My 2 cents

Just wondering - hasn't there already been an abandonment here? I would presume that the plan contains provisions governing removal of the plan administrator and the trustee and termination of the plan. If no actions consistent with those provisions have been taken to remove the plan administrator and the trustee, aren't they already subject to personal liability for failure to carry out their duties? Wouldn't it be in the best interests of all concerned that steps be taken to formally terminate the plan and properly distribute the benefits?

Isn't one of the most frequent requirements for a couple being considered married under common law that they present themselves to the community as married? If they don't file their taxes as married (either jointly or married filing separately), why should they be considered married for purposes of ERISA? That recent court case cited 2 or 3 postings above - how could it have been any more complicated?

Some of the articles I looked at seem to say that this can be problematical for 401(k) plans in particular, because (a) re-entry is generally required to be immediate (or retroactive to date of rehire if any kind of waiting period is required) and (b) there is a duty in a 401(k) plan to offer the participant the opportunity to elect to make contributions upon becoming a participant. So if a former participant is rehired, the burden to get an election form immediately into their hands must be dealt with to avoid an operational failure. Nobody ever said it was easy to administer retirement plans! Would default contribution levels be good enough to avoid operational problems when a former participant is rehired? If this is a nonsensical question, please bear with me - I do not work on 401(k) plans.

Wikipedia says there are something like 9 states still permitting common law marriages (including that wilderness state, Rhode Island!), with a number of other states recognizing existing common law marriages. This perhaps should be considered to be an evolving area because of the Windsor decision. Under what circumstances are ERISA plans required to recognize common law marriages, which are generally defined in terms of the absence of formal legal action? Is an ERISA defined benefit plan required to pay a pre-retirement death benefit when someone claims to be a surviving spouse based on a common law marriage?

Just trying to make this a bit clearer: As the cash balance plan is a defined benefit plan, if it must provide top-heavy accruals of 2%, they must be life annuities payable at NRA equal to 2% of the 5-year final average earnings. Very different from a pay credit of 2% of this year's compensation.

Unless one is specifically rounding up, 6 cents -> $0. If you show a zero balance as of 12/31/14 and nothing happens (and, surely, the 6 cents won't be there for long, right?), what would you show on a 2015 5500? Zero at start, zero at end, no participants at beginning or end, nothing shown as paid, etc.? Or are you going to report $0 assets and 3 participants as of 12/31/14?

Is there an interesting story as to why 6 cents were left behind? Just wondering.

That is why the participant should have a lawyer to help with the process! It certainly would seem fair to me that the QDRO not touch the 401(k) plan at all (since his balance as of the date of the divorce was $0), but it is up to the participant (with legal help if available) to fight any attempts to either assign part of the subsequently established 401(k) account or otherwise to ratchet up the amount to be assigned under the pension plan to "compensate" the alternate payee for not receiving anything from the 401(k) plan. How long are you required, by your administrative processes, to put a hold on an account when there is no QDRO in hand? If there is a limit, perhaps the alternate payee should be notified that benefits will be payable under all plans, with no provision for anything going to the alternate payee, unless a suitable QDRO has been received by [date]. Also, please clarify - was a QDRO received back around 1995 and there was no ruling made by the plan administrator that it was valid or not, or was the notice recent and the QDRO only recently submitted for review? Was the laxity on the part of the participant/alternate payee or on the part of the plan sponsor? In what way was the QDRO invalid? Receipt of a proposed QDRO followed by a decade and a half of no objections begins at some point to look like acceptance of the DRO as qualified. Was the plan administrator's rejection of the original QDRO at all timely?

Irrespective of what one's views may be concerning plans of this sort, isn't giving enough to the low paid employees to pass nondiscrimination the entire idea behind benefit structures like this?

Some QDROs seem to be keyed to what is there at point of retirement (such as balance/accrued benefit at retirement multiplied by marital fraction). If this QDRO is worded that way, it could result in some of the 401(k) balance going to the alternate payee. I personally prefer QDROs tied to balances/accrued benefits as of the date of separation or divorce (as adjusted for period married), but that other approach is not, per se, reason for rejecting the QDRO (at least I don't think it is). So what does the revised QDRO say?

This might not be entirely directly on point, but as I recall, participants used to complain if they could not invest in their favorite mutual funds or otherwise in funds they could track from their daily newspapers (back in the days when everyone bought daily newspapers!). Whether it ever got to the point of generating litigation, I cannot recall. This is just a guess, but is it possible that litigation has arisen in more than 0.1% of the plans offering only retail funds? You only hear about those where suits have been filed.

The DOL took action against sponsors of terminated defined benefit plans that had bought annuities from Executive Life for having failed to properly discharge their fiduciary duties when they chose Executive Life as the insurer.

It is my understanding that the funding target to be reported on the AFN itself should equal the funding target used to calculate the plan's minimum required contribution for the plan year. So while the 2013 AFN might have been based on either MAP-21 or HATFA rates, there is no alternative to having the 2014 AFN reflect the HATFA rates. To the extent that a supplement is required, it should document the differences between the non-relief funding target etc. and the information as otherwise reported on the AFN. Note that in determining the 2014 non-relief minimum contribution for the supplement, you must start with the actual amortization amounts on the relief basis carried over from 2013. If the 2013 MAP-21 (or HATFA) minimum had included no shortfall amortization, then the 2014 non-relief minimum must treat all of the unfunded funding target as a new shortfall base. Whether the disclosed 2013 non-relief minimum for last year's supplement had reflected shortfall amortization amounts is not relevant. You do not carry that forward on a parallel universe basis. The only old shortfall bases you can recognize for the supplement's 2014 non-relief minimum contribution are those used in the actual minimum required contribution (reflecting MAP-21 or HATFA) for 2013.

I suspect that they would if they could, but the federal government might not have the authority, under the constitution, to (for example) require New Jersey to vest its employees after no more than 5 years of service. In the topic at hand, does the federal government have the authority under the constitution to require states and their subdivisions to adhere to federal standards concerning what is acceptable with respect to the handling of pension plan assets?

Is it not the case that governmental plans, not being subject to ERISA and its standards of fiduciary conduct, cannot be found in a court of law to have violated ERISA's fiduciary standards? That is the point of my questions.

Is the plan subject to ERISA? If not, is Tibble relevant?

Not being that familiar with the way the multiemployer plans are handled by the PBGC, I agree that if there is more than enough money to cover the guaranteed benefits, some sort of prioritization is in order to use the assets to provide non-guaranteed benefits. For example, I would expect the PBGC to apply at least some of those assets to cover at least some of the current benefit payments in excess of the guaranteed amount. If we are talking about the Central States fund, however, I would imagine that at something like a 30% funded ratio, there would not be enough there to cover even the guaranteed benefits. Again,not being that familiar with the PBGC's coverage of ME plans, I would imagine that the PBGC is unable to require the participating employers to kick in any additional money to help defray the cost of providing even the guaranteed benefits when a ME plan fails (which they can do for single employer plans). A failing ME plan can assess withdrawal liability against a departing employer but it is doubtful that any such process arises when the plan as a whole is taken over by the PBGC. No going after solvent members of a participating employer's controlled group, no claim against the assets of participating employers, none of the actions the PBGC can take when a single employer plan is taken over. It's just the PBGC and whatever remains of the plan assets (isn't it?).

I may be wrong (not too familiar with the workings of the PBGC's multiemployer program), but I don't think that the PBGC has a formal commitment with respect to protecting the full amount in pay status when it takes over a very underfunded ME plan. Do they still do that for single employer plans? A benefit is guaranteed or not, and (I think) the PBGC would cover nothing under a severely underfunded failing multiemployer plan that is not guaranteed and would cover all that is guaranteed, without regard to priority categories. The PBGC guarantee under a multiemployer plan would be limited to something like $35 per year of service (i.e., the aforementioned Bob would get something like $17,000 if the plan failed and he had to look to the PBGC for benefits for his 40 years of service). I have not looked at the new law yet, but (except for the same reason Willie Sutton gave for why he robbed banks*) how much sense would it make to deprive the retirees of their ongoing payments as a first resort and not as a last resort? Does the law actually permit the trustees to cut immediate payments to retirees first? *Because that is where the money is. If you cut payments to people retiring in 20 years (which is how they reduce Social Security benefits in response to projected shortfalls) but keep making full payments to all of those already retired, how will that keep the multiemployer plan from running out of money in the next 5-10 years?

OK, I'll give you transfer to a status not eligible for ongoing accruals. If that's all there is, though, it doesn't quite seem worth changing the SB for!

Unless someone says something to the contrary, I will assume that the silence in response to my question above about portions of the funding target for inactives to be included in the total funding target column but not the in vested funding target column means that all enrolled actuaries will be reporting the same number in both columns. Wishing all a happy new year!

Personal opinions: Isn't the PBGC's promise to Bob commensurate with the reduced amount he might receive from the Central States fund? The guaranteed benefit for a multiemployer plan is dramatically lower than the corresponding amount for a single-employer plan. So how is the PBGC failing to keep its promises? The PBGC never promised to protect that much of Bob's pension of $36,000 per year. Which is not to say that we have not come to a sad state of affairs, when career workers like Bob are left in the lurch. What would have happened had the laws been changed 25 years ago to force better funding of multiemployer plans (or at least to prohibit any benefit improvements when the funding was not there to support them like they now do for single employer plans)? Not to mention the fact that the funding reforms and the premium increases that are supposed to shore up the PBGC are never applicable to the kinds of plans that cause the PBGC's problems (think of airline and steel companies spared the full brunt of upgraded minimum funding rules back in the 1980's into the 1990's, and the fact that the PBGC premiums for multiemployer plans have been pretty much left alone forever while the single-employer plan sponsors, whose plans have been forced over the past few years into a more secure funded position under PPA, are the ones whose premiums are being more or less tripled). I keep forgetting that any kind of forced increases in contributions to enhance benefit security are considered to threaten jobs (and when are jobs ever sufficiently secure to handle pressure of that sort?). Also, how is this so much worse than forced retrenchments in promised benefits under governmental pension plans (which does not seem to be garnering that much outrage from the taxpayers supporting those plans)? Seems to be a lot of oxen getting gored here. Happy 40th anniversary of ERISA! Here's hoping that the next 40 years work out a bit better.

Idle question from a non-lawyer: If the fiduciaries have no authority to change the investments (which appears to be what is being said above), how could they be said to have violated their fiduciary responsibilities in any actionable way? It should not be possible to successfully sue someone for not doing something they are not permitted to do.

The ASPPA question is focused on a 1/1 plan effective date when the entity is established a bit later in the same year. It would probably be no good to establish the plan in one year and then set up the sponsor early in the next year.

It is my understanding that if one were talking about an enrolled actuary, the only circumstances under which dropping a dime is mandatory would be if the enrolled actuary certified a governmental form for filing that the enrolled actuary knows has not been filed. Which is not to say that there aren't other circumstances under which the enrolled actuary needs to consider finding employment elsewhere. What rules apply to ERPAs?

It is my understanding that if the plan is subject to the QJSA requirements, if the value of the total benefit is worth at least $5,000, then there are no circumstances under which lump sums can be paid without proper spousal consent. None. Further, as of any age at which a lump sum can be elected, an immediate QJSA must be offered or the spousal consent would not be valid.