formeractuary

There are some legacy workers comp claims still being paid through B and there are potential environmental claims (it was a mining facility). Correct, neither is willing to to take a payment to cover the newly assumed liability, mainly because of the unknowns. No one has ever considered letting it fail, and I don't think anyone would be comfortable with that idea. Pension B is ~95% funded. A & C are splitting the required cash evenly. The cash flow is a very small amount for A and C, so they can both continue the funding requirements without much issue. If there were a creative strategy to merge the plan into A or C, that would be preferable, but each can live with the cash flow as it is.

Entity B is 51% owned by Entity C and 49% by Entity A. Entity B exists only on paper at this point. It has no business operations or employees. It sponsors an underfunded DB plan, but entity A operates the plan and employees from A serve as the plan's fiduciary. Entity A and Entity C also has their own DB plans. Entity A and Entity C cannot/will not arrive at a deal for either of them to take 80%+ ownership of Entity B and enable them to merge the B plan into their own DB plan. Are there any mechanisms that would allow A or C to merge the B plan into its own plan without taking 80% ownership of the B entity? Could this be negotiated between A and C?

You can try EAC Tools: https://endresactuarial.com/index.html. I use it fairly regularly and have been impressed.

Can the employee not directly defer the missed around into the NQDC? I realize that doesn't directly address the question you posed, but it would seem to get around any contingent benefit issues. That said, I would agree that a non-elective ER contribution to address the missed amount in the k plan would be problematic.

A business unit with a frozen NQDC plan was sold to private equity several years ago. Seller retained the NQDC plan as part of the deal, but the seller missed the one-year window to begin distribution of all accounts still left in the plan. Therefore, seller still administering frozen NQDC plan for non-employees. The private equity firm recently sold that same business unit to another private equity group. Can the original seller take the position that this new transaction is a distributable event (i.e., terminate the plan with respect to those involved in the transaction)? It's clear from my perspective that the Seller had the right to distribute the accounts upon the original transaction (but did not proceed because of lack of awareness of that provision), so can the same analysis apply in the second iteration? The plan document indicates that the Company (the original seller in this case) can accelerate distributions upon a change in control. It's not clear if this second transaction could be considered a change in control since the affected employees don't work for the plan sponsor (the original seller). External counsel so far has taken the position that we cannot liquidate the plan in light of the new transaction, but I continue to seek other opinions.

Not an attorney, but this feels like a much more significant issue than what the Rev. Proc. alludes to. This situation smells of fraud to me, and it makes me uneasy to rely on self-corrections in this case. Corrections under IRS aside, have you considered whether this would be a prohibited transaction under ERISA?

Since NHCE, should not be an issue. Perhaps some employee relations issues due to special treatment of this person, but I don't see any IRS/DOL concerns. Is it a safe harbor plan? This doesn't appear to fit squarely in the examples of permissible mid-year changes for safe harbor plans, but it doesn't appear to violate any of the prohibitions either.

Abbott Labs recently introduced something similar to this as an option in their 401(k) plan. If you pay towards your student loans, you get a match in the 401(k). I believe they had to get a private letter ruling to do this. It's not clear from the press releases if they engaged this company to help pull this off. Seems like it would require some interesting and challenging work on the payroll side of things. http://abbott.mediaroom.com/2018-06-26-Abbott-Announces-Freedom-2-Save-Program-for-Employees-to-Address-Student-Debt

I don't have a cite (or if one germane to this topic exists), but I know we have merged plans where participants had 2 loans in each (the max in each plan) and were permitted to have 4 loans in the merged plan until they were all paid off.

We have paid expenses such as this from our plan without issue.

Thanks to you both for the helpful responses.

We have a non-trivial amount of deferred vested participants who are well past their NRD. The terms of the plan technically require commencement at NRD (at least as has been explained to me, but that's not really the issue at hand). Ignoring any ramifications of RMDs, have you seen any creative ways to encourage these participants to begin their pension and move into pay status? Letters reminding them of their pension, mailing unsolicited election kits, something else? This is attractive from a potential annuitization/termination perspective because deferred lives are more costly to place with an insurance carrier than an inpay life. We have made multiple lump sum window offerings without much luck and we have good addresses for substantially all of them.

Not too worried about the conflict of interest; we can manage around that. With the plans that you typically work on, do most plan sponsors hire a consultant to lead the RFP?

Does anyone have a sense of the prevalence of hiring consultants to lead 401(k) recordkeeping RFPs? Some folks in my company are pushing pretty hard to do it internally mainly due to cost of the consultant, but I have a lot of reservations about doing it internally in terms of availability and expertise at hand. If it helps, we're a "large" plan ($200M - $1B in assets) with approx. 5,000 participants, for reference. The plan is safe harbor and fairly vanilla otherwise.

Appreciate the response. We'll talk to our consultants.