Belgarath

So, has anyone done a plan termination lately with TIAA where assets are in individual annuities? We haven't for quite some time, and there were, to say the least, difficulties.

When you are terminating a plan, the participant has to be given the option to get a distribution, or roll over the funds. But TIAA "requires" (or did require) the participants themselves to call TIAA if they wanted to surrender. And participants frequently won't bother to do this in a timely fashion. 

Do you know how they handle this now? And do you by any chance have the contact information for a person at TIAA who actually KNOWS something and is willing to discuss how a plqan termination can be handled in this situation so that a final 5500 can be filed?

Thanks in advance! 

FWIW - my understanding is that the "30 day" notice is "deemed" reasonable. However, it doesn't necessarily preclude a shorter notice period if facts and circumstances are such that the shorter period is still "reasonable."

Correct.

But remember, my opinion and 8 dollars will get you a cup of coffee.😁 Happy Friday!

I agree.

On 3/17/2023 at 11:29 AM, Peter Gulia said:

Recognizing MoJo’s guidance, there sometimes might be a deliberate variation from the mainstream approach of setting a plans’ merger’s effect for a year-turn.

A receiving plan’s sponsor/administrator might prefer that a merger not happen by midnight December 31 because that might increase the receiving plan’s beginning-of-year count of participants to require engaging an independent qualified public accountant when the receiving plan’s administrator otherwise would not engage an IQPA. Instead, one might set the plans’ merger for the first business day of January.

Wow, this has been interesting, (and a little depressing)...

So, if you have 2 employers, each with a plan that has, say, 80 participants WITH account balances, and 1 employer purchases the other, and the plans are going to be merged:

Absent other reasons for choosing December 31 or January 1, it might be beneficial to make the merger date January 1, in order to avoid a 1/1 participant count that would require a plan to have an audit as a large plan? Or (and I'm not clear on this) if the official merger date is 1/1, would this be questioned if trying to avoid audit? Would it be better to use 1/2 instead, to remove all doubt?

This may help. https://www.irs.gov/publications/p538

Whoops - I see Peter already posted it!

P.S. - I've never seen it either. I'd hazard a guess that most of us haven't.

20 hours ago, Peter Gulia said:

But even if ERISA § 408(b)(1) tolerates an adjustable-rate participant loan, is the administrator’s service provider capable of accounting for it?

A great point!

Yup.

Agreed. But depending upon which selection you make in Article 1 a or b, it could be immediate, 1 prior year, or 2 prior years for eligibility. Again, you are correct that it is based upon compensation, not hours.

Good luck to both of us! We work with an actuary that does governmental plans, and she was not aware of any companies doing what we are looking for. She inquired of an ERISA attorney about a fee to draft a document (for this 8-person Governmental DB plan) and was quoted $30,000.

Thanks. Very helpful.

We have not encountered this - first time for everything! I am, however, unsure of the exact process. So, our client joins a MEP with someone else effective (X) date - let's just say November 10. Assets will be liquidated from current investment provider, and transferred into the MEP - exactly how, not sure we care. My question is re the 5500 SF. Is the 5500 SF filed as a "final" showing the transfer on Lines 13(b) and (c)? Or would it be a full year 5500 SF since the plan isn't being "terminated." And would it be filed as a short plan year as of the date of transfer of the assets? It appears that no 5310-A would be required.

Just not sure of the process. Would it just be the new MEP that would file a 5500 for 2024, and we wouldn't file a 5500 at all? It'll be driven by the new TPA anyway, but I'd like to get a better handle on how this typically is/should be handled.

Thanks!

Got it. Thanks for the input!

Thanks Carol. ASC sponsors a pre-approved governmental DB plan in an AA format, but I have not yet compared provision-for-provision to the current IDP DB document to see if it would "fit" onto the ASC frame. Now I don't recall - will the IRS accept a 5307 in this situation, if the changes are not too drastic? Problem is we have a couple of small "legacy" governmental DB plans that are far more trouble than they are worth, but for various reasons just getting rid of them isn't a good option...

Thanks again for any thoughts.

Let's assume an individually designed governmental DB plan received a determination letter at some time in the dim and distant past. I believe post 2017, such a plan could no longer apply for a D-letter, absent a plan termination, merger, or some other unusual situation that I can't recall. 

Has that changed?

Interesting points. As a non-lawyer, I have wondered about the long-term effects of the (Loper?) decision, as to challenges to regulatory rules and interpretations, reliance on those regulations, etc., etc. - with any luck, I'll be retired before the excrement hits the windmill in any major volume.

This is absolutely not intended to sound dismissive or snarky, but on a personal level, I find it hard to care at this point. There are so many immediate and difficult technical and administrative issues to deal with, and this particular issue doesn't take effect one way or the other for many years. Given recent legislative history and trends, there will be lots of tinkering before then anyway...

Yup, you should be good, assuming you otherwise satisfy the requirements of that section of the Rev. Proc - (Notice requirement, timing of starting correct deferrals IF the employee notified the employer of the error).

Well - depends upon what you mean by "there's no current match." Suppose at the end of the year, a match is made based on all deferrals for the plan year. (I'm assuming from your comment that they don't match per payroll.) In that case, they would be entitled to the match on the missed deferrals. 

Depends upon the timing. Take a look at Rev. Proc. 2021-30, Appendix A (.05)(8) - that'll give you the information you need.

It doesn't seem to me that the guidance specifically addressed whether the 2025 auto enrollment requirements must apply to LTPT employees? In the absence of a regulatory dispensation, it seems like the safest procedure would be to have auto-enrollment apply to them, as ridiculous as that seems. Thoughts on this issue?

This might be of some assistance? https://www.irs.gov/pub/irs-drop/n-20-50.pdf

I wonder if this question is/was addressed at the ASPPA conference?

I'd leave it.