My 2 cents

1. If the value of the security fell (by roughly the amount of the dividend) once the ex-date had been passed (since sale of the security would not result in the buyer receiving the dividend), equity would seem to call for the participant to be paid the dividend since the sale price was predicated on the seller receiving the announced dividend. 2. Had such a thing ever happened before? If so, wouldn't consistency with past administrative practice be necessary?

My opinion: Any members of the newly-excluded class who were already participants would remain participants at least until no longer employees of the controlled group, whether vested or not. While the amendment can exclude service after July 1, 2014 for benefit accrual purposes for people in the excluded class, it can neither deny recognition of service for vesting purposes to people already participating in the plan who remain in employment with any member of the controlled group nor treat them as no longer being participants in the plan. As there was no distributable event (such as separation from service), they would have to be retained as plan participants, even if accruing no additional benefits. If the question concerns people who would otherwise have become participants on July 1, 2014 except for the amendment, if the amendment is properly worded and timely, they can probably be kept out of the plan even if they had completed the age and service requirements for participation prior to adoption of the amendment..

The 417(e) segment rates for May 2014 (assuming, for example, that you are working with a July-June plan year using the second month before the start of the plan year stability period) is only smoothed across that one month, so there is a significant potential for volatility that could materially change those rates. Look what happened in the last 4 or 5 months of 2008! Assuming no major economic dislocations like that (fervently hoping for no major economic dislocations like that!), minor actions by the Fed or Treasury could certainly make a noticeable difference, up or down, even if on a relatively transitory basis. So I am with Lou S. - check with your magic 8 ball, since that is about as good as anything else for predicting one-month spot rates two or three months from now. Or, if you are a statistics maven, perform stochastic testing which may, at least, offer the opportunity to quantify the uncertainty!

It was noted in a subsequent post by the original poster that the amount in question was over $5,000. Sounds like someone is not bothering to follow the rules.

Does the union know that the owner is contributing dues on his or her behalf to obtain union benefits? Are they OK with that?

Note that both amounts are with respect to life annuities deferred to the plan's Normal Retirement Age (if NRA is between 62 and 65). The limits do not apply with respect to contributions. If you are talking about a cash balance plan, the limit is with respect to the benefit that can be provided by the pay credit. The limits do not apply directly to the pay credit. So the pay credit, while not providing an annuity of more than 1/10th of the 415 limit, can be larger than 1/10th of the 415 limit. Depending on age, the pay credit could well be in excess of $60,000 for a given year.

In my opinion (for what that is worth), that, having left the line blank on the application form to open the IRA, she could only be considered to have "named" the estate as beneficiary if the application form to open the IRA clearly stated that leaving the line blank would result in the estate being the beneficiary. The process necessary to distinguish between IRA holders who have formally designated beneficiaries and those who have not would be likely to, by itself, be costly. Would those IRA holders be willing to pay a $10 annual fee assessed only against those who have not explicitly designated a named beneficiary? Would it be reasonable and appropriate that they would also be assessed the costs of any special mailings necessitated by their failure to have named a specific beneficiary? Granted that many unsolicited junk letters try to get your attention by labelling themselves as "important", but to be on the safe side, shouldn't one look over anything that comes from one's financial institution or investment firm? Not that I do. Ironic, isn't it, that letters from the IRS are not labeled "important", but who would dare to disregard such a letter?

If it's a DB plan, over $5,000 requires participant consent and a valid spousal waiver (if there is a spouse). Don't defined contribution plans have to give the participant the right to elect a direct rollover, even if payouts can be forced? Question: If the payment did not come from the plan ("...so they just sent the participant a check..."), does the plan still owe the participant the money?

If the recipient was the HCE owner and the check was for a benefit provided under the plan, I don't think it could be a PT (or falls under a general exemption). Payments in accordance with the terms of the plan are not supposed to be treated as PTs.

Situation: Employee A is employed by two members of the controlled group. Company X knows Employee A as a member of the collective bargaining unit. Company Y knows Employee A as a non-union employee. Wouldn't A's status with respect to employee benefit programs offered by Company X be union employee and A's status with respect to employee benefit programs offered by Company Y be non-union employee? Depending on the language in the respective plans, wouldn't A's benefits under Company X's union plan be determined solely based on compensation from Company X and A's benefits under Company Y's plans be solely based on compensation from Company Y? Presumably, service with both companies would have to be recognized for eligibility and vesting (but not necessarily for benefit accrual purposes), and the total compensation between Company X and Company Y would be restricted by IRC Section 401(a)(17). How does it work if the owner is a union member? Does he or she use props at the bargaining table to indicate whether what he or she is saying is in the capacity of union member or in the capacity of owner? Takes off baseball cap and puts on top hat, and says "Speaking as the owner..."

I don't think too many funding targets out there include recognition of the non-vested portions of partially vested terminated participants' accrued benefits. A better question might be when is it necessary to restore the non-vested portion of a terminated participant's accrued benefit when the plan terminates. If the participant had terminated 12 years ago and the plan terminates now, do you have to reconstruct the full accrued benefit and fully vest it? If the participant had terminated 4 years ago? Eight months before the decision was made to terminate the plan? Two months?

A violation of plan provisions or ERISA or regulations, maybe. Don't see how if the payment represents the recipient's entitlement under the plan under circumstances permitting such a payment it could be a prohibited transaction. If the participant's benefit is worth less than $200 and the participant has separated from service, it could be entirely acceptable under the rules.

A plan amendment, if there was one, changing the default beneficiary would not represent a fundamental change. Anyone who cared would have designated a beneficiary, and would thus not be affected by the amendment. A change that would impact the ongoing operation of the IRA (i.e., material changes in the expense charges) might be considered fundamental, not the disposition of the IRA upon the owner's death, especially if they had not bothered to designate a beneficiary. The disadvantages of the proceeds going to the estate noted in some of the earlier posts would make it generally undesirable to have the default beneficiary be the estate. The cases in point here, where the beneficiary not being the estate thwarts intentions to keep money from going to disfavored children, are relatively rare. Spouse, then children equally, then maybe parents or siblings, and only then estate, is the most rational and desirable set-up for establishing beneficiaries in the absence of an explicit designation. That is what most people would want. Requiring the IRA sponsor to provide effective notice of changes in the beneficiary provisions would be more appropriate if changes in the law or the IRA provisions made it necessary to redo existing beneficiary designations (although it is hard to imagine that ever happening). Leaving the beneficiary line blank on the application could be construed as "Hey, I'll be dead! Why would I care?" If the desire is to have it be the estate, how much effort would it have been to write "Estate" on the beneficiary line? It is not unlikely that the IRA provider has many thousands of customers, most of whom would complain if they found out that the IRA provisions tried to bypass the spouse or children in the absence of a valid beneficiary designation. With thousands of customers, important notices are sent out, presorted, with the annual privacy notices, with a designation of "IMPORTANT NOTICE" on the envelope. When was the last time anybody received a certified letter from Wells Fargo or Bank of America? A mass mailing via certified mail from anyone?

Using the proceeds of a loan or withdrawal would obviously not be a prohibited transaction. Having the plan loan assets to the grandson would be much more likely to cause problems.

When something like a plan termination happens to a plan where someone well over 70 1/2 has a 242(b) election in place, is it necessary to accelerate distributions to bring them to where they would have been had the election not been made and minimum distributions had been made in the past?

If the loan is not going to be repaid, that would make it a prohibitive transaction. Your question actually should be whether it is a prohibited transaction. The answer to that question would not depend on whether the loan would be a prudent investment of plan assets. My guess is that it would be a prohibited transaction. Would the grandfather make a similar loan from the profit sharing plan to a similar company with which there was no apparent connection to him? The reason for the loan appears to be solely to help his grandson. The profit sharing assets are not available to be applied for personal advantage until after distribution.

Sorry - misread post, but still suggest consulting with RRB office. Your support responsibilities could matter, but the RRB would be in the best position to discuss your exact situation and what would be payable.

Suggestion - check with an office of the Railroad Retirement Board. Ask about eligibility for benefits, and provide the details of your situation. Guess - if it is anything like Social Security, you can collect for yourself. It is questionable that you would be able to receive benefits on account of your minor child, but people at the Board would probably know.

Not a lawyer, but seems to me it would more likely be a breach of contract, deliberately trying to invalidate a contractual obligation after it was entered into.

Are you assuming payment as a lump sum? Perhaps the 404 calculation, with a higher funding target, comes close enough to the 415 limit based on the fixed interest rate applicable to the 415 lump sum limit, to limit the amount that can still be accrued. The lower funding target under MAP-21 rates would leave a larger margin. Just guessing.

Just wondering - what control would an employer participating in a multiemployer plan have over that plan? Wouldn't the collective bargaining agreement have to be followed? Unilateral action by a participating employer isn't permitted, is it? The employer would not just be able to take its prior contributions out of the fund. If the employer chose to pull out of the collective bargaining agreement (assuming that were possible), wouldn't there be the potential for withdrawal liability?

Can it be presumed that the person was given a proper suspension notice upon attainment of normal retirement age? If not, the plan must provide a benefit no less than the full actuarial equivalent of the amount payable at normal retirement age (and should provide at any subsequent date after the year of attainment of normal retirement age a benefit no less than the amount calculated recognizing subsequent accruals or the actuarial equivalent of what would have been payable at the end of the prior plan year). Of course, once the later of attainment of normal retirement age or separation from service has occurred but payments have not begun, it is obligatory that the person either receive back payments or a full actuarial increase, since post-normal retirement benefits cannot be suspended in a month in which the participant works for the sponsor at least 40 hours. So if the person retired and 8 months have elapsed without any payments being made, the plan must either provide full back payments for the period since retirement or the amount that would have been payable with a full actuarial adjustment for deferral. Don't forget that if the participant was given a QJSA notice and a retirement election form more than 6 months ago, they are now stale and you have to redo the benefit calculations. Offering a RASD back to when the person separated from service would seem reasonable enough, but the information concerning what would be payable based on a current commencement date will have to reflect actuarial increases appropriately.

First thing, it would be my understanding that a diligent seach would have to have been conducted to try to locate the participant before the participant could be considered "missing". The burden is on the plan adminstrator to find the participant, and declaring a participant as missing and treating their benefit as forfeited (pending reinstatement if the participant is found) could only be done after conducting a fruitless diligent search. The best answer to this question would probably be another question: What position would the PBGC take? For this, consider that the PBGC, in questions 8 and 10 of the 2012 "Blue Book" (commentary from the PBGC prepared for the Enrolled Actuaries Meeting, like the Gray Book for IRS commentary) said that if a plan is terminating under a standard termination and there are missing participants whose benefits are considered forfeited pending reinstatement if they are located after a diligent search has been conducted, then the plan administrator must either pay the PBGC a designated benefit (under the PBGC missing participants program) or purchase suitable annuities from insurers for them. So if there are people whose benefits have been "forfeited" because they were missing, there must be full provision for those benefits if the plan terminates, so that they are not left out in the cold if they eventually turn up. In Question 10, it is explicitly stated that if a participant is missing, a default IRA may not be set up. Answer 10 says that default IRAs can only be set up if the plan administrator can locate the participant. One presumes that this would apply to an ongoing plan and not just a terminating plan. Given that position, do you think there is any chance that the PBGC would not consider itself entitled to annual premiums on account of missing participants prior to plan termination?

The following is my understanding of the situation described: In a defined benefit plan, recognizing a reduction in plan liabilities by a reduction in future contributions would not, in my opinion, have any relationship to the Exclusive Benefit Rule. The Exclusive Benefit Rule would prohibit using plan assets to cover the cost of non-plan expenses. For example, charging costs for unrelated employee benefits or other sponsor costs to the plan would violate the Exclusive Benefit Rule, but amending the plan to cut future benefit liabilites and consequently reducing future contributions (or retroactively adding a new employee group to coverage by the plan, impairing the plan's funded status) would involve using plan assets for plan purposes. Remember - the assets of a defined benefit plan are not alllocated by individual until they are used to actually pay benefits. If there is any possible issue, it would whether the retroactive reduction in COLA benefits is permissible. For a plan subject to IRC Section 411, such a plan change might not be allowable, but in any event, this is not a matter involving violation of the Exclusive Benefit Rule as I understand it.

Ask anyone at the DOL or PBGC and they will tell you that money is no object when terminating a plan. The information provided to the retirees in connection with an offer to cash out their annuities must be clear enough for the oldest retirees to have a clear understanding of what is being offered and the financial consequences of taking a lump sum (imagine how the lawsuit would turn out if an elderly retiree takes the offered lump sum and then, that money being long gone, tearfully testifies that they had no idea that it would mean that the monthly checks would stop!), and however much higher the annuity cost may be than a lump sum payout, there can be no hint of coercion. There can be absolutely no pressure put on the retiree to cash out the monthly annuity they have been receiving, and if the participant retired with a joint benefit and the spouse is still alive, no pressure can be put on the spouse to sign off on a lump sum. Not sure what happens if the participant retired with a QJSA in place and has since remarried - presumably at least the former spouse would have to agree (good luck with that!). Unlike participants not in pay status with benefit worth less than $5,000, for whom no annuities will be available, retirees with smallish remaining benefits have the absolute right to insist that their benefits be annuitized. What about retirees unable to handle their own affairs? Do you trust those with powers of attorney or guardianship to make an appropriate decision, solely based on what is best for the retiree, with respect to the offer of a lump sum? One thing to bear in mind, the more retirees being purchased, the wider the selection of annuity providers or annuity products. If 60 of the 100 retirees choose lump sums, there may not be enough left to gain access to many group products or insurers. The actives and the deferred vesteds have the authority to demand that their benefits be annuitized. If any of them want annuities, having the retirees included in the annuity purchase will probably make it go smoother.