jpod

My brain unfroze. Now I remember that you can have the plan pay for the fiduciary liability insurance, but only if proceeds are payable to the plan AND the insurance company has recourse against the fiduciary. However, I never understood how any fiduciary would consider that to be insurance that protects the fiduciary, so what would be the point?

Maybe I am having brain freeze, but can a plan pay for a fiduciary's fiduciary liability insurance (for a fiduciary who is not allowed to be compensated by the plan)?

If the spouse doesn't disclaim I think you want to hire a lawyer ASAP, who may be able to force Wells Fargo to freeze the account and not make any distributions to the spouse. It is quite likely that the state law involved here would say that the spouse has no entitlement to the IRA as a result of the pre-nup.

I suppose you could do that, but then you expose the employer to penalties for a future late filing, as well as all of the other reporting and disclosure requirements of Part 1 of Title I of ERISA and the penalties for failure to comply with those requirements.

A literal reading of DFVC might suggest that you can't make use of it for top hats until at least one 5500 is actually late. I don't think you have to read it that way, but if you disagree then why not wait until August 1 before making the DFVC submission?

You can file a late top hat notice under DFVC and pay the fee (I think it's $750, but don't hold me to it). Filing one 5500 and then the top hat notice doesn't seem to accomplish anything because the notice is still late.

I disagree on many levels with your premise that forfs are/can be used to reduce an employer's contribution obligation to a db plan, but in any event the analogy doesn't fit.

Seems to me that using forfeitures to pay earnings on late 401k deposits must be a pt, as it is a use of plan assets to defray the employer's obligation to the plan.

I think you could write a plan document for even a self-directed plan to say that trailing dividends will be allocated to the remaining participants, as unfair as that might sound. However, I doubt that the plan you are working with says that, and without saying that I think the most reasonable interpretation/approach is that an ex-dividend trailing dividend belongs to the participant whose account earned it.

I agree that the 12-month period ends on the day BEFORE the anniversary of the start date. I don't think there is any question about it and under the law you couldn't write the document any other way. That's why the only issue in my view is whether the document says "following" or "coinciding or following." If as you say it says "coinciding or following" then i don't think there is any question that this individual gets in on 7/1/13.

Does the plan say you get in on the first Entry Date following completion of the one YOS, or the first Entry Date following or coinciding with the completion of one YOS? The answer to that question will answer your question.

I don't know why the agreement between the partnership and each non-equity partner can't provide that the matching contribution, safe harbor or otherwise, reduces his or her guaranteed payment. They have to have some mechanism for doing this so that the partnership doesn't get caught short at the end of the year. The non-equity takes the match as an adjustment to gross income on the front page of the 1040, just like for the elective deferrals.

First question, the answer to which will lead to further questions: Are the non-equity partners treated as partners for tax purposes and receive K-1s and no W-2s, or are they "partners" in name only?

That is a very important piece of information which you left out. There may (and I mean "may") be some basis for an ERISA breach of fiduciary duty claim that would trump the normal corporate law "business judgment" rule. I suggest you contact a lawyer or law firm that has experience in handling ERISA fiduciary claims from the plaintiff's side. On the other hand, if you like your job and your pay and are merely angered by this but aren't really adversely affected in any cognizable way in your position as an indirect shareholder, do you really want to sue your employer?

Seems like it would be, at a minimum, a 406(a)(1)(D)/4975©(1)(D) prohibited transaction to use the plan-owned real estate for that purpose.

If the same fiduciary was approving the transaction from both sides why isn't it a slam dunk 406(b)(2) PT (assuming the plan is subject to Title I of ERISA)?

Sorry. I posted my last response on this thread by mistake.

If the same fiduciary was approving the transaction from both sides why isn't it a slam dunk 406(b)(2) PT (assuming the plan is subject to Title I of ERISA)?

Why are you focusing on the one employee - the executive director - and not all the other employees? If there is no health plan at all, then there must be less than 50 FTEs, so what difference does it make if the XD is full time or not?

I agree with David Rigby. In fact, if I had to defend the payor here I would argue that, at least constructively, there was a direct rollover completed, but then it was followed instantaneously by a distribution from the IRA to the participant via a deposit to his personal checking account. If any tax reporting needs to be undertaken it would be for the IRA Custodian to file a 1099-R to report the distribution. I still can't help wondering why the participant called Pam's firm. Pam, what did he want your firm to do?

Certain facts are not clear. Was his designated IRA custodian the same institution at which he has his checking account and it was deposited to the wrong account by mistake? If so, he needs to fight this out with that financial institution. If the IRA custodian is a different entity, then it sounds like he "changed his mind" about a rollover and was able to convince a teller at his bank to deposit it to his checking account. Maybe he had this scam in mind all along and he was able to escape not only the 20% tax w/h but also as far as the IRS thinks he shouldn't be taxed on the distribution, although if it was a scam I don't understand why he would contact you. However, in either case I don't see where the payor has any responsibility to correct the 1099-R because it never should have been deposited anywhere but the IRA to which the check was made payable.

Austin, "money purchase" is just a name with no particular significance under Title I. The crux of the matter is that every Title I "pension benefit plan" (as defined in Title I), other than top-hat plans and a few other exceptions, is subject to the J&S rules, unless it is a "profit sharing plan." The difficulty is finding a basis for classifying a Title I plan as a "profit sharing plan" when the employer contributions are neither discretionary nor conditioned on profits. I think a non-discretionary 403(b) plan sponsor runs a great risk in dealing with a surviving spouse if the plan didn't comply with the spousal consent and other J&S rules during the participant's life.

Austin, the provision you cited is in the IRC, and applies only to 401(a) plans, not 403(b) plans. And, there is no similar provision in Title I of ERISA.

This sounds like an old "thrift plan" where the employer contributions were neither discretionary nor conditioned on profits, hence, a MPPP.

The issue as I understand it is this. If the 403(b) plan is an ERISA Title I plan, it is either subject to the Title I joint and survivor annuity rules or it's not subject to those rules. Only a "profit sharing plan" can escape those rules. There is no definition of "profit sharing plan" in Title I of ERISA, and nothing like the IRC provision added by TRA 86 that says a plan is a profit sharing plan simply by virtue of the fact that it says it is. I think TIAA-CREF and other 403(b) providers have taken the position that if the employer contributions are not discretionary, it can't be a profit sharing plan for purposes of Title I, and therefore they refer to it as a MPPP, and they believe it is subject to the J&S rules (and by the way TIAA-CREF and those other providers happen to be a convenient source for procuring annuities). In my experience, the employer contributions in most (almost all?) 403(b) plans that have employer contributions are not discretionary.