My 2 cents

If a DB plan is effective 1/1/15, even if the plan is signed on 9/1/15, how could it not cover people who did not leave until 8/1/15?

I think that in the case of DB plans (and most likely DC plans as well) whose assets are maintained in financial institutions, when a check is issued, the plan's funds are charged with the amount of the check and the money moves over to whatever kind of holding account the financial institution itself uses to cover the checks it has issued. So it cannot be said that the money remains in the pension fund pending cashing of the check. It is my understanding that the issue the DOL has with escheating funds to a state is more along the lines of the funds, if not actually payable due (for example) to the prior death of the participant, are to be used either to reduce future plan contributions or treated as allocable forfeitures (depending on what kind of plan it is).

And what happens if the participant wants to share the proceeds with someone to whom they are not currently married? On what grounds, other than "tradition", could the plan refuse to cooperate?

Doesn't issuing the payment, by itself, stop the clock for all time? Sequence - paperwork with Rollover Options notice is issued, participant makes affirmative election (this being a situation where the amount in question is over $5,000), checks are issued, and then nothing happens. Wouldn't there be nothing more than stopping payment on the stale checks and issuing new ones? The distribution happened when the checks went out. One presumes that a proper 1099-R has been or will have been issued without regard to whether the checks were cashed. Is this not how it works? Assuming that the money left the fund when the check was originally sent, there would have been no fiduciary duty to invest it pending final cashing of the check, right?

This would indeed seem to be a matter of failure to follow the terms of the plan (and a willful one at that). If a participant makes a claim for a lump sum payment or another form of benefit not involving survivor benefits being payable to the participant's spouse and the claim is, in fact, denied, is there not a requirement (if not then, at least at the point where the participant appeals the denial) that the specific plan provision that results in the denial be identified? Does this make the record keeper a plan fiduciary? Last time I looked, "that's how everyone does it" does not carry much weight in litigation, especially when (as here) it is recognized by all that there is nothing in the plan requiring that it be done that way.

My guess: Beneficiary designations, rules concerning disposition of estates (including intestate succession), what it means for the spouse to survive the participant, competence or incompetence of payees, validity of powers of attorney, that sort of thing. Probably a number of other areas. If ERISA does not concern itself with certain details because they would normally fall under the jurisdiction of state laws, there might not be federal preemption. Any time you read about a contested benefit being turned over for resolution through an interpleader action (for example, conflicts involving divorce or common-law marriages), state law governs, right?

For what it's worth (if I may be so bold as to quote myself, as though some sort of authority), I posted the following comment last year: It is my understanding (for what that is worth) that if the plan has grown to 100+ participants, the valuation date must be changed to the first day of the plan year, so no application, no fee, it just happens. Otherwise, pending any new IRS procedures specifying automatic approval situations (could happen!), to change the valuation date to the first day of the plan year for a plan with less than 100 participants requires explicit application (with fee) to the IRS under 2000-41. In the introduction to the question in question 5 of the 2012 Gray Book, it is observed that Rev Proc 2000-40 no longer applies to single employer plans (and the question goes on to ask when one can expect approval and when not). 2014 Gray Book question 1 says that the valuation date remains the same for a small plan from year to year unless "the sponsor obtains approval for a change". That question was focused on a small plan with a 7/1-6/30 plan year that used the first day of the plan year as its valuation date and then changed to a calendar plan year. Unless approval is obtained, the valuation date would stay at July 1 each year (ugh!).

Preface: I am not a lawyer, and the following may be entirely wrong. Assuming that we are talking about a corporation, every corporation is incorporated in a particular state. I would expect that every action taken by that corporation would, to the extent not subject to overriding federal rules, be subject to the laws of the state of incorporation. Failure to explicitly specify that state in the plan document is unlikely to affect the relevant jurisdiction to which the plan is subject (to the extent not preempted by federal law). I would not expect that failing to clearly specify in the plan document which state's laws would apply to situations in which federal law's preemptive powers do not apply would be a federal qualification issue. However, it might complicate any litigation issues that may arise with respect to the plan. Wouldn't specifying the applicable state in the plan document foreclose lawsuits attempting to subject the plan to the laws of other states?

I do not work on cafeteria plans, but absent a sufficient change of status, isn't the employee required to continue having amounts withheld from pay through the end of 2015? I agree that closing the account into which they were being put would not change that. Also, are their rules requiring the employee to either use the funds for approved expenses or keep them in an account unavailable for normal personal use? There aren't hardship rules or any other rules that would allow an employee to just take the money back, are there?

If a plan allows lump sums but bumps into Section 436 restrictions, the plan's provisions concerning Section 436 restrictions can permit a participant to elect to receive the unrestricted portion of the lump sum and either defer the remaining amount or commence receipt of the remaining amount under any other option permitted under the plan that is not restricted under 436 (i.e., 50% paid as lump sum, 50% paid as a certain and life option). This is clearly permitted under the IRS regulations concerning handling of the restrictions under 436, but it must be supported by plan provisions. But the original post, as has been pointed out, is not asking about partial distributions when 436 applies.

I had been presuming that the partial distribution contemplated was not mandated on account of Section 436. If the plan's AFTAP is between 60% and 80%, they cannot permit the participant to cash out the entire benefit. Certainly, if that situation applies, the plan can permit the participant to cash out half and defer the rest (or cash out half and take the other half as an annuity payable for at least the participant's lifetime).

It is almost certain that the non-financial administrators know your SSN, your pay, your date of birth and your address, They also, without question, know exactly how much money is in your 401(k) account at any given moment. It is also almost certain that they have the same information about people whose 401(k) plans hold hundreds of thousands of dollars or even millions of dollars. They are also almost certainly quite knowledgeable about legal constraints and procedures intended to protect the information to which they have access from those who would use it for nefarious purposes. Do not be concerned about the non-financial administrators finding out about the loan you are taking out. Good luck on your real estate investment! May it thrive.

My vote is for counting them as active. Surely, standard practice in an ongoing but frozen plan is to count those still employed as actives for 5500 purposes, isn't it?

I think that the permanency requirement relates to not terminating the plan within 5 years of when it was established, without a good reason for terminating (not built into the decision to establish the plan in the first place). It looks as though the earlier plan made it through 5 years before it was terminated. Absent some discriminatory intent (possibly related to having terminated most of the non-HCE employees in the interim), I would not think that one is required to have a semblance of permanency with respect to not maintaining a plan.

In general, the answer would be yes but prior service may or may not still count. If the participant was not vested or was paid a lump sum for what was vested and the plan has since frozen, it might be that the employee can't rejoin the plan. But of course, one should always check on what the plan says about rehires. It may address this situation (especially if it has since been frozen).

At the risk of sounding trite, does the plan document address this point? Being able to contribute the maximum plus a catch-up is covered by the applicable statute and regulations, but the plan has a limit lower than the statutory one. I would suspect that the plan imposes a limit of 50% of compensation without reference to catch-ups so the answer would be $18,000, but I don't work with defined contribution plans.

No 1099 would be appropriate - it would be my understanding that as the participant was not eligible to be a participant, there would be no distribution to the participant from the plan. Everything is handled from the employer's own funds. It would then be between the employer and the plan as to whether any of the erroneous contributions are to be returned to the employer (if permissible).

Based on my understanding of the situation, the employee never became a participant in the plan, by virtue of not meeting the plan's eligibility requirements. It is the employer, not the plan, that sounds like the appropriate party to refund the amounts and to otherwise do anything needed to make the employee whole. The employer erroneously collected money from the ineligible employee and the employer (even if unable to retrieve the money from the plan) ought to have to absorb all of the cost (including any tax issues affecting the employee). Whether the employer can get the money back from the plan is their problem. So what if the employer is out the money and the plan reaps a windfall? The mistake was entirely the employer's. Granted, the employee cannot roll the money over to an IRA since the employee is not entitled to any plan benefits. If the mistake wound up messing up the employee's taxes, again, it is up to the employer to fix that. Agreed that a 1099 would not be appropriate. nor would the employee have to pay the early distribution excise tax. Not a distribution from a pension plan. Did anyone force the employer to exclude temporary employees from the plan?

Is that monthly or annual? Don't forget to watch out for the IRC Section 415 100% of average pay limitation!

If the plan's NRA is age 62, age 65 is of no significance. If you are not doing suspension notices, the actuarial increase commences immediately upon attainment of NRA. If you are doing suspension notices, the suspension notice must be issued in the month in which the person attains NRA. Normally, you have to compare the actuarially increased benefit each year to what you would get based on continued accruals (with the larger amount establishing the amount that will have to be actuarially increased for the following year's comparison), but that comparison is moot if the plan was frozen before the person reached NRA.

Is it not true that a defined contribution plan that offers (let alone mandates) an annuity payout must have a QJSA as the default payout option, absent participant and spousal consent to the contrary?

Is this a defined benefit plan subject to ERISA? If so, the plan must offer a qualified joint and survivor annuity (and a qualified optional joint and survivor annuity).

How can you not take deductions for Social Security from their part-time wages?

What aspect of retirement plans are you trying to learn about? For example, are you looking for information about different ways of covering employee retirement needs or just defined contribution plans? Are you looking for something oriented towards retirement plans for general employees or mainly tax-efficient wealth accumulation for owners/executives? If you are "just getting into the business", what aspect of the business are you getting into? Sales, plan design, administration, funding (if relevant)?

Caveat - I do not have any direct involvement with real estate investments. Who would be paying for the periodic independent appraisals that must be obtained? Any contingency plans for disposition of the asset when a distribution is wanted/mandatory? One of the problems with real estate is that it can be so illiquid, especially specific properties. I have no direct knowledge of restrictions that may apply with respect to such property (i.e., limitations on self-dealing in the selection of the investment and use of property by 401(k) participant when the 401(k) account has an ownership interest, etc.), but anyone seeking to make such an acquisition had better be doing so based on sound legal guidance. In what way would investing in a specific property be better than buying shares of a real estate trust, where the selection of the properties to be invested in is beyond the reach of the participant?