My 2 cents

My understanding: 1. What does the plan say? The plan can only pay expenses if the plan says it can. 2. If, as you say, the plan is being audited by the IRS, any services provided to enable the plan to maintain its qualification would fall into the category of expenses that can be paid by the plan (if the plan so permits). Nobody questions whether auditor expenses related to obtaining the accountant's report for a 5500 filing can be paid by the plan (if the plan so permits), and this would appear to be similar. Expenses related to applications for favorable determination letters would also be permissible for the plan to pay. Expenses for actions for the benefit of the employer (i.e., those required by ASC-715 or those related to plan design) must be paid by the employer and not the plan.

Based on my understanding, payment of survivor benefits to the surviving spouse of a deceased participant is not subject to the rules for retroactive annuity start dates. They come into play with respect to commencing payments to the participant, to ensure that the spouse is not shortchanged on the QJSA requirements. If the surviving spouse's benefit was supposed to start as of a particular date but you were unable to locate him or her, the plan probably ought to indicate that a delay in the commencement of the QPSA benefit would result in an actuarial increase. Alternatively, you might allow the benefit to start on a retroactive basis. It ought to be one or the other. Of course, you should have been diligently searching for the surviving spouse before the QPSA was supposed to start being paid. Why can you find the spouse now but couldn't before?

I think that plans subject to Title IV are not required to provide SARs (but they do have to provide Annual Funding Notices).

Not knowing the rules for 457 plans, I will answer based on my understanding of the rules under a qualified defined benefit plan. 1. It is virtually unheard of for a plan to allow any changes in the distribution option as elected once the participant has started receiving payments. However, many plans will allow the beneficiary under a life and certain (or certain only) option to elect, upon the death of the participant, to commute the remaining certain payments (i.e., convert them to a lump sum equal to the present value of the remaining certain payments). 2. With respect to what happens when the participant dies prior to benefit commencement, it is necessary to carefully review the provisions of the plan document. The plan document may require payments under a specific form or may permit the beneficiary to choose among two or more alternatives.

Sigh. As if they didn't already.

I thought everyone was bent out of shape thinking that the new tables would cost employers more? How would they hurt participants?

Considering the fact that, in many instances, the primary reason for excess contributions is to improve the AFTAP, it would be counterproductive to have a standing election to add excess contributions to balances. If the excess contribution is added to the PFB, the assets are reduced accordingly and the extra funds contributed do not increase the AFTAP at all.

The PBGC does not pay lump sums, so when would the PBGC be calculating anything other than annuities equivalent to the CB account? Is it not true that, were the PBGC to agree to cover missing participants under a non-PBGC CB plan, the plan would have to (a) calculate the equivalent annuity (under the plan's equivalence basis) and (b) provide the PBGC the assets necessary for that annuity (without regard to the balance in the CB account)? After all, when any CB plan terminates, the annuity rates for those to be paid annuities (which is everyone over $5,000 who does not waive the right to an annuity, with spousal consent) are set by the insurance company, and the annuity cost is NEVER limited to the current balance in the CB account! Were the PBGC to agree to cover missing participants under a non-PBGC CB plan, what would be different from the way the PBGC covers missing participants under a covered CB plan (of which, I have no reason to doubt, there are many)?

What possible reason could there be, logically, for restricting the options available to an alternate payee for receipt of their separate property assignment beyond any limitations on the options available to a participant? The alternate payee should be treated as fairly as the participant.

If the actual amount paid (or covered by election) is to be less than 25% of the prior year's minimum required contribution, unless you have good calculations for the current year, you have to ask yourself "Am I feeling lucky?" To be on the safe side, in your example pay (or elect) $175,000 (the maximum 2017-18 quarterly installment), and if the actual amount turns out to be $75,000, then you have already taken care of the 2nd quarterly amount due on 12/15/17 and a good chunk of the third (due 3/15/18). No harm, no foul. How you cover $175,000 depends on your cash flow situation. You can use up your prefunding balance (what good is a PFB anyway?) and kick in another $25,000 cash. I don't think you can elect "whatever is needed". Under a standing election applicable to quarterlies, you would have to commit to 25% of the prior year's minimum.

I have seen defined benefit plans that call for forfeiture in the event that the participant cannot be located, with provisions requiring restoration if the participant or beneficiary is found. I think the PBGC requires, however, that full provision be made for anyone whose benefits have been treated as so forfeited without regard to the forfeiture. I don't know what is required when the plan is not subject to Title IV. And what happens if the plan is being terminated in connection with the closing of the sponsor? Where would the money come from for restoration later?

Agreed - most defined benefit plans have provisions that say that in the absence of an election to the contrary (with appropriate spousal consent), the benefit will be paid as the plan's QJSA. That language supports beginning the payments without participant consent as of the date that payments are supposed to start. Give them their options and if they don't submit an election, force them to take a QJSA (granted, easier said than done). I don't know how defined contribution plans handle this issue. Of course, that may not work as well if the participant is missing. It also requires knowledge of the spouse's existence and date of birth.

What kind of option would a CB plan have that the PBGC would have trouble administering? Remember - the PBGC does not pay lump sums, and (other than the usual array of annuity forms) what would a CB plan offer?

Doesn't a company have to have a Social Security Number to pay someone*? Whether it is right or not may be a different story, but "if you don't have an SSN" should not be possible. *assuming that the company is at least pretending to follow the rules

What happens if the legal separation, approved by a court, denies the non-participant spouse any rights to the plan benefits (i.e., a sort of anti-QDRO)? Would the plan be able to accept a beneficiary designation not agreed to by the separated non-participant spouse? All questions become moot if the separated non-participant spouse is willing to sign off on the new beneficiary designation, don't they? Assuming that the plan allows that action when the participant is legally married.

I am not a lawyer, but the following is my understanding: If the former spouse is being provided for under a QDRO, the second spouse has no rights with respect to the portion of the benefit covered by the QDRO. No waiver is required from the second spouse - for all legal purposes, the former spouse is treated, with respect to the benefits assigned under the QDRO, as though he/she were the current spouse. The fact that the court order was issued after your marriage does not deprive you of any vested rights - it preserves the rights of the former spouse. To the extent that the total plan benefits exceed those assigned under the QDRO, you do have full spousal rights with respect to the excess. When you speak of being "vested" in the plan's death benefits, I presume that you are referring to a provision in the plan requiring completion of a one-year period of marriage for there to be a pre-retirement death benefit. I agree that a property settlement agreement calling for the ex-spouse to be entitled to half of the then-accrued benefit does not constitute a QDRO, but if, subsequently, a court order was issued implementing that division, which the plan administrator accepted as a QDRO, then the terms of that order are in effect and restrict the rights of both the participant and you. It is public policy that there be a legal mechanism to protect the rights of ex-spouses with respect to plan benefits earned during the marriage, and it would not make any sense to treat the interests of the current spouse as prevailing over the court-recognized rights of the ex-spouse.

It would be my expectation that the PBGC does not base its claims on the value of benefits as measured for minimum funding purposes (especially when measured using the funding relief discount rates). The funding relief rates have generally been in the 5% to 6% range (the three segment rates in 2015, which would have been used to measure the AFTAP, were 4.72% for the portions of the projected cash flow from the first 5 years, 6.11% for the portions from years 5 to 20, and 6.81% for years after 20) while the PBGC rates under Section 4044 call for discount rates in the 2% to 3% range (depending on duration). This can clearly produce much higher benefit liabilities. I would expect the value of the MTIA to be completely independent of the financial condition of the plan sponsor. I would also expect the PBGC to use a conservative basis in deciding whether and how much to claim from the bankruptcy estate. Bankruptcies do not escape them - they make it their business to become aware, almost immediately, of all bankruptcy filings. Did I see that they were removing bankruptcy filings from their list of reportable events?

"Couldn’t the retirement plan instruct the “old” insurer to deliver not money but the separate account’s securities to the “new” insurer? Then, the plan and the new insurer set whatever amortization formulas and crediting rates use the separate account’s securities within the risk the new insurer will insure. But what complications am I missing?" It may be doubtful that either the old or the new insurer would be willing to move (or accept) assets instead of values? I don't practice in the DC plan arena. Are stable value funds required to have guaranteed values or can they merely be relatively low-risk investments? Why is it unacceptable to transfer less than 100% of the book value?

There is nothing about the proposed tables that any enrolled actuary could have difficulty in using. The proposed regs include totally static tables (varying only by age and sex, with or without the small plan combination of pre-retirement and post-retirement rates, as had been the case for each prior year). Who can't do calculations using a static mortality table (even if the q's differ from any prior table)? There is no requirement to use dynamic projections, no requirement to use a 2-dimensional projection scale (not that most practitioners would have been unable to handle that - all of the major vendor systems have been programmed to handle that and most accounting firms have been demanding the use of such rates for ASC-960 and ASC-715 purposes for the past year or two) and, for plans under 500 participants, no requirement to use separate pre-retirement and post-retirement rates. Granted that the proposed basis needs to have hearings etc., but people should be poised to implement them quickly when they are finalized.

Just wondering why. The deceased spouse's 401(k) would show the distribution as a direct rollover on the 1099-R (so no taxable event) and there would not be 1099-R reporting required from the receiving participant's 401(k), right?

If the plan does not permit hardship withdrawals by alternate payees, the request should be denied on that basis. Are there any tax advantages* to receiving a hardship withdrawal over a partial normal withdrawal?? *It was noted by QDROphile that there is no early distribution tax on distributions pursuant to a QDRO, and I have no reason to doubt that. If normal withdrawals are subject to the standard minimum withholding but hardship withdrawals are not, that is NOT a tax advantage - amounts withheld are inevitably either applied to taxes due or refunded. If you owe $8,000 in taxes for a distribution and $10,000 was withheld, you file and get the $2,000 back. If you owe $8,000 and $6,000 was withheld, then you need to pony up the $2,000 underwithheld.(plus, if applicable, underwithholding penalty). Required withholding is not a tax impact.

I am not a lawyer and don't practice in the 401(k) arena, but it seems to me that if the participant is already covered by the 401(k) plan and the 401(k) plan allows rollovers in, the fact that the amount being rolled over comes as a spousal rollover from the deceased spouse's account and not from another employer plan covering the participant should not get in the way of the 401(k) participant being able to roll that money in. I could be wrong, though.

My vote is that the unpaid balance falls out of restriction if either the plan gets to 110% before all the installments have been made or if the unpaid balance falls below 1% of the plan's total, and the balance can then be paid out. Incidentally, I just want to make sure that it is well understood that just because the installments are equal to a year's worth of life annuity payments, there is no potential forfeiture due to death. The account belongs entirely to the restricted participant and does not return to the plan if death intervenes. The only thing that can take it away is the sponsor failing, resulting in a claw-back situation arising.

It would not surprise me if the plan would permit the AP to receive a partial distribution of his or her account (with the amount payable now being under his or her control). If the account is $15,000, all of which is eligible for payout, why shouldn't he or she be able to take $5,000 now and defer the receipt of the remainder? If the plan doesn't allow that, why would it allow it with the complications of application for a partial withdrawal subject to demonstration of hardship? If the withholding requirements would depend on whether it was a mere withdrawal or a hardship withdrawal, that makes no sense. It's all taxable as ordinary income either way, right?

To cover the situation where the designated beneficiary predeceases the participant and only that situation. If the participant dies but is survived by the beneficiary, then the death benefit belongs exclusively to the beneficiary. I suspect that few, if any, pension plans permit the beneficiary who is to start receiving death benefits to elect his or her own beneficiaries for those death benefits (to cover the death of the receiving beneficiary prior to the completion of the payment of those death benefits). At least that is my understanding.