Belgarath

Interesting. So, for 2014, if you had the situation that My 2 Cents mentions (lost participants who have not received otherwise required RMD's) how would you have answered that question? Can one reasonably interpret the question, based on the new instructions to the 5500, to still say that the plan hasn't "failed" - in other words, it is only a "failure" if the plan COULD make distribution, but didn't - and therefore, since it was not possible to make the distribution, there's no "failure" and therefore you can reasonably answer "no"?

Shouldn't be any problem. The plan termination creates a distributable event which would allow employees to roll their distributions to the 401(k) plan. The "successor plan" rule similar to 401(k) rules applies only if the employer makes contributions to another 403(b) plan during the "12 month period" beginning on the date of termination and ending 12 months after the distribution of all assets from the terminating 403(b). See 1.403(b)-10(a)(1).

It wouldn't. Assuming there is nothing to distribute other than basis (after tax employee contributions) then there is no pro-rata. I make no statement as to whether it is permissible to pay zero interest on the accumulated employee contributions - that's a separate question, which some of the DB experts can doubtless answer.

"Speaking as a non-lawyer: This is not an issue of an ERISA or IRC violation where a corrective filing can fix things. It is outright sex discrimination. This probably should be resolved under a class action lawsuit." So do you think that if not corrected there are no plan qualification implications? Or, would you say that it must be corrected to retain plan qualification, but there are additional issues unrelated to ERISA/IRC, as you said above? P.S. reviewed a synopsis of the Norris case, as David suggested.

Should have specified - DC plan. Thanks for the responses.

Checking my memory - is any of the following untrue? (I know there are additional details that I've left out, intentionally) Re nondiscrimination testing using rate groups. 1. Each rate group must pass either the ratio percentage test, or the average benefits test. 2. For any rate group (or groups) that fail the ratio test above, the average benefits test must be passed for that rate group. 3. Average benefits test consists of two parts, both of which must be passed. One is the nondiscriminatory classification test, (let's call this 4) and the other is the average benefits percentage test (let's call this 6). 4. The nondiscriminatory classification test is itself a 2 part test: (a)(i) determining the ratio percentage for each rate group (which you probably already did, unless you skipped the ratio percentage test and went right to the average benefits test) and checking to see if the percentage in (a)(i) is =>the testing percentage in 5 below. 5. Several steps, which I won't go into here. 6. Average benefits percentage test - this is performed at the PLAN level, not the individual rate group level. And this may require recalculation of benefits percentages used previously.

Thank you - that clears up a lot of questions (for me, at least) and allows the focus to be on the required corrective calculations/distributions/overpayment recovery/etc., whatever those might be.

Every day this week is a palindrome.

The following situation is of course purely hypothetical. In such hypothetical situation, the services of an actuary would be engaged, as would legal counsel if and as necessary. But in wandering through this exercise to educate myself, would appreciate any input from the DB experts. I could see this being a very difficult VCP filing just due to the potential volume of calculations/payouts that might need to be corrected. In this hypothetical situation, suppose there is a Governmental plan (state level, not federal, if that matters), currently using volume submitter document. Going back an as yet undetermined number of years, (could be a lot of years) the plan document specified actuarial equivalence assumptions using a sex-distinct table, rather than a unisex table. (As many of you may know, I'm not a DB person, so I'm very hazy on this - is it possible that a table that appears to be sex-distinct to the non-actuarial mind, such as GA ’51 project age 65 (male) is in fact acceptable, whereas the 1951 GAM is not - or are these really the same thing just with different title)? Also assume that regardless of the specified table, whether acceptable or not, all alternate benefit form calculations and payments have definitely been made on a sex-distinct rather than unisex basis. The plan never had an actuary review any of the calculations for alternate forms of payments - actuary only reviewed funding assumptions/contribution requirements. First, am I correct that the fact it is a governmental plan doesn't matter, and that unisex rates are required for all alternate forms of payment? (I seem to recall that is what the Norris decision was all about) Second, is there a choice amongst various acceptable actuarial equivalence rates/assumptions that may be allowed, or is there only one acceptable table/set of rates? Assuming that there is more than one acceptable rate/assumption(s) allowed, is it permissible, if submitting through VCP, to select rates/assumptions that minimize the additional cost to the employer to correct? Maybe there is no across the board answer to this one, but if sex-distinct rates were used, I'm under the impression that this would typically result in males getting a higher payout than females for the same accrued benefit at the same ages, due to the shorter life expectancy? But perhaps that isn't necessarily true in all situations? Also, is it possible that an allowable unisex table might produce higher payouts for ALL participants than a given sex-distinct table, but that the amount of the increase is just smaller for women than it is for men, or vice versa? Any off the cuff thoughts/observations are appreciated. Please don't take a lot of time, as this is hypothetical, and if such a situation were ever encountered in real life, the services of an actuary would be engaged immediately. Thanks!

As a non-lawyer, I tend to agree with MoJo in this. I note that in the first paragraph of 2510.3-102, says, (my emphasis) (a)(1) General rule. For purposes of subtitle A and parts 1 and 4 of subtitle B of title I of ERISA and section 4975 of the Internal Revenue Code only (but without any implication for and may not be relied upon to bar criminal prosecutions under 18 U.S.C. 664), the assets of the plan include amounts (other than union dues) that a participant or beneficiary pays to an employer, or amounts that a participant has withheld from his wages by an employer, for contribution or repayment of a participant loan to the plan, as of the earliest date on which such contributions or repayments can reasonably be segregated from the employer's general assets. Now, I don't know what that really means in real life circumstances, but it does seem to indicate that the exemption isn't "blanket" and may only be relied upon for specific purposes. But as I said, I'm not a lawyer, so this is nothing more than useless speculation on my part. It's fun to randomly talk about things I know nothing about, when I can't be held responsible for what I say. I think that qualifies me to run for President.

I've talked with several practitioners who are concerned that whatever pre-approved documents ultimately become available won't have sufficient flexibility to allow some of the customization that is often necessary. Of course, that's all speculation, as no one knows. And to echo previous comments, it is entirely possible that this DL situation will be modified again in some form. Since ESOP's seem to be subject to greater scrutiny than most other plan types, both from the IRS and the DOL, I would say that getting a DL is unlikely to be successfully challenged as an imprudent use of plan funds, and entirely consistent with the fiduciary duty to act in the interests of plan participants and beneficiaries. Preserving the tax-qualified status of the plan should certainly be considered of value, as long as your fees are reasonable.

Cause that's what the Commerce Department forms say. Unless the Commerce Dept. is lying...

Ok, client provided us with more information. This is, in fact, a survey from the US Commerce Department, Census Bureau. If is sent to some employers (whether a random survey, or some other method I couldn't say) and it asks them a ton of questions about all of the costs/expenses to run their business. And one of the costs is employee fringe benefits, hence the question. I don't know how many employers ever receive this, but I expect most of them just complete it without ever contacting the TPA, which is probably why we've never heard of it. Evidently, response is legally required, so it isn't a voluntary survey. You learn something new every day...

I read, or heard, somewhere - can't remember, that the DOL is making people revise these when they audit a plan if they are incorrect. I don't know if they were imposing any penalties if they were incorrect. Does anyone recall hearing about this, or have you encountered it, and if so, were any penalties imposed? Seems to me that this wouldn't normally result in any penalty.

In my experience, many documents either automatically allow a participant to postpone distributions, or in the Adoption Agreement allow the employer to choose whether or not to require the mandatory forced distribution. The mandatory forced distribution isn't a popular option, (in our plans, anyway) as the people who generally want to delay it the longest seem to be the higher paid owners.

Agree with the comments, but I"M curious now as to what it is all about. Hopefully they will be more forthcoming with the source of this "request" for information. If I find out anything interesting, that isn't confidential, I'll post it.

We have what I shall euphemistically refer to as a "difficult" client who doesn't like to provide any information that we ask for. They recently sent us an e-mail with a section that had been cut and pasted from somewhere unknown, asking for information on costs of any Defined Benefit and Defined Contribution plans. Client referred to this as a "us census data request." Although we are trying to get additional details, as I said, client is difficult and may not provide. I was just curious if anyone had ever seen any type of similar request, or could fathom a reason? I doubt it is a scam, although of course it could be, but I'm having trouble imagining what, if any, government agency would be asking for this and why. Don't think there is anything connected with the ACA that would request this... Anyway, any thoughts appreciated.

Generally, yes. See 414(v)(3)(B). But if you are using an accrued to date method (which probably isn't what you are asking about) then catch ups for prior years that are included in the applicable measurement period ARE included.

We don't use the FT William document, but I've seen others that are similar. We always prepare a specimen resolution - whether they choose to use it (or need to) is up to them. We also do a SMM - even though no amendment is required, it would generally, depending upon the detail in the SPD, require a modification to the SPD language.

And assuming the POA is acceptable and the plan otherwise permits (which I expect it does) the hardship distribution still can't be made if the medical bills can reasonably be paid from other sources, etc. - the usual...

Step two - go ahead and have the existing trustee-who-isn't-really-a-Trustee removed, and he can appoint himself as Trustee. Does the Plan document have "failsafe" language where if no Trustee is appointed that the Employer/Plan Sponsor is the Trustee? If so, I think you probably don't have any worries. If not, then if the Employer/Sponsor performed any Trustee duties, you might want to check with an ERISA attorney about some sort of resolution formally ratifying any acts performed as a Trustee while not officially being named a Trustee - that's getting out of my league.

With no research, I'd say probably yes - I assume the AB plan has at least one employee participating? If so, both plans are part of the required aggregation group for TH purposes, since at least one key employee participates in both. But I'd have to do a little checking to be sure...although I should probably remember this off the top of my head, I don't...

I think you misunderstood. My real point (which I didn't make very clear) was that NOT all pre-approved documents allow the option. As to nondiscriminatory or not, that's a separate issue, and I can certainly see why you wouldn't worry about it when you have a pre-approved document that permits it. I'm very likely overly paranoid, but as I said, it doesn't really matter to me in real life! Just as a matter of curiosity only - have you ever actually had this request? I haven't, thankfully...

Austin - you might want to be a little careful with such a blanket statement. The pre-approved VS document from at least one major provider does not provide such an option. Now, the fact that many or most pre-approved docs permit it would indicate to me that the IRS doesn't seem to have a problem with it - however, I still wouldn't want to be forced to defend it. It is only an academic issue for me, as I would simply tell a potential client we can't do it. Some of these "Roth problems" are just holdovers from investment platform issues where they couldn't properly handle some Roth issues (and perhaps still can't, for that matter...)

I'm not convinced there isn't a potential nondiscrimination issue. You have both current and effective availability requirements, and depending upon the auditor, I can see an effective availability issue if you can't get a match on your Roth deferral. I wouldn't want to have to defend it...