ESOP Guy

The person needs to tighten up the terms in my opinion. Can you even do a transfer from one plan to another for a terminee? I have always understood a transfer to be a plan administrator/trustee initiated movement of money. Most common example is you terminate an MP plan for example and you transfer all the money to the related 4k plan. In this case you aren't asking the people if you want the money moved you are simply moving it. How can you move a person's money to an unrelated plan without their permission? Once you have their permission isn't a type of distributions? if so, then it is a direct rollover not a transfer? I could be wrong on this but I have never seen something could be called a transfer from plan A to plan B that isn't related to distributed a terminated employee's account balance in all the decades I have been working in this field. It raises all kinds of questions. In the transfer used in the example above you have to keep all protected benefits so you would still have to offer J&S on the MP money. Is that true if you do a transfer to an unrelated plan? Who would accept an unrelated plan's restrictions like that? So is this person talking about a direct rollover or a plan to plan transfer the words matter?

Isn't the point of them being an excluded class is you do NOT have to let them in the plan? If they work the 1,000 hours in a year they have to be factored in on tests but they still don't have to be allowed in the plan. The key is you have to find a classification that is something other then people who work 20/hours a week as that is not allowed. But if you can define them as all janitors, for example, you can exclude them even if they work over 1,000 hours in a plan year. That will merely hurt testing.

That is the date for your 1040 if you haven't done it already.

Another quirk of elapsed time is a person can miss getting another YOS by a matter of days which seems unfair-- i know life isn't fair and all. But I have seen examples of a person who literally left their job less then 1 week from going from 0% vested to 100% vested in a cliff vesting schedule and elapsed time. You can say they should have waited to leave but the average person doesn't think that way.

I think this is one of those issues the TPA shouldn't decide. This is one of those issue that all plan documents give the Plan Administrator the discretion to interpret the document in a reasonable and nondiscriminatory manner. Having said that the client is going to expect a recommendation from the TPA. Every place I have worked the answer was: If you aren't open on the last day of the year and the person worked on the last day the business was open and the person could have worked the plan should treat them as employed on the last day. No employee is going to write their termination letter saying I quite as of the Saturday or Sunday after I leave for good. I find the question given to the IRS poorly worded and thus the IRS answer is poorly worded.

You are still not getting it. Let's say there is a reduction in force that effects only NHCEs but isn't large enough to be a partial termination. Then you make actives 100% vested. There is a facts and circumstances part to the nondiscrimination rules that you need to be concerned about. This can look like you vested after removing a large number of NHCEs from employment and then targeted a group that includes the HCEs to become 100% vested. It strikes me as a rare set of facts but My 2 Cents raises a valid issue. If nothing else the optics could raise more questions then it is worth.

I am like everyone else here I have never seen a rule that says it has to be received before death. The question is the convenient timing of it being found raises concern.

The issue raised wasn't a cut back but discrimination. Although a large enough reduction in force would most likely result in a partial termination and 100% vesting of those people.

I have used PBI before. http://www.pbinfo.com/ I liked the service and price. I was talking to a Millennium Trust people earlier this week at the NCEO conference and they have a search service also. I have no experience with them but they will telling us they can even find people who have moved back to Mexico.

It has been a while since I had a 1st year plan re audit rules. But unless there is a cost of an audit at stake here what is the upside of not filing? The cost of a 5500 tends to be too small to risk getting called out for a late filing penalty. So Yes

In an ESOP at least the shares in the plan the law is clear the trust owns the shares. So if Mr. Smith has over 5% of the shares in his account that does NOT count for HCE purposes because he doesn't own the shares. I believe that is true here where it is a PSP plan trust that owns the shares. So if 100% of the shares are owned by the trust then no human owns any shares. Although most ROBS I have seen (as noted above) the plan doesn't own 100% of the shares more like 99% of the shares. I have seen PSPs that own 100% of the shares however.

I think you are overthinking it. The fact this isn't cash doesn't change the classification in my mind. So put it on the line with any other rolled over assets if any. (And then move it to where the auditor says.)

You can exclude interns as a class. They might not be excludeable from the coverage test if they work enough hours and are over 21. For vesting those all years count if they have a year of service. As rule you can't exclude part-time employees as a class. I believe that is seen as a backdoor service requirement that violates the rules. Now if the part-time employees are all in one class (they are all maintenance workers for example) you can exclude the class but you might have to factor them in coverage testing.

Wow put me down for a couple of billion!

What I can tell you is the note gets you past the computer edit checks. If you say the plan is large enough for a report to be attached and there is no pdf attached the computer rejects the filing. However, since a computer isn't smart enough to know the difference between a note and a report it simply accepts any pdf attached. We have filed with a note when the report wasn't ready on time and then filed an amended form when the report was ready. It so far has worked even if it is playing with fire.

K2retire mentions something I has said in passing above and it is worth repeating. That is why I would start by asking if when they think they will pay out. They don't have to pay you the year after the QDRO but some time down the road. But they should be willing to give you an idea what the triggering event is to start the payments.

There is no reason for them to not give you a copy of the Summary Plan Description (SPD) upon request. It will at least give you some idea who distributions work although it might not address Alt Payee directly. You have a right to an SPD. So I would push for one. I would ask them again to describe to you when they think you can start to be paid. Be aware if the stock isn't publicly traded on an exchange they might not know the current stock price until it is appraised. That can take months in the best of plans and until the summer for most. They should be able to give you a general idea. Something like "...we typically make the payments in the fall and it is our understanding you will get distribution forms then." In the end, once you get the SPD if they really just refuse to work with you the SPD will describe who you send a formal written claim for benefits. Once you start the process they are obligated to tell you if you are due a benefit or not and why/why not. Send a written claim for benefits certified mail and compel them to at least reply to you. Lastly, you can always file a complaint with the DOL. I never recommend going to them first. It is a pretty hostile move and people tend to lawyer up in response. Also, it is the government, so it doesn't move fast. There is also a good chance they are following the law and plan document just no communicating that fact well so you might not get the response you want.

I always cringe when I hear I am being assigned a client who did the plan's work in house before me. The odds of a VCP are always very high.

It is hard to understand what your question or concern is. Are you the participant or the alternate payee in the ESOP? (Or put another way do you work for the ESOP company or the former spouse of the employee?) Do you think you are entitled to a distribution from the ESOP? If so, be aware ESOPs work on their own pace. If the company's stock is not traded on an exchange they have to go get the stock appraised and all the annual work done. This might not be done until the summer or even some times the fall. I work with some ESOPs that won't make payments for the 12/31/2016 plan year until Nov/Dec of '17. I have some that will be starting in May. Also be aware even with a QDRO a plan isn't required to pay you until the terms of the plan say so. This can be years in the waiting. (Assuming you are the Alternate Payee) So if you wouldn't mind answering my questions, it might help in getting you better answers. Either way, it sounds like you think you have shares in an ESOP. They should respect your request for a copy of the Summary Plan Description (SPD) if you have shares in the plan. This should give you some basic idea of how the plan is run. It also tells you who the Plan Administrator is so you can focus future questions towards the correct party. See if they can give you any idea when participant statements are issued for the plan for any given year. Don't be shocked if they come back and say next summer or fall (it could be this spring). But at some point you should get a statement saying how many shares you have and what they are worth if the QDRO gave you a benefit or you had to give up a benefit to someone else..

The strict legal answer is they should file all the forms it seems to me. However sort of like David's comment I have not seen any interest from anyone at the IRS or DOL to look at returns before EFAST2 returns. I guess it is a risk tolerance vs cost balancing act if you do less then all of them.

Mass Mutual is most likely not the legal Plan Administrator. I agree with Bill the two sides need to have a discussion and get the same answers to the questions.

There is the answer no hardships. The idea of ESOP money paid over 5 years is very common.

I guess we need to step back and make sure everyone (mostly me) understands the facts although the basic answer is most likely still correct- that is to say most likely the plan terms control. Is there really two plans or is this a KSOP? A KSOP is an ESOP that has a 401(k) component but is legally still one plan. They can operate like there are two plans but I am starting to wonder if this isn't a KSOP. So employee Joe terminated from Xyz corp in 12/15. His ESOP balance was rolled to the Xyz corp in 11/16. It sounds like the company moved the funds and this wasn't an election by Joe. Is the above correct? Can Joe just take a full distribution of all the funds in the 401(k) plan? If so, why not just do that? If not, what conditions need to be met to get 100% of the funds out of the 401(k) plan? Once again most likely the plan provisions would control here and you would have to ask about a hardship withdrawal. The plan isn't required to offer a hardship provision and it would be very rare to offer one to a terminated employee. I am getting stuck on the fact the person is terminated and can't get his money. It is sounding like this might be a KSOP that cashes a person out of the company stock but still makes them wait 5 years to get their benefit. They simply use the 401(k) portion of the plan to park the cash until the distributions can be made per the terms of the plan. If that is true then they wouldn't offer a hardship because the point is to make the person wait the 5 years. So bottom line is most likely there isn't any hardship option for this person. They are never required to offer a hardship distribution. I hope I am helping and not making things more confusing.

Also do you mean you have been terminated or the ESOP has been terminated? If you are terminated then can't you just take your full benefit from the 401(k) plan? Also, it is rare to offer a hardship payment to someone who is terminated because they can take their full benefits. My first answer assumes you meant the ESOP was terminated and you are still employed by the company that had the ESOP.

It is governed by the terms of the plan. Ask the plan administrator if it is allowed. It might be allowed but the plan would not be required to offer a hardship payment of funds rolled over to a 401(k) plan from an ESOP or any other type of plan.