Belgarath

Like you, I like to have a book as well. The first option on the link Tom posted is the one I use - the 2-volume option. I think it is a bargain.

I agree - eligible as of the date they officially become a "leased" employee.

IMHO, not that loosely! Rent just doesn't qualify. Of course, the plan could be amended to utilize a non-safe harbor definition or criteria for "financial hardship" to allow it. It has to not allow administrator discretion. It might be possible, for example, to define hardship as all hardship events that would qualify under the safe harbor definition (I'm not going to bother to list them here) then to add a category that defines homelessness as a qualifying hardship event, or something like that. You'd have to think about that one a while to get an appropriate definition or set of objective criteria. Call me out of touch, but I wouldn't have expected this to be a common situation that would be encountered very often. Thankfully, I haven't ever seen it either.

Take a look at 408(m).

Honestly, I wouldn't even attempt to answer that question - to me, that's a question for ERISA counsel. Any opinion I might have I'll keep to myself, lest I expose my ignorance even more than is customary...

While I defer to the ERISA attorneys, I'd just observe that it is the participant who wants the distribution that is saying there will be a divorce - what ulterior motive would a participant have for making a statement that serves to delay or prohibit a distribution to himself? So I think it is pretty reasonable for the plan to put a hold on the account based on that, pending whatever additional written confirmation/statements whatever an attorney would tell the plan is appropriate. I think the "may" is fairly standard language, to allow some Plan Administrator flexibility. And, good luck getting a statement indicating marital bliss.

There may be many sources, but you might want to look into purchasing Janice Wegesin's 5500 Preparer's Manual. In my prior life our company purchased this every year, and it was a great resource. I can't guarantee it will answer your questions, but I'm sure you could contact Janice with a list of your questions and ask if the manual answers them.

If you submit under VCP, just possible the IRS might run it over to audit as an "egregious" situation anyway... If a person has a failure (or multiple failures) but isn't willing to fix it, then there isn't really anything that can be done. Were the 5500 EZ forms filed correctly (under penalty of perjury, no less)? Relationships can be tough, but I don't really see any alternative other than saying something to the effect of, "your plan is out of compliance and can be disqualified upon audit, and you are potentially subject to all kinds of penalties for prohibited transactions, etc., etc., and you need to seek advice of counsel to determine your possible course(s) of action and the risks/rewards associated with each."

Short answer - I don't know. I think this is further complicated by 1.403(b)-10, referring to 1.403(b)(3) - which gets you to (d)(2) of that section regarding nonforfeitability, ultimately seems to sort of say that amounts that don't satisfy the nonforfeitability provisions aren't 403(b) amounts, but are instead subject to 403© or 401(a). I haven't done any sort of thorough analysis on this, and if I did, I'm not sure I could find a solidly supportable answer anyway! Going purely with what "feels" right, I'd say the PPT rules apply. I'm most willing to be instructed in why that isn't right, however. Interesting question.

I can't assess your likelihood of success, but see the following: 457(b) Plan Submissions to Voluntary Compliance Some plan sponsors may, under limited circumstances, submit requests to the IRS for voluntary correction of Code Section 457(b) retirement plans (Revenue Procedure 2013-12, Section 4.09). The IRS Employee Plans Voluntary Compliance (VC) team will consider these requests on a provisional basis outside of the Employee Plans Compliance Resolution System (EPCRS). VC retains complete discretion to accept or reject these requests. If accepted, VC will issue a special closing agreement. •VC will not consider any issue relating to the form of a written 457(b) plan document. •Governmental plan sponsors do not have to make a submission to VC to voluntarily fix problems with their 457(b) plans. Where to send Plan failures related to IRC Section 457(b) should be resolved in accordance with Revenue Procedure 2013-12, Section 4.09, by completing Form 8950, Application for Voluntary Correction Program (VCP). •Mail Form 8950 with a cover letter that describes the problem and proposed solution to the IRS address listed in the instructions. •Don't mail your submission to the California address used for voluntary closing agreement requests related to issues that can't be addressed under the EPCRS. •Don't submit your request to the EP Examinations or Determinations functions. Don't submit plan document issues We have received several submissions alleging that a written 457(b) plan was not timely adopted, or amended for some tax law or income tax regulation. VC will not issue closing agreements for these matters and will decline to process these requests and refund any payments. Plan sponsors are reminded that the remedial amendment concepts and definitions in Revenue Procedure 2007-44 do not apply to 457(b) retirement plans. Plan sponsors who want the IRS to review their 457(b) plan document or consider any other document form issue may request a private letter ruling. See Revenue Procedure 2016-1 (or annual successor revenue procedure) for details. Governmental plan sponsors can self-correct Governmental plan sponsors may self-correct their 457(b) plans if they did not comply with the Code or regulations. Governmental entities have until the first day of the plan year that begins more than 180 days after the IRS notifies them of the failure to correct their plan failures (IRC Section 457(b)(6) and Treasury Regulation Section 1.457-9(a)). Considering the time governmental entities have to self-correct plan errors, they may not need to make voluntary submissions to the IRS in most cases. If a governmental plan sponsor needs to request additional relief or simply wants IRS approval for a correction method for a non-plan document failure, they may make a submission to VC as permitted by Revenue Procedure 2013-12, Section 4.09. The plan sponsor must indicate that they are aware of the self-correction rule in IRC Section 457(b)(6) and Treasury Regulation Section 1.457-9, but still wants to proceed with a written VC application. Plan sponsors should include this statement and Form 8950, Application for Voluntary Correction Program (VCP) (instructions) with their submission. Questions? Send your questions about submitting a request for voluntary correction for a 457(b) retirement plan to TEGE.EP.VC@irs.gov.

But beware! As always, make sure what the plan document says. Ours, for example (and I hate this provision) says that for purposes of determining who RECEIVES a top heavy allocation, it is based on the plan year for which the contribution is being made, and NOT the plan year containing the determination date.

If a traditional, frozen DB plan was timely amended in 2012/13 for 436/MAP-21/PRA-210 (Basically IRS Notice 2011-96 stuff) and hasn't made any discretionary amendments since, are there any required amendments that must be adopted now if plan is currently terminating? I don't think so, but maybe I'm missing something... Thanks.

I'm guessing that this is a small (non audited) plan? If so, I'd personally vote for filing amended forms.

Most likely true, but you might have to then give to a bunch of people otherwise not eligible, due to less than 1000 hours, for example.

Agree. (as an aside, any forfeiture issues in this plan? There can be some nasty surprises when a plan has forfeiture reallocations...)

Agreed. Our document language is flexible in this regard - allows exclusion of HCE's, but as part of that exclusion, allows a "discretionary" safe harbor for the HCE's - only restriction being that it cannot exceed the safe harbor being provided to the NHCE's. A nice feature.

My 2 Cents - I don't think the stock market being closed would matter for a non-publicly traded company, as is the case with many ESOP's?

I'm not aware of any, either.

I seem to recall something about if, in the judgment of the Fiduciary/Administrator/Sponsor/whatever, the imposition of the surrender charge would result in a lawsuit, then the plan sponsor would be justified in paying the surrender charge. But I really don't remember the details, and would have to dig into it to see if my memory is even remotely correct, and even if it is, does such a stance still exist.

I'm not clear from your original post - is the plan being amended to waive eligibility for this one person by name or title or whatever, or are you just amending it to change overall plan eligibility to immediate? If the latter, certainly no problem. And the fact that this person will be named Trustee is also no problem. Can you perhaps amend the plan to include service with a prior employer (wherever this person worked before) which would hopefully allow immediate entry, so it has the same effect without actually modifying normal 1 year/1000 hour requirements? Only hitch there might be if this employer also hires other people who have worked for that prior employer. In my prior life, we frequently amended plans to include prior service with a prior employer, even for Highly Compensated employees, and filed for d-letters, which the IRS always approved - we never had a rejection. It was a commonly used "recruiting tool" by employers to entice certain people to come to work for them, and as long as there was no "pattern" of doing this routinely, the IRS didn't have a problem with it. (I'll state here that I do not know if they currently feel the same.) But since in your situation it is a NHC anyway, then I'd have no qualms about it.

There really are a lot of people out there who only want what is right and fair. Of course, none of them are in politics...

Well, it is an ERISA plan, so there is a formal procedure involved for denying a claim for benefits. I don't believe a simple "We don't have it" will qualify. At the very least, the plan must follow the formal plan procedures as outlined in the Plan/SPD, although if the claim is not made in writing, I don't know if that negates the participant's rights, or partially negates them, etc. If the appropriate procedure is not followed, it may result in unfavorable results for the Fiduciaries/Administrator if the participant decides to bring a lawsuit. I have to agree with Jpod that at the very least, this should be discussed with counsel prior to the formal or informal rejection, as it is obvious that the plan has not encountered this situation before.

Let me start by saying I have absolutely no knowledge of the legal arguments or principles involved, so I cheerfully defer to the attorneys. It seems, however, that it is pretty hard for a participant to "prove" that they never received payment. It would seem to me that once the participant claims that they were never paid, the burden of proof rests on the plan, to prove that payment WAS in fact made? And perhaps there are all sort of applicable statutes of limitations, court precedents, etc., etc., that can be used to negate or overcome that burden if a certain amount of time has passed, or whatever? And I'm probably COMPLETELY off base in my thinking.

This is why when clients ask, "How long should I keep plan records?" I tell them forever. Was it over $5,000 so that it couldn't be cashed out without consent, or was it small enough so that it might be reasonable to think it was cashed out? How old is this person now? Has the plan been through several TPA's before it came to you (seems like that's the way it usually works...) SSA's ever filed? I really don't have any bright ideas on this. Hopefully someone else can provide you with something constructive.

"does the fact that they terminated put them automatically into a reasonable business classification in that case?" While I absolutely think that this is a reasonable business classification, I don't think it alters the fact that you have to decide, before you ever get to that stage, whether you think you can use the ABT for coverage or not in a plan where everyone is in their own group. If you believe you can, then I don't think it matters. If you believe that you can't (or the IRS position is that you can't) then again, I don't think it matters. Interesting IRS comment, although I can't figure out what his real position is based on that! By the way, the sound you just heard was my head exploding.