My 2 cents

I personally see no compelling need for there to be any kind of asset accumulation vehicle that would allow very highly-paid individuals the opportunity to amass wealth on a tax-favored basis. I find it very difficult to feel any sympathy for people who may no longer have access to such vehicles. As far as I am concerned, they can live within the bounds of qualified retirement plans (even if it means providing larger benefits to the rank and file employees) or they can save up their money on a taxable basis. Why are there such things as non-qualified plans that do not involve full immediate taxation (at least at the point where benefits/balances vest)?

It may sound selfish, but as nobody has ever offered me any nonqualified deferred compensation... Does the proposal change what is meant by "substantial risk of forfeiture"? As I recall, the tax magic behind Rabbi Trusts was that since, in the event the sponsor went belly-up, the assets in the trust would be reachable by the sponsor's creditors, the arrangement was considered to involve a substantial risk of forfeiture, and therefore not currently taxable when the covered individual became vested.

That cite could be very useful in this instance - it allows for the waiver of the spouse's rights for both QJSA and QPSA if the spouse's whereabouts cannot be located AND also, when backed by a court order to that effect, when the spouse has abandoned the participant. The facts, as presented in the original post, would certainly seem to support an assertion that the spouse had abandoned the participant.

I have seen defined benefit plan documents containing language such as this: "If it is established to the satisfaction of a Plan representative that there is no Spouse or that the Spouse cannot be located, a Participant's waiver will be deemed a Qualified Election even though no Spousal consent is obtained with respect to such waiver." True, that is with respect to a QJSA waiver, not necessarily applicable to a QPSA waiver, but if, in this instance, all attempts to locate the deceased participant's spouse are in vain, the balance will certainly have to be paid to someone eventually. It is just that there are hoops to be jumped through before a Plan representative can establish to his or her "satisfaction" that the Spouse cannot be located, primarily one has to give it a good try first.

Speaking as one familiar with defined benefit rules but not really defined contribution rules - The plan administrator has a fiduciary duty to diligently try to get the benefit payments made as called for under the plan provisions. To delay distributions to the beneficiary beyond the earliest date called for by the plan would, presumably, require affirmative consent from the spouse. If the children file a claim for the benefits, deny it in writing on the basis that the spouse of the deceased participant is entitled to them, pointing to the relevant plan provision. If the plan administrator cannot locate the spouse or find evidence of the spouse's death despite making diligent efforts, perhaps the children will be able to do the heavy lifting (including obtaining court orders declaring the spouse deceased or, if the plan lists it as a basis for paying others, missing).

...Taking what many may perceive (in the case of medically necessary usage, in particular) as the wrong side of the question as to what is and what is not moral? PS: No relation (that I know of) between MoJo and me!

I would have expected it to be the tax year in which the payment was made (if different from the tax year for which the payment was made). I presume that, for participants newly subject to RMDs, the payment by April 1 of the year after the year of the RMD would invariably be declared as taxable in that following year (assuming that the payment or payments were made between January 1 and April 1 of that following year). Why should this situation be treated differently?

There ought to be access, through the internet, for up to date balances on demand. That should be a minimum service level for being in the marketplace (especially when self-directed brokerage accounts are made available). This isn't 1980!

Yes. Long before it becomes a regulatory issue, you need to verify that they are not violating the terms of the agreement by taking so long. To the extent relevant, protecting the interests of anyone NOT leaving from adverse consequences resulting from carrying out the request to transfer the money out has to be given a high priority. Depending on the investments being maintained, that could lead to extensive delays in transferring money out, presumably in accordance with provisions in the contract. Not that saying this proves much of anything, but I am not aware of any regulations (IRS or DOL) requiring quick action in response to contract termination requests.

I think it comes down to the idea that cash balance plans usually have to rely on ERISA's 133% accrual rule and under that rule, the accrual in no future year can exceed the accrual in the current year or any earlier future year (all expressed as periodic benefits payable as of NRA) by more than a third. Unless your planned jumped-up benefit for 2018 is only slightly higher than the initial benefit for 2017, you are not going to be able to pass the 133% rule if both levels are in the plan document on the effective date. As all 133% rule testing is done for the current and future years (with no looking back), wait until 2018 and amend the higher level in then. You won't, in 2018, be comparing anything to the 2017 accrual, so you ought to be OK.

First of all, it should not be a matter of concern that one will be giving a NOIT to a plan participant who will ultimately be given a notice of plan benefits showing that they will receive nothing from the terminating defined benefit plan. They must already have been made fully aware of what they will get from the defined benefit plan and the defined contribution plan that is used to determine the offset. Giving someone a notice that a plan that will pay them nothing is terminating cannot make morale any worse. It is my opinion that even those offset to zero under the defined benefit plan are indisputably participants in the defined benefit plan (since they would meet both the definition of eligible employee and would have completed the age and service requirements for participation), and as such must be given NOITs. AND notices of plan benefits (in due course), even if the benefit shown will be $0.

Fine if it is a plan provision (in which case follow the plan), apparently irrelevant if state law calls for revocation (per recent court ruling)

The assets probably ought to be segregated so that investment earnings will be properly allocated. Certainly, paying out 25% of the account balance as of the date the death is processed by the plan to each beneficiary (as of some unknown future date or dates), as is with no subsequent earnings recognized, is 100% out of the question. The pot should be split in 4, with each being accounted for to take investment results into account until actually paid out.

I take the original post as saying that the participant's adult children want to make a claim for their mother's benefits. That is, "mother" is the deceased participant. Would the deceased participant's spouse's whereabouts be unknown or can the spouse be contacted to enable payment to the spouse?

Has the money left the prior 403(b) plan [warning - I know little or nothing about 403(b) plans]? If so, is there a problem with the completion of the rollover having taken so long that it cannot be considered a rollover any more?

My understanding of the rule is that all plans covering at least one key employee (not necessarily the same key employee) must be aggregated for top heavy testing. I do not know whether anything is different if one of the plans is a safe harbor 401(k), however. Plans that must be aggregated for passage of 410(b) and/or 401(a)(4) must be aggregated for top-heavy testing. If the aggregation is top heavy, it is my understanding that any of the aggregated plans not covering any key employees need not provide top heavy accruals or contributions.

Notwithstanding whatever may be allowed by the rules, the entire justification for favorable tax treatment given to IRAs and PSPs is that they are intended to accumulate funds for RETIREMENT. A mortgage that cannot be covered from current income is essentially unsupportable (absent extraordinary circumstances), and the best solution is probably to step down to less expensive housing.

I think we can all agree that, with respect to such investments, the plan officials merely shrugging their shoulders and using something expedient (such as "cost") to assign a value to them is not acceptable. The actual value of the assets must be regularly assessed by experts. Judging from the facts indicated in the original post, there is and has always been a very tenuous relationship between the value of the investments and the amount spent to buy them.

With most of the "great opportunity" being for the benefit of the adviser?

The world is full of readily marketable investments, with determinable values. Why does anyone want to get involved with this sort of thing?

Reminder - any spousal consents needed cannot be effectively given until after the marriage.

Would that be for the current year or for the year with respect to which it is a corrective payment?

1. One should stand on one's head to not overstate the number of participants to the extent that doing so would expose the plan to extra rules (such as the at-risk rules). Beyond combining multiple recipients with respect to benefits earned by one person and reporting them as 1, what other consideration is there for the Schedule SB count. If you show 105 people on question 3 of the SB and check off the under 100 box in F, would that raise questions? 2. If you are holding a liability for someone, I don't see how you could show a count of 0. Also, I am surprised to hear that the count for the 5500 should be 0. Really? The benefits payable to the AP are payable on account of the deceased participant. Why would you count it differently from a beneficiary under a QPSA or an annuity form paying benefits after the death of the participant?

I am trying to wrap my mind around the idea that there are unresolved issues concerning something that arose pre-ERISA. That was over 40 years ago! Never mind the way that this thing seems to operate something like a tontine. I do not understand the way that it is supposed to work, let alone how it would be made to work in the context of an ERISA plan.

I am not a lawyer, but this is my understanding: If the QDRO assigns a separate interest to the AP, then even if the QDRO does not preserve the AP's status as spouse, if the participant dies before payments start, the AP continues to be able to collect the amount assigned. The benefit assigned to the AP ceases to belong to the participant and belongs to the AP. Unless otherwise specified in the QDRO, if the AP dies before payments have started, the assigned portion does NOT have to be reverted to the participant. Obviously, the more clearly all contingencies are addressed in the QDRO, the better.