ConnieStorer

Hi Belgarath, I worked on a defined benefit plan many many years ago that was covered by a Union. The Union agreed to the retroactive freezing of accruals. I brought up the anti-cutback rules to the attorneys involved in the negotiations and was told that the CBA took precedence over ERISA regulations. They did not give me a reference site but they were the attorneys in charge so I did not argue the point.

Thanks everyone. I really like austin3515's suggestion to go with the 4% SHNE. We are possibly adding a Cash Balance Plan and the gateway will be at least 7.5%.

Based on my google search it appears that I have until 12/31/2025 to amend a 401(k) Plan for the 2026 Plan Year regarding the Safe Harbor Match. However, I cannot find anything that specifically states that the Amendment can change the Safe Harbor Method from a SH Match to the SH Nonelective. Is this allowed? The client has already distributed the SH Notice to the Participants stating that the Plan will provide the basic SH Match for 2026. If the 401(k) gurus out there believe I can amend the Plan, then I will prepare a new Notice stating that the Plan will be providing the SH Nonelective rather than the Match. Thanks for any input.

I have a somewhat unusual situation. We have a defined benefit plan that was frozen back in 2017. The Plan Sponsor recently amended the Plan to allow for lump sum payments. We had a terminated vested participant who just passed away. The only death benefit was the QPSA for married participants. This individual was divorced (I believe back in 2020). The Plan sponsor received a copy of the divorce settlement from the ex-wife after the Participant died. The divorce settlement stated that the full benefit from the defined benefit plan was payable to the spouse. No QDRO was ever written. The Plan Document is an FIS Cycle 3 Document with the following language: 5.22 QUALIFIED DOMESTIC RELATIONS ORDERS All rights and benefits, including elections, provided to a Participant in this Plan shall be subject to the rights afforded to any Alternate Payee under a "qualified domestic relations order." Furthermore, a distribution to an Alternate Payee shall be permitted if such distribution is authorized by a "qualified domestic relations order," even if the affected Participant has not reached the "earliest retirement age." For the purposes of this Section, "qualified domestic relations order" and "earliest retirement age" shall have the meanings set forth under Code §414(p). A domestic relations order that otherwise satisfies the requirements for a "qualified domestic relations order" will not fail to be a "qualified domestic relations order": (i) solely because the order is issued after, or revises, another "qualified domestic relations order"; or (ii) solely because of the time at which the order is issued, including issuance after the Annuity Starting Date or after the Participant's death. We told the ex-wife that she needs a QDRO before any payment can be made. However, there is some disagreement in our office as to whether or not there are any benefits payable to the ex. My arguement is that the Participant died prior to the request for any payments to begin. He had attained Early Retirment Age but was a few years from Normal Retirement Age. As an unmarried Participant, there is no death benefit so the ex is not entitled to any benefit. Another administrator in the office thinks that if a QDRO is written, then the death of the participant should not affect the payment available to the ex since she was the Alternate Payee and entitled to 100% of the benefit. I still think any benefit payable to the ex is contingent on the Participant being alive at the time an election is made. The Plan Sponsor has no problem with paying the benefit to the ex if she can get a QDRO issued. Any thoughts out there on the benefit payable in this situation?

Hi Audrey, Most documents (FIS at least) says to use years in which the participant receives credit for TH. If the participant does not work 1000 hours in a year, then they should not receive credit for TH for that year.

Thanks everyone. The normal url that we use does not show the updated rates. Guess I need to snoop around more.

Does anyone know when the updated segment rates will be available? The last rates we have are January 2025.

I am assuming that you use FIS/Relius. We had to go in and fix the rates in our system after we ran the global updates. Someone in Jacksonville is not doing a good job of checking their work.

I have a terminating Defined Benefit Plan with assets in a pooled account at Vanguard. I prepared my standard Letters of Authorization for the Trustee to sign and submit to Vanguard for the benefit payments. Vanguard said the Letters were not sufficient but did not provide any alternative. Does anyone have a form or template that they have successfully used to get payments made from a qualified plan with Vanguard? Thanks,

I would like to think this would work but the deferrals were reported on the 2023 W-2. They were Roth so no tax consequences to the participant.

I have an ineligible employee who was allowed to defer prior to meeting eligibility. I would normally just amend the Plan to allow early entry for this employee. My only concern is that the Plan is Top Heavy. Is there anyway to avoid allocating a Top Heavy Benefit to this employee?

OMG That is so true.😂

Hi Jakyasar, That is my understanding of how the calculation works. Attached is a little spreadsheet that I use when I am forced to calculate a premium based on 74-307. Definitely not a fan of insurance in a qualified plan. Rev Ruling 74-307.xlsx

This is a small plan. The Trustee is the Plan Administrator. I have no clue as to why the Trustee/Plan Administrator is so adamant about paying out benefits now. No one has submitted a claim.

Very strange situation. Participant dies with no spouse. He does have minor children. The Plan document (FIS prototype) provides the order of payout. Since no spouse, the payments will go to the children. The Plan Trustee reached out to the parents of the deceased participant assuming that they would be the legal guardians. The Parents will not respond to the Trustee. At this point the Trustee wants to send the death benefit to the state's (Ohio) unclaimed funds. We cautioned the Trustee that this was not the appropriate action to take. The Trustee is totally fed up with the situation and is asking what he can do. Does anyone know if there is an agency that can be contacted to obtain information on the legal guardian of the deceased Participant's children. At least this would confirm who the Trustee needs to contact in order to pay out the death benefits. Any other suggestions would be greatly appreciated.