RatherBeGolfing

Son was never an employee of dad's practice, he was an IC. So maybe he was a sole prop as an IC and counts that prior service but not prior service at dad's practice...

The line "we don't need no stinkin' badgers" was also used in the 1989 Weird Al Yankovic classic "UHF" Popular line to parody

Are the employees in for sure? That was my first reaction but as more details are coming out, I'm not so sure. Depending on other unknown details, why couldn't son require a year of service? 1. It is an asset sale. 2. Son wants to start a new plan. In an asset sale, the employees have severed employment with dad's company and are now new employees of son's company. He does not have to credit service in dad's company for the new plan in his company.

Pretty much every opinion I have heard or read has said it is NOT preempted. I have talked to many ERISA attorneys who will outline the possible implications of non-compliance and many who take Larry's approach of "who cares, nothing is going to happen". That said, I have never talked to one who can mention a single example where non-compliance has actually become a problem.

Maybe I'm missing something, but since the plan is paying the expenses, shouldn't the fee (or the formula for calculating the fee) have been disclosed ahead of time? Or are we discussing future changes?

Indeed it is

It is worth pointing out that ALL parties to the document are liable for the tax. The state doesn't care who pays it, so if the participant refuses, the plan is still on the hook.

So we have a double whammy He cannot disregard the EEs service just because he didn't own it at the time He cannot count his time as an IC because he wasn't an employee

How about ERISA § 412, 29 C.F.R. § 2580.412-11

My emphasis in bold. Wife must consent to the mother as beneficiary. I'm not sure I see the controversy

In Florida we have what is called a "document stamp tax". It is an excise tax on certain documents like deeds and promissory notes. ERISA plans are not exempt and applies to all loans executed in Florida. The tax rate is 70.cents per $100, or maximum $350 tax on a $50,000 loan. You can pay it online, by mail or in person. Technically, failure to pay the doc stamp tax could mean that the loan is unenforceable, which of course could have a cascading effect on the the loan and the plan. I have never heard of a loan actually being disqualified due to failure to pay the doc stamp tax. Very few plans and/or service providers actually comply with the doc stamp tax. Most service providers will simply inform the plan and participant that they also owe a doc stamp tax to the state but that they do not fill out the paperwork etc, so it is it falls on the plan/participant to make the payment. We do the doc stamps for some of our clients but the vast majority simply say "ok, I have been informed, I'll roll the dice". The only service provider I knew of in Florida that did doc stamps for ALL their clients, was recently acquired by a major national provider who to my knowledge does NOT do doc stamps.

No panda Larry?

They are up Dave. At least for me.

Ok so I have been thinking on this a little bit more (and reading the EOB, because it is Saturday after all)... Per treasury reg §1.411(a)-11(c)(6), the notice and consent requirements do not apply to an alternate payee unless required by the QDRO. In other words, unless the QDRO states that the AP shall be provided with notices and must consent to the distribution, you can distribute the asserts based on the QDRO alone However, if the distribution is in the form of an eligible rollover distribution (single-sum distribution), the 402(f) notice is required, as is the 30 day election period. Could the attorney perhaps be thinking that notice and consent isn't required per treasury reg §1.411(a)-11(c)(6), not realizing that the 402(f) notice and election period is still required if it is in the form of an eligible rollover distribution? Again, I think the attorney is the issue rather than the DRO itself. You are still correct in requiring your 402(f) notice though, she can't require that you not provide it (even though it seems she is already electing a rollover, so the purpose of the notice is sort of moot) Also, I confirmed with the EOB that the DRO does not have make available to the AP all options available to the participant under the plan, it just cant give the AP an option that is not available to the participant. For your reading pleasure, see EOB Chapter 6 - Section VI - Part B

Just to be clear, does the DRO actually have language in it to prohibit you from sending an election form? Or is this what the attorney is telling you in addition to the DRO. If it is in the DRO, I wouldn't have a problem saying it is not a QDRO. If it is just what the attorney is telling you, you probably have a QDRO but with a PITA attorney who does not know how this works. In which case I would just stand my ground and not pay it out until they go through the elections, notices, etc.

Ok. So you file a 5330 and pay the tax but don't go through VFCP. There are several reasons why you may want to file VFCP in addition to paying your excise tax. Did you use the DOL calculator to figure out your lost earnings? If you did and did not file VFCP, the DOL can come back at you and say you can't use it, either file VFCP or redo your calculations without the calculator. Even if you didn't use the calculator, filing the 5330 does not grant you relief for fiduciary violations, it just means you paid tax on a prohibited transaction. So in short, you can sometimes avoid filing a 5330 when filing VFCP, but you can't avoid filing VFCP by filing a 5330. You are correcting different issues, but under limited circumstances, correcting one can give you relief on the other.

Filing VFCP doesn't excuse your excise tax under 4975, so you still have to file your 5330 and pay the tax. Under limited circumstances, you can file VFCP and deposit what would have been the tax to the participants instead. But outside the PTE it really isn't an either/or situation...

I guess my question is why would you NOT keep records of benefit payments?

That makes more since than how I read it

Why did the participant give a check to the sponsor for a deferral?

I agree 100%. I only offered an explanation of the issue and the objection as I understand them. The plan and its admins are under no obligation to act on it. I disagree to a degree. I don't think the Sharia issue is all that different. Some Muslims see any vehicle that earns interest or dividends as haram, even if a so called sharia compliant mutual fund is available. Others don't care about the usury aspect as long as the underlying investments are "sharia compliant", and others don't care at all. But just like the Amish example, the plan is under no obligation to make special considerations such as a sharia compliant fund that may appease a subset of believers. They may make the decision to do so if it is otherwise prudent and reasonable, but I don't think it is any different from the Amish exclusion. EDIT: There is an excellent article on Sharia and ERISA in the JPB that was written by Asrar Ahmed at the DOL (at least at the DOL at the time of the article). It goes into many more issues than I noted above. JPB Vol 20 Number 4 if you have access to it. At least I found it very interesting as a non-Muslim pension geek :)

When it comes to religious objections, I think you can always make counter arguments like "how can you object to X but not Y?" The old "would you pull an ox out of a pit on the Sabbath" comes to mind as a perfect example. What it comes down to is that religious interpretation is an individual thing.

I will start by saying that this simply my understanding (right or wrong) of the issue. investment options are not necessarily disconnected from the issue of a retirement plan in general. The objection on religious grounds isn't a one size fits all. Some may object because there are no investments that meets their needs, like a sharia compliant fund. Some may object because no matter what the fund options are, investments are designed earn dividends or interest which some interpret as running afoul of prohibitions of usury. Some (including some Amish apparently) may object because their religion requires them to be self sufficient which means that they may not object to savings but would object to ER contributions.

I haven't seen any Amish examples before but I have heard several examples of Muslim participants who refuse participation and/or refuse to accept contributions based on the theory that the plan itself or the investment options are not halal. In each of those cases the problem was not discovered until the employee was already a participant. I agree with the comments above. Absent a timely executed waiver, you have to follow the terms of the plan. If you can exclude them from the allocation and pass, great. If not, you follow the terms of the plan and contribute to a participant who will most likely refuse to accept it when it is time to distribute the benefits.