ESOP Guy

Just a simple prediction here that doesn't really help answer this question. Anyone who can't take more loans and needs to play these kind of games to pay bills is going to not pay it back 60 days later. So while your advice needs to be correct obviously it is all academic most likely.

It is the Plan Administrator's call. I think the PA has the ability to interpret the plan as saying last day includes last work day if 12/31 falls on a day not normally worked. We would not make the client change the census we would tweak our system to conform with the PA's wishes. We would document this whole thing as you just set precedent (as david notes) and make sure the client is consistent after that. As a general rule I find most client will call this the last day of the plan year. I had one client years ago whose union contract was very clear the plan had to treat the last Fri of the year as the last day if the 31st fell on a Sat or Sun.

It sounds like the accountant is confusing IRA rules with Qualified Plan rules.

I want to check my sanity. I am taking over an ESOP and I think the prior TPA didn't handle vesting for rehires correctly via the Rule of Parity. I know of no exception to that rule. If the person had any vested amounts prior to termination upon being rehired they get all their Years of Service for Vesting is my understanding. This is regardless of the number of BIS. For example: There is a person they are telling me had 8 YOS when they terminated. As such he was 100% vested with that money. His money is still in the ESOP even. The person was rehired well after 5 BIS. They show him as having earned 3 YOS since they were rehired and thus 40% vested on the new money. Am I missing something or is that a clear violation of the Rule of Parity?

https://en.wikipedia.org/wiki/A_Planet_for_Texans Quote from summary in article: Silk is welcomed to New Texas with a giant barbecue, where he sees a trial and learns that assassination of politicians is a legitimate part of the New Texan political process as long as the assassin can show that his victim “needed killin'” If I recall correctly one such assassination and trial was when a politician proposed an income tax. The defendants were found innocent. The jury decided that politician just "needed killin". Other interesting science fiction books that can get you thinking about political systems/philosophy regardless if you agree or not with the author would include by Heinlein: The Moon is a Harsh Mistress (Also an excellent read in my mind) Starship Troopers (book not that crime against humanity of a movie)

Can't agree more there. I wish more plan documents were written by attorneys that had TPA experience or talked to TPAs and a few HR people.

I am not sure the way the QDRO is set up in the original question is "smart" thinking but it appears to be legal thinking.

The key here is to note the QDRO did NOT order to pay the benefits BEFORE the person became vested. It says once the person becomes vested THEN the Alt Payee has a right to those benefits. So the Alt Payee has to wait years to find out if she will be paid a benefit or not. So the DRO is qualified. See Larry Star's quoted material for additional information and examples.

I came to love Omni+ once I mastered it. I loved the flexibility of the custom calculators and the system over all. Its flexibility can be its draw back as other systems will do some of the work. I learned the 4k business on Pentabs and if you set up the plan specs right and loaded a good census 90+% of the time the first results you got from it were the correct results. Omni+ doesn't hold your hand like that but there was no allocation issue we couldn't program to solve once out group mastered teh custom calculators. I found their distribution system to be excellent.

The beneficiary has to take an RMD based on their age using the Single life table in 2018 unless they elect the 5 year rule. The RMD section of your document covers this situation. If you are using a prototype it might be in the base document but this is covered in it.

Maybe I am being dimwitted but I don't see how this can't be accomplished. You build a spreadsheet doing the initial divide. You keep the AP's unvested assets in the original account. Every year you compute the amount the AP is do (if any) and do another transfer. To me the hard part is making sure there are no distributions made out of the original account without a final accounting of the AP's share. I understand why this would be seen as error prone as it is that. But not doable I don't see that at all. But I admit it has been over 5 years since I worked in the 4k world and it was mostly balance forward even back then. But I did do some daily work and that is how I would have solved this problem.

Could be I was never a member of ASPPA I just thought it would make an interesting question.

Sounds like we have an ASPPA question for the IRS.

Are you saying you have NOT filed the required forms since 2015?

I have not seen a cash incentive to take a distribution. On the other hand if you do all the documentation correctly I have seen plans that charge certain fees to terms that leave their balances in the plan. These fees aren't charged to the actives. It has been a while since I have worked on such plans but I seem to recall the SPD had to be clear about the fees. The distribution forms have to be clear about the fees. That seemed to help get the balances out of the plan.

Always nice to have a happy ending.

I agree giving him a full allocation is the safer route.

I suppose one could ask the question did this person really terminate in each of those years. That is a more difficult question in my mind. But if it was a bonafide termination in each of those years he retired each of those years.

Glad it helped you serve a client better. This is what this forum is about!

I have never seen a limit either. it tends to be age and/or mortality that limits this- ie- the person just decides they are too old to keep going back and doing projects or they pass away so they can't be rehired. But I have never seen a limit via plan provision.

It is driven by the plan document. IF your plan document is like ALL the plans I see then this is true: I have this conversation with clients all the time. It doesn't matter if the client thinks they retired or not. It doesn't matter if they give him a party and a gold watch. It doesn't matter if they fire the person or they leave voluntarily. In every plan I have read if the person separates from service and is at or beyond Normal Retirement Age they will have a Normal Retirement Date. As such they have retired. All that matters is age and if required by the plan service and they are no longer employed. I have even seen examples where the person is rehired to do a small project a year or two later and then they leave again. They just retired again and will another profit sharing contribution at least (in this case it is rare the person makes any 4k deferrals so match wasn't an issue) is due. So read your document very carefully and see what the definition of Normal Retirement Age and Normal Retirement Date is. Then read you allocation sections about allocations to someone who has reached either their Normal Retirement Age or Normal Retirement Date. You will most likely (about 99.99% sure) you will find out this person retired per the plan document and is due a contribution. Not trying to be mean but this is a classic example of the answer really is in your document.

I would give serious thought to 2nd choice. When was the dist form signed by NHCE? Can you still use it as the basis of how to pay the person? I forget is a form good for 180 days? Too small dollars to set up an account and send forms if it can be avoided.

That might be an understatement! I was amazed how long it took us to get a person ASSIGNED to use to START the process to upload ESOP data so it could be added to the 401(k) statement. (Months to get a contact person to start the process!) I won't even bother with a discussion of how long it took to actually get a simple data transfer set up! I wish I could give my clients that bad of service and keep my job! Life would be easy!

So was this an ESOP of shares that are publicly traded or not? I would point out you have mostly speculation instead of facts at this point. Courts care about facts not what you think is true. Also, mere bad timing of a sale you agreed to is not actionable.

I agree he turns 70.5 in 2018 so as long as he has a zero balance at 12/31/2017 the plan doesn't owe him an RMD. If things don't go as planned and he gets any payments in 2018 the first dollars leaving the plan are RMD dollars.