CuseFan

Technically, ALL eligible participants should have a cash balance account as it is not the account that gets offset by the DC account(s). The CB account is converted to the gross Accrued/Normal Retirement Benefit and that is offset by the actuarial equivalent value of the DC account(s) based on assumptions specifically defined in the CBP to get the net benefit. Your CB participant count should be those with the required bookkeeping account. As @C. B. Zeller noted, the count for premium payment is only those with accrued benefits > zero (i.e., those not fully offset). They are looking at past PBGC premiums plus interest and late filing penalties, not to mention the issues associated with an improper termination. I suspect this creates some IRS issues as well, which then puts tax deferral of contributions and benefits at risk (which I assume is substantial for the principals), and add the incorrect 5500 filings to the mix. This is definitely a situation for qualified legal counsel involvement.

We have had many plan terminations over the decades and a number of them in recent years and nearly every one was with only a resolution and without a formal amendment saying "the plan is terminated effective X" - and many of these were submitted to IRS and received d-letters. Yes, there is an amendment for compliance and any design changes related to the termination, and all the other compliance (PBGC especially and IRS) items that are part of the process. Regardless, whether resolution with or without a formal "the plan is terminated" amendment, unless you properly complete the process within your required time constraints, your plan is not terminated. Personally, I do not think a plan termination is a plan provision, it is an event/transaction/process, and a resolution by the employer stating their intent to engage in such has been sufficient during my 40+ years in the industry. That said, I do not begrudge any one wanting a formal amendment to state the plan is terminated and have accommodated when requested, I have not found such to be necessary.

In your hypo, the $100 was the correct deferral, was actually withheld, and was fully deposited on a timely basis, yes? Then some accounting report seemed to incorrectly indicate there was a $15 deposit shortfall which was then unnecessarily made up via another deposit? I think either method for correction would be acceptable.

Mass does not recognize common law marriage from what I see, so I do not see the plan as recognizing her as the surviving spouse. There was no valid beneficiary designation, so the plan provisions concerning such would/should be followed. These may specify some sort of hierarchy of persons - spouse, children, parents, siblings, etc. - or may simply default to the estate. If the funds go to his child, whether directly or through the estate and the child is a minor, then (assuming plan provisions or state law supports ) I would expect the distribution would be paid to the child's legal guardian, which I assume is the mother. No explanation of intent without valid backup and official documentation will carry any weight with the Plan Administrator. Your masseuse (child's aunt/mother's sister) may be able to assist her sister in making a claim to the plan on behalf of her child as legal guardian, but beyond that, managing funds for support of the child is another conversation (family law/trust?) well outside on what I'm able to opine. None of this is legal advice.

Same thought. If the form says "brothers" then it should go to both. If it said "brother" w/o specifying which, I don't see how that could justify paying one of them, and so a reasonable (and safest?) interpretation might be each brother. I think the only way you could pay one brother and not the other is if the form specifically said brother X. This also highlights a best practice where beneficiary designations require name, address, SS# and phone number of each beneficiary and contingent beneficiary, and is reviewed and accepted (or rejected until perfected) by the Plan Administrator.

Employer may want to adjust their payroll reporting so that a status change such as this, or say a transfer to another department or division, is not done via a termination date. An edit check would be if someone with a termination date has compensation for a payroll period say two months later, not that it necessarily means there is a problem but it flags as a potential problem to be explored. This might be a payroll function, HR or bundled RK/TPA depending on the sponsor company and vendor. Just a thought.

Agree with @Bri that if amounts were not forfeited from accounts when they were required to be under the terms of the plan then you have an operational defect(s). Then, if defect(s) #1 resulted in forfeited amounts not being applied timely pursuant to plan provisions then you have operational defect(s) #2. If those forfeitures were supposed to be allocated or reduce expenses, then participants would have been harmed. If they were supposed to reduce future contributions, yes, maybe only the employer was impacted, but that also enabled them to contribute and deduct more. Regarding IRS thoughts - I would suspect they'd want the defects corrected in accordance with the plan's provisions and not fully vest amounts that should have been forfeited years ago.

OMG, that was awesome Tom. And crossword puzzle aficionados certainly know what a yegg is!

The question to answer first is what does the plan say for timing? Was the benefit REQUIRED to commence at an earlier time without regard to any election by the spouse, in which case you are correcting an operational defect and and option 1 seems appropriate. Maybe paying the greater of 1 and 2 could be justified but I probably wouldn't go that route if there are NHCEs in the plan. If the plan does not specifically require that earlier distribution, then you are looking at a current annuity starting date after all conditions needed to pay out are satisfied, and then you are looking at option 2, provided those actuarial increases do not cause the benefit to exceed 415.

If that was a change in plan provisions driven by a change in corporate governance, there should have been a plan amendment for which you should have received a Summary of Material Modifications (SMM) no later than the middle of the following year. I suggest reading through your Summary Plan Description and then directing specific questions to the Plan Administrator. That's about all I have to offer, good luck.

I don't know what the rationale would be unless that timing has been in the plan all along, which is often the case with ESOPs. What may have changed was an underlying requirement regarding stock ownership. Some companies through their by-laws restrict stock ownership to employees and maybe it was that sort of change in corporate governance that triggered redemption. Also, plans sometime use special early distribution windows to reduce head counts for various reasons, but couldn't guess why they would want/need to hold assets no longer in company stock for years after termination.

If under the terms of the plan and prior to the termination (maybe too late now if process started/NOITs issued) you could do auto rollover as a function of normal plan administration then I think it would be permissible.

Agree with your assessment.

So now I'm told this was a different plan versus my original question which still remains relevant - so the $64,000 question is whether the plan termination distribution date for all benefits (the ASD) is essentially a PYE and therefore creates an Interest Credit Period under the terms of the Plan? If so, then an interest credit should be provided. Does the presence of excess assets which will be transferred after all benefits are paid make a difference? Technically the plan has not ended because assets are not zero, but there is nothing on which to credit interest so does that still create a (short) Interest Credit Period. These are relevant AA items. The BPD does not elaborate other than say that the ICR will be prorated for any ICP < 12 months. 15. Interest Credit Period: a.  Each Plan Year 22. If a Participant's annuity starting date occurs before the end of an Interest Crediting Period, the Interest Credit for the partial Interest Crediting Period will be: a.  Zero I welcome any further thoughts or direct experience you may have had with this issue. Happy Friday afternoon for a holiday weekend!

Pennies! If you can find enough of them.