jpod

Just ran into a situation where a multiemployer welfare fund is assessing w/l against an employer who is leaving the plan and putting the participants into its own plan. The fund is saying that the employer is bound by the terms of the trust agreement for the fund - which the employer didn't sign or "join" in any way - that establishes a regime for imposing w/l on withdrawing employers who had agreed in their cbas to contribute to the fund. Is there any case law on this?

Recommendation of first step is to get a copy of the SERP document and find out (1) if the Company in fact has reserved the right to terminate the SERP, and (2) if it has reserved the right to terminate what is to happen on termination, i.e., if it says a lump sum is paid how the lump sum is calculated. Come back to this Board with those answers and we will be in a better position to recommend next steps/considerations.

If only the plans and IRAs benefit from the aggregation, it shouldn't be a pt. If plans, IRAs AND personal accounts benefit, it may be a pt.

"Is it because anything sponsored by a tax exempt entity that is not a 457(b) is by default a 457(f)? i.e., the plan sponsor has no say in the matter?" Yes.

It seems to me that the judge has no authority to order the plan to do this, but I suppose the plan felt that the path of least resistance would be to comply rather than litigate.

I think there probably is a "legally binding right" at the time of the grant, but I also think there is no "deferred payment;" consequently, the S-T exemption is available.

Why isn't this a S-T deferral with respect to each payment? It would be an easier analysis if the employee must be employed on the date earnings are paid to investors, but I'm not sure that's even necessary to fit within the S-T deferral rule.

It seems to me that the/an amount should have been subject to FICA/Medicare when it first vested; I am not seeing any contingencies that made it not reasonbly ascertainable at that time. If the limitations period for the applicable 941 has not expired, it may benefit everyone to file the corrected 941 for that year and report the amount of additional FICA/Medicare taxes. Otherwise, the penalty is that the $100K will be subject to full FICA/Medicare when it's paid (although even that result might not be so bad if it's paid in a year in which he has already passed the SSWB due to other compensation received from the employer). Incidentally, it sounds like he could have received that $100k upon separation from employment at any time. If so, why would a reduction to present value be allowed?

My reading of the facts is that the money is already in the Mother's IRA, having been distributed from the 401k/ESOP long ago, and the Father was the beneficiary of that IRA, but he never did anything that would create a death beneficiary vis a vis his death.

I don't understand why this is a difficult issue: The money belonged to the Father, so now it belong's to his estate, both for mrd purposes and for legal purposes generally. Did I miss something in the statement of facts by snmhanson?

I believe that was "80% of the putts . . .," but it's close enough. Also, don't forget: "If you don't go to other people's funerals they won't come to yours."

Yogi also said (among other things): "We're lost, but we're making good time!" "90% of this game is half mental." "It gets late early this time of year" (i.e., September-October).

Are there ERISA fiduciary duty breach issues associated with not investing those funds (or forfeiture funds)?

I agree with George's technical answer, but would also note that this, clearly, is not in the universe of "deferred compensation" which the IRS has tried to regulate since 1972 (if not before then) and is also not something which Congress had in mind post-Enron and in the development of 409A.

As I said, you really should punt it back to the lawyers. There may be indemnifications from the selling shareholders for breached reps and warranties that are implicated here, and no steps should be taken to do anything until the lawyers say so.

Question 1: Assuming the transaction has closed, which your post suggests, either the acquired company no longer exists (because it was merged into the aquiror), or it is a wholly-owned subsidiary of the acquiror. Therefore, what is gained by such insistence? Question 2: The acquiror is now responsible, either directly (if it is the successor in interest via merger or otherwise to the acquired company) or indirectly (as the owner of the acquired company). This matter should be punted back to the lawyers who represented the acquiring company and if there is a mess to clean up it should be there responsibility.

Unusual for a joint venture to have its own employees, because there is no "entity" that is created to undertake the venture; typically the employees of the two joint venturers perform the work necessitated by the joint venture. Do you mean "joint venture" in a technical sense, or have they actually created an entity that will have employees?

It is a liability of the IRA. It should not be a taxable distribution if IRA money is used to pay the IRA's tax liability. Not sure there is a specific IRS statement to that effect, but it seems logical to me. (There may be IRS guidance confirming this in the qualified plan space, and if so I believe the same should apply to IRAs.) Using the same logic, I would think that the depositor's payment of the tax should be treated as an IRA contribution.

This message board should not be used as a substitute for competent, one-on-one advice, but I will point you in the direction of considering that many dollars may be saved by (1) starting to handle this correctly going forward, and (2) filing amended 941s (I believe it is via Form 941-X) for all open years.

Maybe my question is fundamentally stupid. Maybe the simple answer is that because permissive aggregation is "permitted," and there are no specified conditions to meet before you may permissively aggregate, you can do it regardless of the reason, even if the reason is to shoe-horn yourself into aggregation of the two plans for 401(a)(4).

Tom, I am not sure if you were answering my question or not. My question is: If you don't need to aggregate for coverage, CAN you aggregate for coverage in order to aggregate for 401(a)(4)?

Yes; pass 410(b) if aggregated and 401(a)(4) if aggregated. Why is that relevant to my question?

This is probably a silly question, and I always assumed the answer, but as I look through the regulations I have not yet found anything to confirm the answer. Let's assume you have a DB Plan and a DC Plan, each satisfying 410(b) via ratio percentage. Therefore, they do not NEED to be aggregated for 410(b). However, while one plan satisfies 401(a)(4) on its own, the other does not. If they are aggregated, the aggregated DB/DC plan satisfies 401(a)(4). The 1.401(a)(4)-9 regulation says you can aggregate two plans for 401(a)(4) testing if those plans are permissively aggregated and treated as a single plan under 1.410(b)-7(d), and 1.410(b)-7(d) contemplates, naturally, that the two plans will be permissively aggregated only if necessary to satisfy coverage. As I said there is no need to permissively aggregate these plans for 410(b), but can they still be aggregated for 401(a)(4) testing? Am I reading too much into the language of the regulation?

Isn't the QPSA required in the case of death prior to the ASD (or the 100% spousal death benefit in a DC plan not subject to J&S)?

Definitely not a waste of time, but your much more likely to get a favorable result if all communications to participants (particularly the SPD) were consistent with the employer's intent. Although the corrective amendment is not supposed to result in a 411(d)(6) cutback, I have seen where IRS will ignore that as a practical matter. Note that VCP only gets you relief from plan disqualification on account of the correction via an amendment; it is not binding on the courts if participants were to sue for benefits as provided under the incorrect document. On the other hand, there are some cases (see Verizon) that recognize the scrivener's error concept.