ESOP Guy

We do help our clients look for lost people who need an RMD as no one likes an uncashed check hanging on the books. We don't do it until very close to the RMD date or if the check really does go uncashed.

Add another voice that is objecting to the annual part of this idea. We look for or advise our clients to look for people when it is relevant. Although places like Inspira people send a lot of forced out to IRAs to them does an annual search. Not sure if it is part of the base fee they charge those IRAs or an add on What I do know is that a few hundred in an Inspira IRA needs to have an incredible rate of return to not have the balance go down annually.

The moral of this story is: Folks make sure your beneficiary elections are complete and up to date as you aren't doing your heirs any favors if you don't. I can't tell you how many times I have said that sentence to someone of the job.

Also understand if the estate is small enough in many states the beneficiaries of the estate can use a "small estate affidavit" I am NOT an expert and it isn't really the TPA's job to educate people on them. But we see them on a regular basis and it seems to allow a fair amount of skipping of the probate process. You now know close to 100% of what I know and I am not sure if I helped or not.

Your math and logic is all wrong. Read the IRS examples: https://links.us1.defend.egress.com/Warning?crId=6984f4a2c933bcd338c721dd&Domain=oneblueridge.com&Threat=eNpzrShJLcpLzAEADmkDRA%3D%3D&Lang=en&Base64Url=eNrLKCkpKLbS1y9JTcwt1svNTC7KL85PK9FLzs_Vz01NLdE3MrE0s7AwMbe0tDA3M7IvsA21zEsvrfIrzM4M8CrLyvIMzQYALWcXFw%3D%3D&@OriginalLink=teams.microsoft.com

Ok lets be dumb and set aside the oddities but they have been covered enough I won't beat the dead horse too much. I would check if this is an Affiliated Service Group. I have to admit I know enough about these to know to look as you see them infrequently. I mean what are they doing for this company as "owners" if not managing it? It might not be a service organization for example. My guess even if they think they can thread the needle on the Affiliated Service Group rules and so forth in an audit the way they are being paid becomes the issue. This seems to be set up to exclude the rank and file from benefits they want for themselves. I just try to avoid the stink of pigs in this job and this has the stink of pigs trying to get benefits for themselves they aren't willing to give the rank and file.

Does the RR plan document allow for the RR in? Are the NR union employees excluded by document and the benefit subject to good faith bargaining? If you are excluding the one group by document and they had good faith bargaining to that effect that is a statutory exclusion. They aren't in the coverage test. I am pretty sure you test the included union people separately from the non-union for 410b testing by regulation. But check me on that or someone tell me I am wrong. It has been a number of years since I had a mixed union and non-union plan. The first step is to make sure the groups are included and excluded per the document and contract and move forward from there.

Yeah, the times I have seen this error we didn't put this much thought into it. We got the money moved to the correct plan. If we thought it was material there was some earnings transferred. I have to admit I don't recall any of these plans ever getting an IRS or DOL audit also. But at times the KISS Principle works.

You may have thought of this already but there are a lot of important side issues. I have had this happen before. if the first check was paid in 2025 and you reissue can you stop the 2025 1099-R? If not, will there be a 1099-R for the original check and whoever gets the new check? it seems like there shouldn't be two 1099-Rs. I know a lot of banks don't allow even the correct person endorse and deposit a check in a dead person's name so while maybe legal my guess that check can't get deposited. However, the person had the check so it is taxable income to the deceased. If no 1099-R ends up in their name that isn't going to be an issue most likely. After that it is an asset of the estate in my mind. My guess the plan needs some advice of an attorney like mentioned.

We will ask the client to ask the attorney about that provision. Thanks for your help!

It is an ESOP so it is an ERISA governed plan.

As the title says I just came across a plan document that defines a Break in Service as any year the participant works <1,000 hours. I don't recall ever seeing the number of hours being more than the <501. I have tried looking up the code and regulations and I see nothing that allows it that high number of hours. Thanks in advance.

You're just muddying the water unnecessarily. Even you admit that all the plan has to do is distribute the shares if the company wants to buy them. Or more likely the original commentor is using nontechnical language for a very technical event. Since he mentioned the putting the money into a money market more likely the company isn't actually buying the shares but recycling them within the ESOP. To most people in the ESOP and not in the industry the ESOP and company are basically interchangeable when legally they are very different. This company would have to have the most incompetent advisors to have the company buying these shares directly from the plan when there are so many ways to avoid the issue. I stand my advice you would be wasting your money to go to an attorney. Answers to non-technical people should follow the KISS principle: Keep It Simple Stupid works well. Reality does bring up a good point you could ask if they think a money market is prudent to invest your money. Or better take your funds out of the ESOP and get a better set of investments of our choosing in an IRA if you want.

I would have been in jr high (what middle school was called in the '70s for you Gen Z) when Visicalc had its day. I seem to recall the name when you bring it up but I don't think I used it ever.

I did too