a) plans should, by itself, give only cold comfort. If it is not permitted, that just means that the consultant has been getting it wrong over and over and over again!

With an emphasis on "fiduciary responsibility", since after the change the plan sponsor would have sole responsibility for choosing the allocation of assets among the various investments!

I don't normally work on that sort of thing, but if the money never left the plan, how could there be a 1099-R? Of course, anything that was reportable would necessitate treating the beneficiaries as separate individuals. Note that for purposes of 5500 reporting, the beneficiaries would count as 1, since their benefits are all derived from the deceased participant. However, if one of the 5 was covered by the plan as an employee as well as being one of the beneficiaries, that person would have to be counted twice (once on account of their own benefits and once as part of the 5-headed beneficiary).

Many plans contain language making a benefit election irrevocable once it commences. Most plans (not all) that permit the election of a joint annuity option do not require that the joint annuitant be the participant's spouse (but do require spousal consent if there is a spouse). Is there any question as to whether the annulment predated the annuity commencement? If it was granted later, nothing needs to be changed. If the plan contains any language indicating that form of payment elections are irrevocable once payments start, the plan administrator could presumably deny the request and be on solid ground. Anything that happens subsequent to benefit commencement (death of joint annuitant or annulment) cannot change irrevocable to revocable.

It has been my experience that plan years and fiscal years sometimes do not match. In fact, they appear to differ fairly often (perhaps as often as not). From this I conclude that it is permissible (logical, no?). Working primarily within the defined benefit sphere (where the deduction limits are often so high as to be irrelevant), the impact is mainly in having to perform funding valuations as of one date and the accounting valuations under ASC-715 as of another. The carefully gathered census data as of the funding valuation date may be used (with suitable adjustments) as of the end of the fiscal year without the need for a second annual data collection.

Now, maybe, but how about plan provision requiring that vested benefits be paid no later than NRA? Or RMDs? Suppose you want to terminate the plan. Do you think it will be easier to find people you haven't heard from in 15 years? Besides which, is there any kind of per person per day penalty for failing to distribute SARs? I have to ask because, working on defined benefit plans, it's been years since I had any involvement with SARs. And what about mandated periodic account statements. Is there a penalty for not getting them into the hands of participants?

Sounds like it's time to contact someone in a responsible position at the IRS (i.e., not the sort of person who reseals a filing and just sends it back!), without waiting for something adverse to be issued. You have the certified mail receipt - include a copy and say that it proves that the filings were sent to the right place and received on a timely basis, and you want the IRS to acknowledge that to be true, in writing, so if you receive any late filing letters, you will have a letter from the IRS to send back saying they were timely filed.

Putting returned mail in boxes is totally unsatisfactory. The plan administrator has a fiduciary and statutory obligation to get all required notices into the hands of the participants on a timely basis. Failure to do so would, properly, subject the plan to penalties. As the DOL has recently emphasized, the plan administrator has an affirmative duty to conduct a diligent search for everyone whose current whereabouts are not known. Returned mail is evidence that you don't know where someone is. Returned mail = affirmative fiduciary duty to hire a search firm (or at least start contacting known family and associates) to find the person. Out of sight, out of mind is a violation of ERISA and the Internal Revenue Code if one is talking about terminated participants with vested rights.

There is probably a big distinction between small plans (set up, for example, as a way to create tax-favored savings for modeling fees earned by children) and large plans (for example, chain supermarkets hiring 14-year old baggers). The former kind of plan would presumably not regard special procedures as unduly burdensome, while the latter are probably able to cope fairly well with relatively small additional administration resulting from covering legal minors. Would the children appearing in advertising circulars for department stores be considered employees of the department store (or chain) or would they be considered employees of the talent agency retained to provide models? I don't think that they could be considered as either employees or even leased employees of the store. They might even qualify (legitimately!) as independent contractors, fully excludable from the department store's plans by virtue of not being employees at all.

I am not involved with 401(k) plans, but the defined benefit plans I see all have provisions concerning payment to minors or otherwise incompetent persons. I can't imagine any retirement plan of any sort would lack such a provision, so should have procedures for handling those situations already in place.

Agreed - in a domestic relations order, "earned" while married is secondary in the allocation of the pension benefits. If necessary to properly provide for support of dependents, the entire pension could be in play, however much may have been earned prior to the marriage.

Fairness and equity, while presumably taken into account in establishing the division, are nowhere to be found in the requirements for a QDRO. QDROs giving 100% to the alternate payee can be acceptable. Equal divisions, while often used, are not automatic. This is not a matter of calculating what is and what is not community property (where the end results are based on portions earned during the marriage, distinguishing between what is separate property and what is not). As noted in one of the posts above, it comes down to what the parties can agree to and whether it is structured in a way that can be administered and that violates none of the requirements for a proper QDRO (such as verifying that the order does not result in the plan having to pay a more valuable benefit).

Is there any responsibility to protect against the participant essentially defrauding the potential alternate payee by clearing out the account? Interesting item I saw over the weekend in an article saying what NOT to do if you win Powerball. In the section that may be relevant here, someone won $1 million in a California (I think) lottery then promptly filed for divorce without mentioning the lottery winnings. They came out during the divorce process and THE COURT GAVE ALL OF IT TO THE SPOUSE. How well do you think it would work out if a participant is going through a divorce and the plan administrator is told about it but allows the participant to cash out of the plan? Any chance of the plan having to pay twice?

But most participant treat the SPD like junk mail, shouldn't it be sent bulk rate? I think mailing the SPDs certified is a bit over the top, but I do agree first class seems reasonable. The SPD being treated like junk mail is a big problem. That is the sort of thing that leads to lost participants, failure of people to claim benefits on time, etc. The DOL's nose is out of joint on that issue (as it should be). Recognizing that sending in a way that would require signatures would probably be prohibitively expensive, that is the sort of thing that points towards requiring a recipient signature. Pay me now or pay me later - no expense can be spared, after all, to try to find each and every participant when benefits are coming due.