My 2 cents

Maybe the bank thinks the year is 1816. Is a requirement like that still legal anywhere in the US?

I think it is something like March 31st, but I am not sure. Wouldn't failing to use up the entire account have some sort of impact on the individual taxes due April 15th? If so, how could one submit claims way past then? By submitting claims, are you restricting it to the submission of claims for 2015 services, or are you looking to submit claims incurred in 2016 to use up any balances remaining from 2015? That might even be permissible, but again, not sure.

Yes, this is a new discussion. It has nothing to do with the Mr. Green discussion. This one involves the Alternate Payee's claim for 50% marital share based on the fictitious Single Life Annuity amount and not the Stream of Payments Mr. Smith is actually receiving. Equity demands that the second spouse have much of her so-called "rights" ripped away from her. The rights of the first spouse prevail over those of the second spouse, based on the court order (the divorce settlement) issued at the time of the divorce. If it is not possible to void the election as made, it should be determined how much should have gone to the ex-spouse based on the divorce settlement, both before and after the death of the participant, and the ex-spouse should receive that, even if the post-death payments have to come out of the second spouse's survivor benefits under the election as made.

I am pretty sure that things don't work that way when the plan is limited by Section 436. Example: Participant's total benefit is worth $8,000 and the plan (normally) allows lump sums at termination of employment. According to my recollection of the Section 436 regulations, the participant can now take a lump sum of $4,000 (50% of the total benefit, assuming AFTAP between 60% and 79%) but must either defer commencement of the remainder or take the remainder as a non-decreasing benefit payable for at least the participant's lifetime (notwithstanding the remainder being worth less than $5,000). I cannot recall whether the IRS has issued anything contrary to that gray book question since 2003 taking a different position (or affirming it) when Section 436 is not affecting distributions. Perhaps that sort of thing is one of the reasons that the IRS has sworn off participating in the gray book process.

I am sure that it is a great comfort to the "infinity payers" that they will be able to stop after all of the participants and beneficiaries have died! Reminds me a bit of Wagner's Flying Dutchman, condemned to sail the seas forever, longing for the end of the earth when there will be no more oceans.

It's one of those "You had to be there" kinds of things!

First question is why was Smith permitted to ignore the earlier settlement agreement when he retired? I know what you are going to say - that the first Mrs. Smith had not gone to the trouble of reporting the court order (a settlement agreement in a divorce proceeding is a sort of court order, right?) to the plan. The second Mrs. Smith would only be treated, all facts being known, as the spouse with respect to the portion of the benefit not assigned to the first Mrs. Smith, whose rights should prevail over those of the second Mrs. Smith. Where is Mr. Smith's duty to the first Mrs. Smith and the settlement agreement? Why didn't he bring this up when he retired? Who is Mr. Green?

Naive question: Would access to one investment firm instead of another be considered an advantage at all, to the extent that it would be considered as rising to the level of being a BRF issue?

Does the Social Security statement of earnings report total earnings or are the reported earnings limited by the Social Security wage base? There was, of course, no distinction between Social Security and Medicare earnings back in the 1990s.

Based on my understanding (assuming support from plan language): At the end of each plan year (or date of separation from service), the greater of Calc A or Calc B: Calc A: Last year's greater of Calc A or B, actuarially increased from last year to this year (calculation as of end of year only, until separation from service, even if a mid-year calculation would have put the person up over the 100% of 3-year average limit under 415 - the application of the 415 limit is done only at the end of the plan year or separation from service and there is no prohibited loss of value - and thus no mid-year forced commencement - if the participant would, on a continuous measurement, have hit the limit mid-year but continued in service) Calc B: The determination of the plan benefit, taking into account all post-NRA (and even post 70 1/2) accruals and without regard to any actuarial increases for deferral. This holds even after attainment of age 70 1/2. Assuming that the plan calls for offsetting new accruals by actuarial adjustments to prior accruals, it is never necessary to start having unreduced new accruals on or after 70 1/2.

I would not think that prior terminees would fall into the category of frozen participants, by virtue of the fact that they are not employees at all.

Please note that the original post said that the high-3 years preceded the adoption of the plan. Assuming that such years can be taken into account, there was no actuary to back up the earnings for those years, unless those earnings were provided to the actuary when the plan was established. Are the plan benefits so high that the earnings that the sponsor and CPA do have cannot justify them under Section 415? If so, how did the plan allow such large accruals without the earnings histories to show that they were acceptable? It is very difficult to obtain information from the IRS (including, but not limited to, copies of prior favorable determination letters)

Is there any reason to not amend the plan to specifically say that compensation after the freeze will be ignored for top-heavy minimum purposes? Would that be acceptable?

The deduction limitation is based on the maximum amount for a particular plan year. The employer will have already committed to what plan year applies to what fiscal year, and has to live with that. The maximum deductible amount for most defined benefit plans is significantly larger than amounts required as MRCs, so there could well be plenty of room in the 2016 tax year's limit to cover two years' worth of minimum contributions. Not always, but in many instances. Certainly, if the plan year is a calendar year, an amount contributed on March 16, 2016 can be applied to the 2015 plan year minimum.

Unless I misunderstand the original post, the plan did not suffer any losses due to embezzlement, so the bonding company would not have any liability. Absent knowledge by the plan that the repayments were not legitimate, the plan cannot be considered liable to the employer for the employer's losses, could it? This doesn't even come down to a question of the plan taking money from the participant's account to repay the employer for those losses. That money is gone. What possible justification can there be for the other participants suffering any penalty at all to make the employer whole? The employer cannot legitimately withhold amounts that would be payable to the accounts of the innocent parties as matching funds.

I am not a lawyer, but I cannot imagine that the plan has any responsibility to check the provenance of money used to repay a plan loan. As far as I can tell, without further suspicious circumstances, it sounds as though the plan has done everything right. Clearly, the former payroll person is the one who owes the employer money. Threat of prosecution might be enough to get the perpetrator to agree to a suitable program of restitution.

Isn't that the kind of policy where the participant can buy the policy from the plan by paying the plan the policy's cash value? This is not normal insurance - if the participant dies, the money does not go to the participant's beneficiary but to the plan (think "key man insurance", if that term is still being used; probably should have been changed to "key employee insurance" by now). The plan, by setting the policy up so the plan itself receives any proceeds, owns the policy lock, stock and barrel. It does not appear that the policy exists for the benefit of the employee. Pension Pro - the basic question (as always) is "What does the plan say?"

Ah, Leonard Nimoy. Such a good Boston boy! My omniscient smart phone says those lines come from a Mad Magazine parody of Star Trek (which amused Shatner and Nimoy to the point that they wrote to the editor), and that Spock's comment in "The Trouble with Tribbles" (that Kirk couldn't believe his ears) was an inside joke reference to the parody. Isn't it great to not have to actually know or remember anything anymore?

Trust but verify. The only way the ex-spouse can be sure of getting at least a piece of any further payments would be to obtain a proper QDRO. The court that had jurisdiction over the divorce ought to be willing to issue a proper QDRO now, based on the divorce decree's division of the pension benefits. The biggest question is whether anything can be done to negate the recent election and enforce an election consistent with the divorce agreement (which, after all, places an undeniable burden on the participant with respect to the plan benefits). Perhaps, if the election cannot be undone, the ex-spouse should obtain the services of an actuarial consultant to determine a fair value for the benefits to which she was entitled under the divorce decree that she will not receive and sue the participant for restitution. The participant, having learned that the ex-spouse had not filed a QDRO with the plan, and then proceeding to file for payments that cut the ex-spouse off, was committing fraud against her. I speak here as someone who is not a lawyer.

I think it is being assumed here that there now is a QDRO, even though benefits had commenced before one was issued and supplied to the plan. If there is a QDRO providing something to the ex-spouse, there will necessarily be something to report.

I'm pretty sure it is, no ifs ands or buts, total benefits, including employee-paid benefits. This means that if the total benefit is worth more than $5,000, you cannot refund employee contributions without spousal consent (noting that this is a DB plan, based on the forum). I am also pretty sure that if the plan is restricted under IRC Section 436, exemption from the restriction on lump sums only applies when the total (employer plus employee) is worth less than $5,000.

The impression I got from the comment at the bottom of post #1 (correctly or not) was that BenefitsLink was being paid to allow that post.

If it is a takeover plan, is it possible to get copies of the 8955-SSA forms as filed in the past year or two? That would enable you to distinguish between recently terminated people who were reported and those who weren't. If someone terminated in 2013 and did not appear on either the 2013 or 2014 form, report them now. Otherwise, wouldn't it be reasonable to assume that everyone who handled the plan previously saw to it that the people who should have been reported had, in fact, been reported? So if someone who should have been reported previously dies or retires or is paid out, report them as a "D" and don't worry about whether they are on the system to remove.

You mean be taken advantage of by plan loans if the rate is so much higher than market. Isn't the whole reason for retirement plans permitting loans to give the opportunity to people with bad credit to obtain reasonably priced loans?

I think you may have missed my point. HCEs don't have to take a 12% loan since they surely have access to standard rates through a normal lender. NHCEs may have poor credit, meaning that it's either the plan or another loan shark if they need to borrow. And I have to agree with Belgarath - the plan either allows loans or it doesn't. The sponsor is not allowed to "want to discourage" anything. If they don't want participants to take loans, the plan should not allow them. Permitting loans is not a required feature, right?