ESOP Guy

Read literally the client is correct. It is late but do you think there is a legal problem with the client's reading? If not, run it the way they want and in the document. There clearly is no law that say it has to be 12 months and 1,000 hours. The only question is is there a law that say you can't say once you reach 1,000 hours in 12 month you enter? I haven't seen this but I just got a new client whose Year of Service is a plan year where they work 500 hours. Eligibility says you enter upon being 21 and working a Year of Service. You enter on the 1st day of the month following. Everyone seems to agree that means you enter on the 1st day of the month following working 500 hours. That is the oddest way to say that but odd and not right aren't the same thing.

Yes you can expect an assessment. it has been a while since they came out (last 3 or so years) ago guidance on how to file these late if the 5500 has a DFVCP (whatever that acronym is. I file so few 5500s late I have to look it up.) I used it once but the 5500s were late. I would see if that has any guidance on what to do if just the 8955-SSA is late. What I can tell you is when we did that with the 5500 being late there was a $0 assessment for the 8955-SSA. But I have seen once a client who file and get an assessment- we got it waived when we proved timely extension. I have heard of other saying they get hit.

The document will answer this question in my opinion and I would be shocked if it supports the idea of using the rehire date in this case.

I agree with David "freezing" did not mean the amount of money in the account will not change. I would not recommend going to the DOL first if you still think you have an issue. If you think Vanguard was too slow or non-responsive I would talk to the HR department at your spouse's former employer. They are the ones that work with Vanguard and they are the ones who hired Vanguard. Vanguard has an incentive to keep them happy. My condolences on your loss.

Isn't there always an excise tax due on a PT? So not reporting it is a failure to pay a tax due isn't it? https://www.irs.gov/retirement-plans/retirement-plan-investments-faqs

I would start be re-reading the document. Is the definition of hours linked to hours worked AND paid BY the sponsor? A lot of my plans talk about paid at least. If it doesn't clearly say "by the sponsor" I would do the following. I would also make sure your plan has the standard language that says the Plan Administrator (PA) is allowed to make reasonable interpretations of the plan document in a non-discriminatory manner. I would then see if people are comfortable with the PA saying a reasonable interpretation of the document is hours are worked and paid by the sponsor. That does seem like the natural reading of the plan document. I have never researched this specific question but off the top of my head I doubt you will find a clear cite on something like this. This is merely my reaction to the question nothing authoritative.

See Q3 and its answer. https://www.law.cornell.edu/cfr/text/26/1.401(a)(9)-5

I worked for a large firm that had IT people that allowed us to program based on the file specs a FIRE file for 1099-R many years ago. So I am assuming you could do that with the 8955-SSA. I do recall it helped that I had the help of an IT person and I have a degree in Accounting and IT as it would be overwhelming for a novice. I agree if you can find a friendly TPA who has the software you feel comfortable working with you might be easiest.

I am glad you think the DOL is helping. I am still curious do you know who the trustee that made the critical decisions at the time of the sale?

I once had a plan for a lawn service that had a generous PSP and he made people wait 3 years. He wasn't paranoid he could tell you the names of guys who left him in the fall and by the next spring had a new pickup truck, lawnmowers and other equipment competing with him. The problem decreased dramatically after the wait provisions were put into place. I guess it depends on easy of entry into market. You can get into the basic lawn care business for maybe $20k or less depending how much of a loan you can get on the truck.

I agree maybe I was reading the OP wrong but it doesn't say after 12/31/2018 but on 12/31/2018. I recent comment makes it clearer that it is after 12/31/2018. Which yes is a wait until at least one year after the year of termination provision.

Also, I am curious did they really say it would be 12/31/2018 when you would get paid or "no later than" 12/31/2018? I would find the idea of paying you exactly on the last day of the year really odd but saying it will be some time in 2018 more normal. It just could be they aren't 100% sure when in 2018 and so they are giving you the latest date it will be done by.

You are one of several people who has made a version of this point in this thread and I don't get it. I mean how are you qualified to know if this interferes or not in the free exercise of their religion? If this person thinks there is an ethical issue with being a participant in the plan in what way are you qualified to say otherwise? If the plan puts the person into an unethical position that in my mind is an interference in their free exercise of their religion. Let me be clear I am not saying their belief has to be accommodated in this case as it might be unreasonable or for some other reason. If so, then that person can decide if they need to find a new job or not. I merely find it interesting how many people on this board seem to think their qualified to tell another person how their religion works.

As far as I know this hasn't changed regarding escheating. https://www.dol.gov/agencies/ebsa/employers-and-advisers/guidance/advisory-opinions/1994-41a

It is my understanding the DOL does not believe an ERISA plan can turn assets over to the state ever. You need to either put it in an IRA, now the PGGC program (if elig) or reallocate as forf (if applicable which is hard at plan termination.)

I know no one who thinks you can change it for people in pay status. Most will cite 409(o)(1)(c) which requires ESOP payments to be substantially equal. You can get vigorous debates on people terminated and whose payments have not started. It is clearly more aggressive. Most people I know shy away from it and make the change to the policy to say something like: This policy is for anyone who terminated after xx/xx/xxxx date. I have however, seen change apply to terms not in pay status. I have never seen any clear ruling or cite for the terms not in pay status. It is more of a risk tolerance thing as far as I can tell. I have to admit I have never seen an SDP warn people it could change after they terminate either. Not sure if that boosts the case you can do it. I know you can search and find a thread on this board were a person was asking about a person who completed the form but the check hadn't been written. That was cutting it real close! (I believe I advised against it but I am going off memory.)

I am more concerned by the idea you aren't going to pay anyone until NRA, death, disability or diversification. Unless there is a loan that purchased all the shares in the plan don't you have to offer a distribution after the 5th year after termination? https://www.nceo.org/articles/esop-vesting-distribution-diversification

It isn't obvious that the employer can do nothing. Most employment law requires "reasonable accommodations" of religious beliefs. I am assuming this is what Jpod is referring to when he says Title VII doesn't apply that he is saying either those rules don't apply here or this isn't a reasonable request. But it is dangerous to just dismiss this out of hand as the employer gets to decide end of story. Let me be clear here I am NOT an expert on this part of the law so it very well maybe you either don't need to accommodate the person with ERISA plans for some reason or asking a plan to amend so it carves you out is not a reasonable accommodation. I am merely pointing out you have to ask those kinds of questions.

If you are going to amend (not endorsing or objecting to the idea) the plan why not make it more generic and long term useful? Something like the plan excludes any employee who certifies they have a religious objection to the plan? Maybe getting a waiver is the same thing. Just guessing but if there is one such person there might be a community of them in the employer's area. The objection might come across as off beat but typically they congregate at a place of worship and not come up with the objection on their own. I would add if it is an objection to interest one of the world's largest religions has that as a core belief.

In the past were they more people in the plan. If you read those rules carefully the full vesting goes back to when the plan first stopped making regular contributions. So if you go back were there people paid less then 100% of their balance? That retroactive look to this rule catches people at times. Other then that I got nothing coming to mind as to why one would need CAP.

I think the original question has been answered as best as it can be. If there was no form, which the question implies, then the document tells you who the beneficiary is.

Not trying to be evasive but isn't the answer to your question- depends? It seems like if they are really offering the right to all the other employees to defer and roll money into the plan and they are simply choosing not to do so I am not thinking of a reason why it isn't legal. On the other hand I do think it is odd no one is deferring. So if it turns out that the owner isn't really given the other people an opportunity to defer that would be a problem. That at least is my initial reaction. One needs more facts to know for sure if it is all on the up and up. But on its face I can't see a problem.

The document is going to tell you who the beneficiary is if there isn't a valid beneficiary form for whatever reason. As for the question if no one shows up to claim the money the question then becomes at what point, if any, does that then fall under the lost participant section of the document? But once you decide this is a lost participant the document drives the results. And to me this is the only hard question. The first question- who is the beneficiary- is a simple question of going through the steps the document spell out for who the beneficiary is when there is no form. So I like I said before and people keep saying look to the document.

If all else fails I will take the money off everyone's hands! On a more serious note the document will tell you what to do.

This group will make them for you!