jpod

Employer is opening up an early retirement incentive window. Eligible employees who elect to take advantage of the incentive get extra years of service factored into their qualified defined benefit pension plan benefit, whether they are retiring at, after or prior to the NRA, which is 65. All of this being done via an appropriate plan amendment; no EEOC, 401(a)(4) or other qualification concerns, except possibly one: Employer wants to condition the extra years of service on pre-age 65 employees taking an immediate pension rather than deferring until age 65, which they have the right to do, obviously. Is this a "significant detriment" that would make any consent to take a pre-65 distribution invalid under the 411 regulation?

It depends on the meaning intended to convey by the use of the phrase "qualified plan." I think when most "ERISA people" use it they mean a plan described in IRC Section 401(a), which would not include a plan described in 403(b). On the other hand, many people in the financial services industry often refer to all tax-favored retirement vehicles, including IRAs, as "qualified," or the money held in them as "qualified assets."

You said a "non-profit," so I am going to make the assumption that it is exempt from Federal income tax. Tell us why they don't want to take the reversion?

Do you mean a NQ plan? How about Federal and State securities registration issues, for starters? Perhaps not a reason not to, but at least a consideration.

It has a lot of meaning to the American Funds, the custodian and their respective service-providers. It means that if an employee moves money from the SEP IRA to a different IRA then that money is no longer considered part of the SEP for whatever reason relevant.

Does the letter actually use the word "fine." If so it is a scammer.

You need to look at the regulations under IRC Section 3121(v) and the W-2 instructions. Resolution of this turns on the compensation being "deferred compensation." I don't believe the fact that it is deferred compensation subject to the 457(f) special income tax rule is relevant.

I am sure you will hear plenty of happy ending stories that will make you or client feel like a sucker for going down the DFVCP route, but nonetheless it is not a worthy gamble in my opinion.

If you are suggesting that it reduces the net income which the partner will report as gross income in the top half of page 1 of the 1040, that's not how it is done. The pension contribution is a separate adjustment to GI which the partner reports in the bottom half of the page.

The only cite I have for you is the 1040 Instructions themselves. I am sure one can dig deeper and find something more "official" looking, but what more does the accountant need than that?

Presumably there were 100 or more participants at the beginning of the plan year because if not there would be no 5500 requirement. TPApril, it's good to ask the question and get some war stories from others, but quite frankly why would you ever advise the client to consider playing Russian Roulette to save a measly $760?

If this is a welfare plan there is no penalty assessable by IRS. DOL penalty only.

Perhaps promises were broken, but such is life. No indication so far from your posts that your existing 401k money is in danger, or that any money was taken out of your pay and disappeared. Do you like your job?

I am not sure you are hurt in any way by the one-day notice, but the facts are a bit fuzzy.

Most likely the person(s) who purchased the practice purchased only its assets, not the entity that operated the practice, in which case as a legal matter you went to work for a new employer, in which case you stopped participating in your "old" employer's 401k plan when you went to work for the "new" employer, and the "new" employer didn't take over the 401k plan and evidently is not interested in setting up one of its own, at least not yet. You may not like this, and I can understand not liking it, but there is nothing illegal or strange about it. Under these facts it is to be expected that the "old" employer will terminate its 401(k) plan, so there is nothing alarming about that. You should be receiving information about your options for taking out your money from that plan.

If there were good SPDs (perhaps a big "if"), didn't plan numbers appear in the SPDs for the component plans?

Did the client save the envelope it came in? That could be interesting too.

You don't need vcp relief if your plan has been kept up-to-date. Are saying it hasn't been kept-up-to date, or has it been kept up-to-date but they just didn't seek a DL?

Since when does IRS make "changes" to a 5500? They either threaten you with penalties because it is incomplete in some fashion, or they pull the plan for examination. That's what is suspicious to me.

Sounds like a scammer to me.

But if the plan document leaves room for interpretation, wouldn't the original calculation aid in that interpretation? I'm no actuary, but I would think the amount payable during the joint lives would be less if the 20 year certain applies to the front end than it would if it applied to the back end.

Can't you tell based on how the reduction from single life was calculated?

QDRO, you've been blowing that horn beautifully for years, and I agree with you, but while you may save a few souls here and there the reality is that the PS will be the PA 99.9% of the time.

Forgive me but I don't understand the concern here. Enlighten me. If the concern is the client's irrational fear of the IRS/DOL, well then, ok, I get it. Absent that, why worry?

Aside from the fact that it is generally understood that ERISA embraces the concept of "modern portfolio theory," whatever that means, my guess is that there is no guidance other than perhaps one or more reported cases where the courts found - based on the particular facts of those cases - a lack of diversification consistent with the ERISA diversification standard.