My 2 cents

One thing to consider with respect to transferring money from a plan subject to the spousal consent requirements to an IRA is that, whether the plan is terminating or the participant is just entitled to elect payment currently, the only way that the money can be transferred is if the spouse consents in writing. Once the spouse has consented, wherever the money goes (unless to another plan also subject to spousal consent requirements), further spousal consent would not be required. That would be why, the money having been transferred to an IRA, the IRA holder can take action without further spousal consent.

How could there be? Just wondering.

If the check is mailed, whether the participant deigns to receive it or not, wouldn't the plan issue a 1099-R, so the participant would be taxed in any event?

Are you sure you are thinking of 401(a)(4)? If he had deferred $53,000, would the plan have passed non-discrimination? I don't see how his putting more in would solve a 401(a)(4) issue. Or are you referring to individual limitations on deferrals, such as 415?

Saying that the death benefit is to be the actuarial equivalent of the Accrued Benefit is not the same as saying that it is to be paid as a lump sum. If the pre-retirement death benefit is to be paid as a straight life annuity to the beneficiary (for the beneficiary's life), then 417(e) would not apply. The equivalence calculation would be based on the 1971 GAM at 7%. Shouldn't the pre-retirement death benefit refer to the spouse or QPSA? Perhaps that part was just not quoted.

If the people for whom the contributions were made actually earned $0, wouldn't the amounts contributed have to be disgorged from the plan as excess contributions under 415 and any open tax year individual tax filings made by the individuals claiming these fraudulent amounts have to be refiled etc.? This is distinguishable from the situation when a participant is using a false identity and SS#. In that case, the person (whoever they may be) actually did work and actually did receive compensation. My impression from the original post is that many of people involved did not actually work and, whatever it was they received, did not earn or receive anything that could be considered compensation. If the people did not earn enough to justify the "salary reduction amounts" credited to their accounts, they would certainly not be vested in them!

All of the following presumes that the defined benefit plan is not a non-electing church plan or a governmental plan, and so subject to ERISA: If the lump sum pre-retirement death benefit is defined as the value of a series of monthly payments, I cannot imagine that 417(e)(3) would not apply. If it is something else (say a return of contributions with interest or payment of the account balance under a cash balance plan) it might not. For example, if the lump sum pre-retirement death benefit is the present value of what would have been payable to a hypothetical joint/contingent annuitant the same age as the participant had the participant elected a joint and survivor or contingent annuitant form with the hypothetical as joint/contingent annuitant and then died immediately after payments started, how could it not be subject to 417(e)(3)?

Oh, you mean that they want the amount allocated to the AP, notwithstanding the provision of the QDRO calling for reversion to the participant, to be outright forfeited? That does not sound right!

If the QDRO says that if the AP dies before benefits commence then the benefits revert to the participant, what is there to discuss? If the AP dies, then by the terms of the QDRO the amount allocated to the AP goes back to the participant. Or am I missing something?

Just wondering - wouldn't the sponsor of the terminating plan have filed for a determination letter anyway? Wouldn't that make a 5500 SUP form unnecessary?

So, Mr. Cratchit, what is a negative Christmas bonus? Do I really want a better understanding concerning negative bonuses and negative 401(k) deferrals?

The termination might have been bona fide if there was no expectation on either side of a return to work in an on-call status. The entire thread seems predicated on the idea that being on-call means that there is a sufficient employment relationship for it to possibly be an in-service distribution issue. Would it matter if the person hasn't even been called to come in yet?

Or, maybe, the employer is not paying the employees enough for them to be willing to continue working. There is also a lack of communication (concerning the ongoing availability of the lump sum in the future). Or is this one of those I-won-$50,000-in-the-lottery-so-I-don't-have-to-work-any-more situations? Just wondering what the people who resigned are going to do in a year or so when to lump sum is exhausted. It seems obvious that they are not doing this in order to roll the proceeds into an IRA! And the 20% mandatory withholding is probably not going to cover the taxes. Have fun next spring!

Why are proper, tight QDROs so hard to find? Any decent QDRO will say what to do if the AP dies first before commencement, if the AP dies first after commencement, if the participant dies first before commencement or if the participant dies first after commencement. Not rocket science!

And if the sponsor picks up the fees for the actives, it is particularly important that the terminated participants not be charged more than a fair share. The sponsor does not get to save on some of the fees they pick up for the actives by passing some of those fees on to the terminated people. It is not a system to be gamed by the plan sponsor (who owes a fiduciary duty to the terminated people no less than to the actives).

How is that not a violation of fiduciary standards (not to mention the possibility that what the sponsor wants to do is for the sponsor's benefit and not that of the participants)? Certainly, it would seem to be hard (if not impossible) to justify charging larger fees to terminated participants than to ongoing active participants. You only get to charge participants reasonable and necessary expenses. How would this be necessary? How big is the plan? Is this related to trying to hold the number of participants down to avoid needing an auditor's report? Even if it is, I don't think you get to discriminate against terminated participants to force them out.

Even if the outstanding balance is promptly paid back? One presumes that getting the loan paid back is the primary reason for such a provision. Isn't it?

Last time I looked, you only have rate groups based on HCEs. The tests are all structured in terms of one rate group for each HCE, and see how many non-HCEs fit in each HCE's rate group. You do not have separate rate groups for NHCEs receiving different amounts. Or have they changed the rules?

Agreed - the main reason behind having a fidelity bond is to insure that if a plan official embezzles funds (or someone else steals from the account), the participants are protected. Just because a participant issues detailed instructions for the investment of his or her account does not mean that the money cannot be stolen. How do you think the participants of a plan whose trustees are swindled by a Ponzi scheme are to going to get their money back?

In any event (to return to the original subject), whether one chooses to deal with missing participants via forfeiture (restored upon the participant coming forward) or transfer to an IRA, is it agreed that nothing should be escheated to the state from an ERISA plan? That a sentence in the plan section dealing with missing participants that says “However, regardless of the preceding, a benefit which is lost by reason of escheat under applicable state law is not treated as a forfeiture for purposes of this Section nor as an impermissible forfeiture under the Code.” is essentially meaningless because any state escheat law purporting to be applicable to a qualified ERISA plan is necessarily pre-empted and thus not applicable?

Is it not more or less standard procedure in defined contribution plans that any amounts forfeited are reallocated among the other participants (or possibly spent to cover expenses)? In either case, wouldn't there be no lingering fiduciary obligations to the missing participants with respect to investment of the assets they were treated as having forfeited because those assets have, in effect, been spent (leaving nothing to be invested)?

Should qualified ERISA retirement plans have to escheat any funds to the sponsor's state of domicile or should the state escheat laws be treated as pre-empted by ERISA? In a defined contribution plan, shouldn't amounts that cannot be paid for an extended period of time be treated as forfeitures, to be reallocated to the other participants? In a defined benefit plan, shouldn't such amounts also be treated as forfeited, reducing future employer contributions?

[personal opinion] People who run their businesses by deliberately holding hours down to deprive their employees of normal employee benefits should be ashamed of their unmitigated selfishness. Karma demands that such employers go to bed every night wondering why they can't find or retain competent employees.

How much is the relative's commission? Wouldn't rolling the annual withdrawal into an annuity more or less end any opportunity for investment gains? Perhaps I don't understand what kind of "annuity" is being used. Is it something into which the distributions can be directly rolled without there being a current tax impact?

How is that handled for purposes of IRC Section 430?