CuseFan

Correct, person cannot get 402(f) notice more than 180 days before the annuity starting date, which in this case I think would be the distribution date. I don't know how quickly a DCP termination d-letter happens these days, DBPs usually take 9-12 months. I think they can't issue a letter any sooner than 145 days, so maybe send out forms after four months (120 days). Unless the plan is an ESOP, part ESOP, or has some crazy provisions, I would think you'd have d-letter in time to be within those 180 days. Just a thought.

This can often be a HUGE headache (and very expensive) for small terminating DBPs and especially if they have a general lump sum option like CBPs. Those in the small plan space know that having ANY annuity insurer option is a godsend. Effen - is this Midland National Life Insurance Company in Iowa that you reference? I'd ask if they could satisfy the DOL's safest available annuity option requirement, but if they're the only option then they are also the safest option. I see they are well rated anyway. Do you know in which states they are licensed to write contracts? I briefly checked their website but couldn't find. I know New York is a problem state. Thanks

seconded

If the plan allows expenses to be paid from assets and a recent invoice that could have been paid from the plan was instead paid by the plan sponsor, the plan sponsor can submit that invoice to the plan for reimbursement.

This is a great point and should not be overlooked. If you had owner or HCEs only and gave immediate vesting but now there are NHCEs coming into the Plan and you want to add a vesting schedule, that might be an issue.

I don't think so. Years ago, back when the PS deduction limit was 15%, I did RK for the large/audited PS 401k of a very generous NFP that easily exceeded that threshold every year without issue. Total compensation and benefits still need to be reasonable but there's no hard coded limit of which I'm aware.

Yikes, I'd only roll those dice if I knew they were loaded and guaranteed to come up 7 or 11 as opposed to snake-eyes!

and a person who represents himself has a fool for a client

Agreed, any reasonable determination that is defined and not subject to annual employer discretion in its application, would be permissible provided the result then satisfies coverage, which would be an automatic if all HCEs were always excluded.

and look at the time periods - as each could cover the specific periods of marriage, 50% of those 25 years thru 2015 and 50% for however long the second marriage lasted.

Agree - and assume this was a DBP, otherwise where did extra amount that was overpaid come from?

I would not forfeit and correct through payroll. It is not the correct method and a forfeiture from a salary deferral account throws up a red flag. Also, the excess is required to be adjusted for investment experience as Lou noted.

If they have d-letters, looking at the letters might indicate whether they were on prior 5-year cycle for IDP which has since gone away or are pre-approved with modifications on a 6-year cycle. I agree not much has been going on in DB amendment world and these may be OK, but it would be prudent to do a detailed review prior to going down termination road.

I do not think the spousal protections afforded by ERISA that attach to qualified plan participants subsequently apply to the benefits inherited by their beneficiaries. For example, if my married daughter is my beneficiary, upon my death there is no requirement to name her husband as her beneficiary of my inherited account. However, if she fails to designate a beneficiary then the plan's default will apply, which could be her husband. Also, be mindful of the new RMD requirements.

From the IRS Form 5304 model SIMPLE: V. Duration of Election This salary reduction agreement replaces any earlier agreement and will remain in effect as long as I remain an eligible employee under the SIMPLE IRA plan or until I provide my Employer with a request to end my salary reduction contributions or provide a new salary reduction agreement as permitted under this SIMPLE IRA plan. As long as the employee remains eligible, his/her latest election should continue and there is no need to re-enroll unless the employee is making a change.

Agree that there does appear to be inconsistency between the 6088 instructions and the Rev Proc, but that section of the RP then goes on to reference filing per the 6088 instructions, which do call for the 6088 for a collectively bargained DBP. The primary (sole?) purpose of the form is for IRS to monitor accrued benefits versus 415 limits, to which cb'd plans are subject, so it makes sense that a 6088 would be required.

I went to school with SpongeBob and I don't think he would like that, but I can ask him at class reunion in three weeks. I understand your frustration but financial institutions are required by law to know and verify their customers. I would think the important matching up would be the name of the plan sponsor (not the plan name) with the name on the check/bank account. If I'm holding the assets for a plan sponsored by XYZ company, or John Smith, but accept deposits of funds coming from an account for MAGA company or Osama Been There, can't you see where that could be an issue unless such entity or person is also listed as a sponsor to the plan? And if the check writing account does not belong to a party to the plan then contributions shouldn't be coming from that account either. Some CPAs might play loose with those rules but they are not the ones forced to comply with all the government regulations designed to combat terrorism and money laundering. Change the plan sponsor or add participating sponsor to match the source of funds and move on. Moving to another financial institution should still see the same requirements.

Agree with Bill. Follow the document. It is likely that some of their VAT will need to be returned to correct 415 violations.

Yes, this isn't Monopoly (no bank error in your favor)!

Most likely not - see third bullet below. From IRS website: https://www.irs.gov/retirement-plans/retirement-plans-startup-costs-tax-credit Eligible employers You qualify to claim this credit if: You had 100 or fewer employees who received at least $5,000 in compensation from you for the preceding year; You had at least one plan participant who was a non-highly compensated employee (NHCE); and In the three tax years before the first year you’re eligible for the credit, your employees weren’t substantially the same employees who received contributions or accrued benefits in another plan sponsored by you, a member of a controlled group that includes you, or a predecessor of either.

Even if they remain employed, rolling to an IRA would then create an RMD (or increase RMD) from IRA(s) next year - so this only makes sense if taking the cash (less 20% w/h).

Thanks Lois, I don't know how I missed them before, must have glossed over as other items caught my eye instead. Sorry for the redundancy.

I know one or more people have asked about DC plan litigation statistics within the last year. I came across Part II in another newsletter and found Part I so linking these for anyone interested. https://www.callan.com/blog-archive/dc-plan-lawsuits/ https://www.callan.com/blog-archive/dc-plan-litigation/?utm_campaign=Headlines_102722_US&utm_medium=email&utm_source=Eloqua

I don't think anyone is advising that - just advocating for proper accounting for matching contribution purposes. As Frankenstein's monster said, "fire bad, catch-up contribution good!"

That is an incorrect interpretation. As discussed, deferrals become catch-ups after a limit (402(g), plan imposed, or ADP test restricted) is reached, not simply by election. By "people" do you mean participants or service providers? The latter group should know better. The SPD wording means (if drafted by a knowledgeable person, or platform) that you are eligible for catch-up deferrals if you attain age 50 at any time during the year, not simply after reaching age 50. Whether I turn 50 on 1/1/2022 or 12/31/2022 I can defer $27,000 in total in 2022, and do so all in Q1 if able or spread throughout the year. The SPD could possibly be worded with more clarity, but the administrative system providers (payroll and RK) should know how to do this properly.