Griswold

It depends on what the 401(k) plan documents say. For e.g., they might exclude people who are covered under the hospital's 403(b) plan.

Just writing to add that you should request the plan documents. The SPD isn't necessarily controlling...

Thanks, David. Another related question, are frozen plans subject to the certification requirements?

I think what I was looking for is IRC 436(d)(4). I think...

Plan was frozen back in the 90s. I'm pretty sure if something is frozen before 9/1/2005, then 436 doesn't apply. But I can't find a cite or guidance for that. I didn't make that up, did I? Could someone point me towards what I'm looking for?

Thanks, Xtitan

Thanks jpod. I read those a few times. I guess what I don't understand is how to run this. The plan calls for the payment to be made to the beneficiary. Should they run a payment to the deceased in the amount of the withholdings and then pay the rest to the beneficiary? Anything to withhold for her? I guess its IRD, and so it will retain its character as ordinary income. And she'll just report it on her 1040. That makes the most sense to me, but I just can't find guidance for it....

An executive passes away and becomes fully vested in 457(f) plan. Payment to be made to a beneficiary. Could someone point me to how I can figure out the FICA, FUTA, Medicare taxes and reporting? TYIA!

Deferral =/= match.

The concern is that employers who have a 457 plan don't have the same incentives as other employers. They won't care about taking deductions on contributions and so they're more likely to enter into arrangements that defer compensation and hence defer the taxation on the compensation. I'm not saying you're not giving them a good deal; I'm saying you should run it by an attorney to get their opinion on 409A issues.

Agree with XTitan. A risk of forfeiture associated with a voluntary deferral of compensation may generally be treated as substantial under Section 83, but not under Section 409A unless, as mentioned above, the present value of the projected payment amount is materially greater than the amount deferred.

My take on this (and your previous post) is that you're doing this for a very specific reason that none of us can discern. Whatever it is, it doesn't seem to be for the exclusive purpose of providing benefits to participants. ERISA 404(a)(1)(A). And that's why you're not finding the answer you're looking for here. Food for thought.

I think with the new guidance (IRS Notice 2016-16) you're in the clear!

Assuming single employer, and assuming the forgone benefits will make the plan sufficient, then I agree with David.

I agree with Lou in that I don't know what you're trying to correct (though there are plenty of plans that dictate the timing of the default in this way.) But I think it's too late for the participant to undo it all. If there were a bona fide error, the ER could correct the 1099-R and reissue it, but that doesn't seem to be the case here. --- Edited to fix typo

Generally the IRS would only go back three years, six if there's a substantial understatement, or forever if it involves fraud. But yeah, this sounds fishy.

I don't think it's a problem. When you're vesting everyone and doing so in a nondiscriminatory way, as seems to be the case here it, the government should view it as a good thing.

It's just the date to adopt by. If you've changed the VS plans and want a determination letter, then yes, April 30th. That's what the website says, anyway.

Sure--though I'm not sure it will get you to your goal. What you're looking for is a permissible distribution event under 409A. Separation from service is such an event. Under the regulations, an employee is presumed to have a separation if the level of bona fide services performed decreases to a level equal to 20 percent or less of the average level of services performed by the employee during the immediately preceding 36-month period. And there is also a presumption that a separation will not have occurred if the service provider continues at an annual rate that is 50 percent or more of that average. The regulations allow you to put into the SERP a definition of the separation. But the level of service would still need to be under 50%.Take a look at IRC 409A(a)(2)(A)(i) and Treas. Reg. 1.409A-1(h)(1)(i)-(ii).

You can amend the SERP to define the separation, but the service provider (i.e. the exec) would still have to go to under 50% of his/her former service level for the last three years. And that's really skirting the line.

I agree with Lou's analysis and would only add that the April 30th deadline is for volume submitters and prototypes so it would not apply to an individually designed plan. ETA: Oops, didn't see that Lou made this point as well.

To echo bird and jpod's point, I've come across this resistance before when the accounts weren't properly set up (but in a 403(b) context.)

I'd be curious to know which FINRA rule they're talking about if you can get a citation out of them.

It's unlikely that he'd be able to receive the SERP payment and remain at the same level of service.

I agree that it's odd, but I read it the same way. Perhaps, depending on the years, number of employees, etc., this might be egregious and the SCP would not be available.