My 2 cents

DOL agents have badges?

I have never heard of "diligent search" being interpreted, even by the DOL, as entailing a personal visit to the last known address. Sounds like the kind of request that ought to be bumped up to the auditor's supervisor.

Not sure how this interacts with DC plans where the contribution formula ratchets up as service increases. Of course, there would be no "extra" contributions for years of service prior to the creation of the plan, as is often done when a new DB plan is created.

...except possibly for the minimum distribution requirements. This presumes that the side income is unrelated to the insurance company paying him his pension (i.e., not a member of the insurance company's controlled group).

One thing to remember - under NO CIRCUMSTANCES can a forfeiture be treated as employer funds. All forfeitures remain in the trust, to be allocated to something. The employer cannot use them for any purpose other than to cover amounts like plan expenses or those kinds to participant contributions that the plan and the regulations say can be covered by forfeitures. Those small plan sponsors who think of the plan assets as their own are always wrong.

If the plans of your former employers say that they are not supposed to let you keep your money there, why are they doing so? If the plan provisions do allow you to do that, even the DOL would not object to their allowing you to keep your money there. I presume that you have a good way to keep track of all of the 401(k) plans that are holding pieces of your retirement funds (a listing tattooed on a shoulder blade?), but too often, people lose track of small retirement accounts and never receive the money. Have yours all been reported to the Social Security Administration via Form 8955-SSA?

I don't work on defined contribution plans. Generally, a defined benefit plan must provide that forfeitures cannot be used to increase individual benefits and must be used to reduce future employer contributions. The rules on defined contribution plans are somewhat different. Apparently, forfeitures can now be used to cover employer contributions other than those that are, in reality, made by the participants through salary reduction agreements. However one deals with forfeitures, it should be consistent with what the plan says. Is there such a thing as a defined contribution plan that does not permit allocating forfeitures to individual accounts? Reducing future employer contributions is inherently part of the funding method in a defined benefit plan, but reducing future employer contributions is harder to make work in a defined contribution plan setting.

I reiterate, based on my understanding, such as it is, (using the numbers from the example above) that the $5,000 amount withheld from pay to repay plan loans does not count as a salary reduction amount, does not represent an amount paid by the employer, is not pre-tax etc. Under no circumstances (based on my understanding) can the forfeitures be used for loan repayments. I don't know whether forfeitures can be used to cover salary reduction amounts. Maybe matches, certainly expenses that would otherwise be borne by the employer. Remember, the default use for forfeitures is to increase amounts paid into the accounts of the other participants. If the employer chooses to pay administrative expenses directly, it strikes me as reasonable and appropriate that the $100,000 in forfeitures be reduced by those expenses before the remainder is allocated to the participant accounts.

Once the funds have been moved to a default IRA provider, the plan has NO responsibility with respect to the fees charged by the IRA provider (assuming that the IRA provider was chosen prudently - if the IRA provider charges $50 per year while others charge $28, that by itself could be a 401(k) plan fiduciary issue). Please bear in mind that the plan says that the funds WILL be paid out,not that they may be paid out. If they were paid out, the DOL could never (barring improper selection of the IRA provider) come after the 401(k) sponsor because the IRA fees were chewing through the account balances faster than the 401(k) plan's fees would have.

In reference to the third bullet point, I may have missed something (quite possible, alas!), but I do not recall having ever seen anything requiring the AFTAP to be put on the annual funding notice. The FTAP, sure, and always with the credit balances pulled out of the assets, but never an AFTAP (which would reflect adjustments to the numerator and denominator for annuity purchases and, in most instances, with the assets unreduced for balances if greater than the funding target). As an additional point with regard to the original post - provided that the amendment does not bring the AFTAP down from 80% or more to less than 80%, amendments adopted during the plan year after the valuation date do NOT require either that the AFTAP be recertified or that the actuarial valuation itself be revised. The example in the original post would permit deferral of recognition of the August 2017 amendment into 2018 (assuming that the valuation is as of the first day of the plan year and that there are no material differences between the rules for a 1-person plan and other plans, for I know little or nothing about special rules applicable to 1-person plans). The same is, of course, true of either big market losses or heavy utilization of a plan's lump sum option if already present.

I think it goes beyond any sort of decision whether to make a payment. The plan administrator has an absolute duty to make sure that individual participants are properly notified when they are eligible to receive benefits. If someone terminates employment under circumstances that either call for payment or create eligibility to elect to receive a payment (especially something like a small balance situation, where the SPD would clearly be inadequate to put the participant on notice to the point where even some of the responsibility is transferred to the participant), it is incumbent on the plan administrator to make the payment or clearly communicate to the participant that they have the right to choose to be paid. Promptly!

"May", with its implied employer discretion, might not fly. The plan could probably be changed to explicitly leave it up to the participants under $5,000 to decide whether to cash out (or roll the funds over) or not, but that brings with it a burden on the plan administrator to diligently bring this to the participant's attention, with information needed to make an informed decision, requiring essentially as great an effort as having the cashout be required by the plan. The DOL does not consider it acceptable for the plan administrator to fail to discharge their duties with sufficient care and attention.

Is there a reason to not stretch to get it done, unambiguously, on time? Do you have legal guidance saying that it is OK to go to the first business day after, if the normal deadline falls on a weekend? By "legal guidance", I mean an ERISA attorney who would defend, before the IRS or otherwise in Tax Court, the validity of the new plan if, based on that attorney's legal advice, it was not started until the next following business day. It comes down to your answer to the question "Are you feeling lucky?"

Agreed - if the sponsor is interested in making maximal contributions, stashing chunks into the PFB doesn't make the greatest amount of sense. Isn't it all focused on accumulating enough money to pay the lump sum? As a fall-back, why not make sure each year to burn enough PFB to keep the FTAP above 80%? How much cushion against contribution volatility do they need?

Maybe I don't fully understand your question, but I think the answer has to be that loan repayments cannot be part of anything to do with forfeitures. I don't work on 401(k) plans, but the following would be my understanding (but it could be that they are not accurate): 1. It is impossible to characterize loan repayments as having anything to do with "payments that the employer would otherwise have to make to the plan". They are loan repayments, and have to be made by the participants who took the loans. 2. Loan repayments cannot be "forfeited", since loans can only be taken from vested funds.

TO clarify my second paragraph above - the first sentence is only with respect to participants who have died. I meant to say that I don't think that people previously reported as A's who have died need to be reported as D's.

I believe that the 8955-SSA is used EXCLUSIVELY to report participants and to document when previously reported participants have received what they were entitled to. One NEVER reports a beneficiary on the form for any reason - it is only used to report participants. The instructions make that clear by only referring to separated participants who meet one or more criteria. Further, I don't think that it is ever necessary to report, as a "D", someone who had previously been reported as an "A" , whether or not there are death benefits payable to someone else, immediately or on a deferred basis, although putting them on there as a D is fairly easy. For 8955-SSA purposes, the most you would ever have to do for someone previously reported would be to say that they have no further benefit entitlement (and even that may not be required).

I suppose this issue depends on whether it is a defined benefit plan or a defined contribution plan. If a defined benefit plan, are there mandatory participant disclosures concerning fees to be paid by the plan?

Not really familiar with the fine-tuning of the rules, but would the criterion be whether, if ANY of the participant's benefit is subject to J&S, all of the participant's account would have to be under $5,000 to be exempt from having to buy an annuity? And would it be mandatory, in the absence of participant and spousal consent to the contrary, to buy an annuity covering both MPP and non-MPP account balances, if the total was over $5,000? Unlike the situation in a DB plan, however, where the annuity must cover the plan benefit (however much more than a lump sum payout the annuity would cost), wouldn't buying an annuity for a MPP benefit be that you only need to buy an annuity that costs the same as the account balance? If the lump sum option in a DB plan would pay $10,000 but the annuity would cost $15,000, then if there is no acceptance of the lump sum, the employer must spend $15,000. If the total account balance in the defined contribution plan is $10,000 and an annuity must be purchased, would you not buy an annuity that costs $10,000?

The key thing is that the IRS owned up to having sent the letter. What you really have to watch out for are letters from the "IRS" demanding immediate payment using money orders!

Failure to properly administer the 401(k) plan would appear to be more of a DOL matter.

When you say that "the Labor department estimated the rule's aid to investors in the hundreds of billions for a ten-year period", do you mean that scrapping the rule would COST investors hundreds of billions over a ten-year period? Allowing investment advisors to choose which investments to recommend based on their own interests (as opposed to those of the investors) would seem, if I understand the dynamics correctly, to have that kind of effect.

Why, when I see this, do I think that this is probably the most spectacularly inappropriate way to measure the impact of the proposed legislation? Nothing that looks at the impact of the legislation on individual savings for those who are not investment advisors versus the impact of the legislation on individual savings for those who are investment advisors?

The average employee would probably not make the effort to elect out (which is the main idea behind auto-enrollment). Having actually elected out, the no-longer-average employee is very much more likely to go to the trouble of verifying that the deductions have stopped. So why didn't they?

Just wondering why it took the participant so long to notice that contributions were still being taken out of pay.