jpod

NQDC Plan provides only for lump sum payment at a specified date. The Plan does not permit or even address the subject of participant elections. Can the Plan be amended to permit a "second election," obviously in accordance with the 409A limitations on second elections, or is it too late because vested benefits have accrued and the Plan does not permit elections?

My motivation for asking the question was sincere. I don't recall seeing any situation where legitimate plan administration expenses were paid with plan assets in a non-public ESOP with no assets other than employer securities. The ESOP would have to raise the cash somehow, presumably through a redemption of shares by the corporation. I guess that is the way to do it if you don't wish to dilute the non-ESOP shareholders, if any, but typically I just see the corporation paying all ESOP expenses and leaving the share allocations alone.

Just for giggles if ESOP's sole asset is company stock and the company is not publicly traded how is the payment of expenses by the ESOP financed?

EBECatty: Obviously I missed that in my review of the EPCRS rev. proc. (I need to improve my word search skills.) I guess it couldn't be clearer. Thanks much.

ETA, you may be right, but the conundrum here is that the DL application for the cycle ending February 1 will be filed on February 1 and I don't want to file the DL application unless the VCP submission is filed simultaneously or within a very short time thereafter. I don't want to take the risk that the missing amendment is discovered by the DL agent before the VCP is filed. So, that gets back to the question of whether the VCP submission is sufficient to plug the hole in the dike if it is not signed or whether it must be signed.

Termination post-closing of the acquisition cannot be a distributable event unless you satisfy the 2% exception.

I assume Austin was saying that each of those five people owns 20% of the for-profit entity. Austin, you need to work your way through the 1.414©-5 regulation (assuming the non-profit is a tax-exempt entity, rather than a taxable non-profit). Unless there is common control via that regulation, I don't see how you would have a 414 affiliation.

This is a LATE interim amendment. It must be done by Feb. 1 for this particular employer because it's 5-year RAC ends on Feb. 1 and it it's not done by Feb. 1 the VCP compliance fee is much greater than $375.

If it was quite feasible to have an amendment adopted before the February 1, 2016 deadline (i.e., end of Cycle E), I wouldn't be asking. There is a large, geographically diverse and inquisitive Board that has to adopt the amendment, and while it could be done, it will be difficult to get it done. Frankly, I think the answer is the amendment has to be adopted, not merely submitted in proposed form, before the deadline, but I am doing a sanity check. Now, if you come back and ask me "why is there such a large and geographically diverse Board," or "why hasn't the Board delegated this responsibility to someone else so amendments can be more conveniently adopted," I am not interested in playing 20 questions.

Thanks for the suggestion but that doesn't answer the question.

If you are doing a VCP submission for a late interim amendment (where the compliance fee is only $375), can you submit the late interim amendment in proposed form, rather than a signed amendment)?

Effen's advice is quite sound. However, the fiduciaries still have a duty under ERISA to explore all possible avenues of recovery.

What about the plan's auditors? I don't know how long this has been going on but if it went on long enough this might be the type of thing an auditor should have detected and perhaps it should have been detected by the auditors at a point in time where some of the bleeding would have stopped earlier. Presumably they aren't fiduciaries, but the plan could maintain a non-ERISA negligence/professional malpractice claim against them. I would have counsel investigate, because the auditors certainly have insurance and are otherwise deep pockets.

If all HCEs are excluded you have no 410(b) worries if you limit participation to only certain employees. Still must satisfy 410(a). Still must not violate Federal and State laws prohibiting discrimination on the basis of age, race, sex, etc.

Isn't this preemption 101? Going down the road of taxing rather than regulating can't avoid preemption, can it?

This is not a successor situation, so any such language is irrelevant. There is absolutely no legal reason whatsoever if - as the facts state - there is no change in Plan Sponsor/EIN, only a change in name.

QDRO, are you saying that the acceptance of form over substance by virtue of "governance" is itself abdication, or if the IRS position is even looser than that? (I would agree that it is abdication, I'm just wondering if there is something more to your comments which I may have missed.)

I know you said that, but I was trying to point out that it is not enough to pass a resolution, etc., unless under the partnership's rules of governance such action is required to implement the allocations. Maybe splitting hairs, but it's important.

No, it is NOT acceptable. That would make the feature a CODA. It IS acceptable if each partner expresses a desire, but the Plan document must make each allocation a Partnership decision, and the Partnership's governance must be such that it is not an individual partner-by-partner decision.

This may not be something warranting a "move on" approach. Miner says overpayments RANGE from $5k to $125K. I interpret that to mean per case. The overpayments could be in the mid or high six figures or higher, and if they are it may be a breach of fiduciary duty to forego claims against the responsible persons.

While it appears to be 90%, that isn't stated explicitly in your post.

J Simmons, I don't have an answer, but you may wish to take a look at a fairly recent Tax Court case, Peek v. Commissioner. A relevant question may be: How much of the corporation does 900 shares represent?

It's not a "risk of forfeiture" issue. It is a question of whether the insurance creates an "economic benefit" that results in immediate taxation. I believe there was a lot of discussion years ago (probably when the TRA 86 comp limit when into effect for all qualified plans) leaning towards the conclusion that it was safe as long as the executive procured the insurance himself or herself with very little employer involvement, but (a) I may be "misremembering," and (b) I have no idea what the market is like for these products.

The ERISA indicia of ownership requirement wouldn't apply based on the facts stated. Whether there are other hoops worthy of note if a us-based tax-exempt entity will own foreign real estate is possibly another matter.

benefitsguru, what is your role here? Are you the attorney representing the IRA custodian/trustee, the executor/administrator of the decedent's estate, or of some other "interested" person? P.s., forget about malpractice against the provider of the document or reporting to DOL. Neither idea can go anywhere for different reasons.