jpod

That case is not relevant to a non-ERISA plan.

You are correct that ERISA doesn't apply. Whether an audit is required for reasons other than ERISA is a different question.

If these are both one-person plans exempt from Title I of ERISA then neither the general fiduciary rules of ERISA nor the PT rules of Section 406 of ERISA applies. The IRC Section 4975 PT rules still may be a concern, but note that whereas this would probably be a per se PT under 406(b)(2) of ERISA there is no provision like 406(b)(2) in IRC Section 4975. However, there still could be another self-dealing type of PT under 4975, even if neither plan is a disqualified person with respect to the other plan.

When you say "Plan Sponsor," do you mean the prototype plan sponsor or the employer?

I would say it's a distribution and sleep fine at night. Where is the harm to the plan in taking that conservative position? If the issue is cleared up and the funds are released but too late for the participant to do a 60-day manual rollover (assuming she wishes to do that), this would seem like an easy case for one of those IRS waivers of the 60-day period.

This is quite common. As long as it is open to everyone with no restrictions or conditions there shouldn't be any problem. Pretty sure EEOC clarified long ago that the fact that the benefit declines with age, and eventually disappears at age 65, is not an ADEA problem.

I thought it was evident from the stated facts that the trustee was not the employer. Perhaps I assumed too much.

To be a qualified plan under IRC Section 401(a), the trust must be a valid trust under the law of the State where the trust has its situs. It has always has been a concern that if the trust is an entity that does not have trust powers under local law you are at risk for blowing 401(a) status.

Please explain why you would ever consider a match in a one-person plan?

Contributing employer to a multiemployer pension plan received notice of the plan's election to elect red zone status early, coupled with the rehabilitation plan. The rehabilitation plan's default schedule calls for NO increase in contributions, just reduction in some benefit distribution options and a few bells and whistles. In order to avoid the employer surcharge under the IRC, the employer and union must amend their CBA to reflect the rehab plan. The plan has produced a template of a MUA for bargaining parties to sign, in counterparts. As far as I can tell from reading the rehab plan, the employer has no incentive NOT to do this, but what incentive does the union have? If the employer signs but the union doesn't, does the surcharge apply?

I would never in a million years feel comfortable just paying it to the sister. My natural first reaction (and probably the reaction of the trier of fact in court) is that a competent person would not knowingly complete a beneficiary designation and then give it to his sister or leave it in a drawer to be found after his death, rather than sending it to plan/employer. Sure, it's possible, but I would interplead this unless you can get the ex-spouse to waive or the ex-spouse and the sister to settle. I don't see a qualification problem with honoring the ex-spouse's waiver or a settlement between the ex-spouse and the sister.

Did the person who told you they could issue a 1099 have a lot of experience with that Company and spoke with confidence? If so, get a new Administrator.

Any individual OR entity can be an ERISA plan or qualified plan or IRA beneficiary, e.g., a charity. I believe you are thinking of the 401(a)(9) rules that only allows individuals and certain trusts to be considered "designated beneficiaries," but that is solely for purposes of those rules. There is nothing in the law that prevents someone from naming the United States, or General Motors, as his death beneficiary.

I think the discussion in this post centers around 410(a), not (b), and I for one don't know what you are talking about in your second paragraph.

Don't you also have to contend with the missed payments to the participant?

Sure; risk of losing subsequent installments by not completing the additional year is a SRF.

There are fundamental issues which need to be addressed here (terms of plan document, bylaws and other rules of governance of the P.A.); this is not a question simply answered "yes" or "no." No easy answer can be given here. If someone wants to type out a 3 or 4 paragraph summary of how one would go about addressing this question more power to him or her.

What is your role here?

It is my impression that IRS agents are taught to shoot first and ask questions later when there is an exclusion of a class that gives off any scent of a service-based exclusion. I don't see why my suggestion isn't a perfect answer given that no intern is likely to complete a year of service.

This seems like a no-brainer to me with no need to take a 410(a) risk: amend the plan so that people classified as interns enter on a bi-annual entry date after completing a year of service. Am I missing something?

Buyers aren't always that altruistic when faced with the risk, no matter how small, that the target's plan(s) could taint the buyer's plan(s). The indemnification extracted from sellers typically won't last long enough to suit the buyers, so best to start the SOL clock on the terminated target plan(s) at closing.

Our experiences differ I guess. Mine is as deal counsel representing buyers and sellers in all sorts of m&a, and unless the target is going to be maintained with a separate benefits structure, the buyer will want to get rid of the target's qualified plans (except for an underfunded db plan).

In a stock acquisition where the buyer is an existing business with its own 401k plan it is almost always standard operating procedure to require the target's plan to be terminated prior to closing. This is not that scenario, however. I see two possible explanations here. (1) The advisor is very green and not able to draw this distinction; or (2) there are in fact lots of problems with the plan and it is felt that this is an opportunity to stop the bleeding and allow the statute of limitations period clock to run, while at the same time starting up a fresh and clean new plan.

and all the losses . . . .

I did not read the complaint or all of the FAQs. Obviously there is some theory which plaintiffs' counsel will advance for why this product is not a guaranteed benefit policy that does not hold plan assets, or how GW is otherwise a fiduciary with respect to the product. Do we know what that theory is?