jpod

Why wouldn't a state law that imposes an obligation on an ERISA-governed plan be preempted by ERISA?

I agree that sometimes it's best to take the path of least resistance but you would need to go up (way up) the food chain anyway to start getting involved with indemnifications and liability waivers. Assuming there is a very nice amount of money in the plan, here is my suggestion: get someone at the transferee financial institution to intervene on the trustee's behalf. If they want the new business bad enough they will find a way to find out how to get this done.

Agree 100% with Mr. Preston about the creative thinking which could be employed here, but evidently the facts are that the owner is in his 70s and thinking about his exit strategy and retiring to a beach somewhere and really has no interest in spending the time or the money to make his highly paid employee just a little bit happier.

I think someone suggested that the match already appears to be at least close to as generous as a SH Match, so quite possibly the NHCEs' behavior won't change just because of the immediate vesting and receipt of the annual SH notice. Of course, in the final analysis they would be gambling with the owner's money, not 401kquestion's money.

with a one person plan why even bother with a 401k deferral feature?

I agree about DOL having no jurisdiction. However, doesn't the DOL's regulation addressing when participant contributions become plan assets apply for purposes of Section 4975 of the IRC (as well as for purposes of Title I of ERISA)? If so, don't you have a risk of a Section 4975 PT if you have not deposited in accordance with that regulation? On the other hand, this probably only is an issue in the case of a one-person plan if the employer entity is a corporation or a partnership, but not in the case of an unincorporated sole proprieter.

If she retired in 2014 and received payment in 2015, wouldn't 2 RMDs have to be held back? If so, let's say that's $60K, which means she only has to come up with $40K to do a complete rollover.

15 months sounds high because the tax should probably be exclusively or almost exclusively the 1.45% Medicare amount. Also, a 100% offset until recovery is a little chintzy, in my opinion, but I suppose the SERP could be written that way. Bottom line is, you need to see the calculation of the estimated FICA and Medicare taxes to be paid at retirement AND find out what the SERP document says about the financing of the employee share of these taxes.

If she retired in 2014, wouldn't part of the $500k she received in January 2015 be an RMD anyway? IF so, how much is an MRD as compared to the $100K withheld for taxes?

If she did not file as a person married to the decedent, i don't see the problem/risk in denying treatment as a surviving spouse. Is there any chance that she is willing to go into a court and say that while she was perfectly willing to lie to the IRS nonetheless she was the spouse (especially with none of the other usual indicia)?

Are they allowed to adopt a qualified CODA (after 1986)?

Whether it was mapping or a default, it was a fiduciary act by some fiduciary to put his money in that fund (and from the description it sounds like it may not be a QDIA). He says he lost $100,000 or more; I think it's worth a look.

On the assumption that none of those six figures are cents, and based on what you said in your last post, if I were you I would consult with a trial lawyer who has experience with ERISA fiduciary claims. I realize that you may have to balance the value of any claim you may have against your relationship with your new employers/partners (assuming you have that relationship with them), but it would be worthwhile to at least consult with someone experienced in that area of law rather than just forgetting about the matter.

It sounds like his/her real complaint is a failure to receive a black-out notice, and I believe there is a civil penalty which a participant may be able to collect if he goes to court, but failure to provide the notice does result in strict liability for losses incurred thereafter.

How would the supreme court's decision - either way - impact the health insurance issue? Just because the supreme court holds that a state may not constitutionally prohibit same-sex marriages, so what? Haven't we had that issue for so long as we've had same-sex marriage: Is there any law that prohibits an ERISA-governed health plan from distinguishing between same-sex and opposite-sex marriages?

I wasn't suggesting that a tax return by itself was enough proof. I was suggesting that the request for the tax return usually makes the person claiming to have a common law marriage drop the marriage. Frankly, most people who claim they have a CL marriage are, how shall i say this, a little bit flakey, and quite offten they don't file as joint or married filing separately.

K2retire, great question. I have seen the issue raised only when an employee volunteers that information in connection with some benefits matter, usually health insurance enrollment: "I have a common law wife/husband . . . ."

There are several lists of criteria/questions floating around on the WWW. In my experience insisting upon a copy of the most recent Federal tax return always knocks out some people because they don't file as married.

I am with QDRO on this one. And in my experience situations like this are usually readily cured by saying "we're sorry, we can't do it, but we will give you $X cash instead." If there is a vesting schedule, you can commit to deferred compensation that becomes vested and payable commensurate with the plan's vesting schedule.

MoJo, have you actually witnessed a case/cases where the IRS Agent asked specifically about all prior years? That's all I am wondering about but your other comments/suggestions are appreciated.

I am the ERISA counsel. I know that EPCRS and the underlying legal principles require correction for all years. But as a practical matter if you self-correct only 6 years (or pick another number less than all) what is the likelihood that if the issue comes up in a subsequent plan audit that the agent will inquire about earlier years? Also, my question about VCP is whether anyone has ever experienced or heard about the IRS allowing VCP relief with the express understanding that less than all years would be corrected.

401(k) Plan document has had one-month eligibility requirement for elective and matching contributions for at least 10 year (maybe 30 years; I am not done with my due diligence yet); no exclusions in Plan document. Employer now knows, after discussing with ERISA counsel, that it has an operational error by failing to give temporary employees the opportunity to participate in the plan. Employer is willing to self-correct with QNECs per EPCRS guidance. I am comfortable that the error is not significant notwithstanding the fact that it has gone on for so many years (just a handful of interns and co-ops each year as compared to 150-250 other employees). The issue is what is the "safe" number of years to go back to correct without correcting ALL years (including all closed years). All open years? 4 years? 6 years? If Plan is audited and they find out we have corrected for those years but not all years, what is likelihood of a problem? Alternatively, has anyone ever heard of getting VCP blessing for correcting less than all years? If so, what could we expect going down that road? Blessing if only open years are corrected? 4 years? 6 years? All years for which relevant data has not been destroyed? p.s., don't worry I am not thinking about suggesting that the client have a bonfire and burn some old payroll records.

Without an earnings component I wonder if it is even a defined contribution plan as opposed to a db plan for purposes of the 3121(v) rules. (I am not in a position to check that out now.) If it's a db plan then the amount subject to current FICA/Medicare is only the present value, if it subject to those taxes currently at all.

I don't see the PT concern (assuming there is a written and revocable deduction authorization). I think this was rather common in the good old days of retiree medical.

no offense intended but i am not sufficiently interested in the subject to continue . . . .