CuseFan

If the PTEE never worked 1000 hours, can amend the plan to apply 1000-hour YOS eligibility and apply to everyone as of an allowable date which could serve to kick out this employee. However, such amendment would likely be a modification to the pre-approved document language (most provide continued participation) and could also trigger a partial termination. Since PS-only there are no LTPT EE issues. Seems like a lot of trouble to avoid PS for a single PT EE.

No worries and thanks for the confirm - hope you are enjoying the summer.

Very good "not advice" @Peter Gulia

Maybe, you have a 33 1/3% reduction in active participants via action by the employer. I would lean yes. However, it's not just flip a switch and this person magically goes from employee to contractor. Unless something changes in the relationship this person could still be deemed an employee.

That may be a possibility if the buyer's new sub adopted the seller's plan as a participating employer, creating a multiple employer plan for that "stump" period, otherwise having them remain in that plan w/o being employees of a participating employer would violate the exclusive benefit rule in my opinion. If the TSA (what does that stand for?) allows for this then maybe that is sufficient for a participating employer agreement, which should have been executed in some form prior to these employee deferrals from the "new" employer.

I assume the employee was not deferring at the time or those would have stopped as well. The employee could make pre-tax contributions in the amount of the loan repayments to restore his balance to what it would have been upon repayment and on a pre-tax basis. Maybe an EPCRS filing, but he's already been taxed, then that also involves amending 1099 (to zero?) and tax return. Whose error in "terminating" the employee? The employer or the TPA? Maybe TPA covers (a portion of) the EPCRS? As I've opined over the years on these types of situations, the employee needs to accept some responsibility here as well - he didn't notice that his net paycheck increased or think to explore why? Agree that 1099 coding was incorrect.

Those who had 415 excess must be informed of such and that those amounts were not eligible for rollover and need to be withdrawn from the IRAs and the 1099Rs they get from the plans will (should) reflect that. At least that is my understanding. Note, the overpayment forgiveness allowed by SECURE?2.0? does not extend to amounts that exceeded legal limits.

Yes, unless there is some ESOP specific exception of which I'm unaware. ESOP Guy?

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.