CuseFan

yes and yes

I would do the prescribed 1 to 1. Small allocations shouldn't be an issue - they may look odd, but my guess is they'll go unnoticed or unquestioned. And there is a de minimis exception for any that might then need to be currently distributed, so you can avoid that hassle. Or, as you note, just process the corrective distribution and roll the dice, and/or bring the custodian into the conversation and discuss how they propose to properly address and fix their error.

1. Agree with Bill on preference to use 11g amendments. 2. If plan defines year of service in terms of hours, then my opinion is that hours should be your measuring standard and employee B gets added. 3. Could Plan Administrator reasonably interpret that provision in the alternative? Sure, and maybe that is best way to handle, but then document their decision so it gets applied consistently in the future. 4. The spirit of the failsafe is to add in the people closest to fulfilling the allocation requirement - but if you require both hours and year-end employment, who is considered closest, most hours or latest employment? The provision disregards the 1,000 hour rule first in favor of year-end employment, so maybe that is the intended measuring stick for who is closest, so I'm no longer strongly favoring hours as stated in #2 above. Suggest the Plan Administrator decides and then amending out this provision in favor of future 11g amendments.

No. You need to view the above as a transfer for all purposes and not a termination, same as going from an eligible employee to ineligible employee in the same plan (think non-union to union status).

If you think there was fraud involved, and can prove it, then hiring an attorney to sue your ex and have the QDRO rescinded may be your only recourse. A QDRO need not be signed by the litigants as far as I know, and if all the pieces that qualify a DRO as a QDRO are there then the Plan Administrator is required to follow. There is nothing you state that implies the Plan Administrator did anything wrong.

Good point - were people accounted for as in pay status or paid out lump sums? And how could that be recorded w/o assets actually leaving the plan?

This brings up more questions - HOW were those assets paid from general assets, taxes withheld, distributions reported, etc.? Was that all done properly such that the company was merely functioning as the paying agent for the plan? I've seen that before - not a best practice for sure - but the required funds left the plan and flowed through the company's checking account with the proper tax withholding and reporting. Why would they not want to recover those assets? Wonder if not doing so would constitute contributions to the plan and if so, would that create any issues? You don't say how long this has been going on - what is "a few years back"? If this has been 2 or 3 years then I'd be inclined to reimburse the company from the plan, whether they want or not, and move on. If this has been going on longer, then maybe a VCP. Or reimburse for recent (or open) years only and move forward. Or, actually spend some money and do the right thing and get a bank to function as paying agent. What was going on with all this before the acquisition? Did the seller act as plan paying agent as well? Finally, how has the company reconciled all this on their books, and did they take corporate deductions for plan benefit distributions? Sorry, more questions than answers.

It is the responsibility of the trustee to provide the value of all plan assets, how and where the trustee obtains those values is up to the trustee, but failure to do so accurately such that the plan's fair market value is not annually ascertained is a fiduciary breach in my opinion. Just because it is owner only doesn't mean (s)he can do whatever (s)he wants with the assets w/o accounting and accountability.

Thanks Everyone. Yeah, the "dark siders" usually defer to my expertise in shedding light for them, but apparently not this time! Enjoy the weekend - stay safe and stay warm, especially if caught in the polar vortex.

ESOPs were not always part of and eligible for the pre-approved/volume submitter document program. I think it was just the prior cycle for which that was available. That means the plan was individually designed by definition - regardless of the document platform that was used (like cash balance plans years back). Like cash balance plans, or any plan for that matter, the ESOP was not required to be put on a pre-approved document. You can always remain individually designed, in which case you need not and can not submit an updated document for a determination letter, except for an initial determination, plan termination or other special circumstances defined by the Secretary. However, individually designed plans are still required to be amended timely for changes in the law and periodically restated after a certain number of amendments - you need not restate every 6 years as with pre-approved documents. Look at the existing document, it's determination letter and the prior 5-year cycle under which this came. It might be a cycle B or C plan for which a 2013 restatement would be appropriate - BUT, they should also then have any and all required interim amendments for ESOPs, adopted timely (which is, as you know, one of the primary advantages of using a pre-approved document). So even if the intent was adopt a new pre-approved document as evidenced by a resolution, the lack thereof may not be a compliance issue. Updated SPDs are also a periodic requirement and may not necessarily mean a restatement was prepared. Hope this was helpful and good luck.

Thanks - and just on the basis of interpretation of the regulation, no other additional cite or reference?

Agreed, the amount subject to FICA is the benefit accrued (balance) up to the point FICA is applied, but then any incremental interest thereafter is not subject to FICA.

I searched archives and couldn't find an answer, would have thought this group would have discussed at some point - maybe I didn't look long enough. Combination CBP (1,000 hours for allocation) and PS 401k with SH match and individual groups with no allocation conditions for PS. Two NHCEs terminated with less than 1,000 hours, so no CB allocation and no top-heavy (if applicable, but not TH yet anyway). The CB providers doing the testing think that the employer can declare zero PS for these two NHCEs and therefore, they are not benefiting under the (combined) plan with respect to 401(a) source and need not be provided the gateway allocation of 5%. Employer was given option to give these two 0% or 5%. The DC providers think that these two NHCEs are required to get the gateway because there are no allocation conditions. I am in the CB camp (no gateway). Regulations say gateway is required for employees benefiting under the "plan" and refers to 1.410(b)-3 for "benefiting" which says: § 1.410(b)-3 Employees and former employees who benefit under a plan. (a) Employees benefiting under a plan - (1) In general. Except as provided in paragraph (a)(2) of this section, an employee is treated as benefiting under a plan for a plan year if and only if for that plan year, in the case of a defined contribution plan, the employee receives an allocation taken into account under § 1.401(a)(4)-2(c)(2)(ii), or in the case of a defined benefit plan, the employee has an increase in a benefit accrued or treated as an accrued benefit under section 411(d)(6). These two terminated NHCEs are not receiving an allocation. It is clear we cannot exclude them from coverage and nondiscrimination testing, even if hours are less than 500, because that is not the reason they do not benefit, the reason is that the employer (under the terms of the plan) decided that these individual allocation groups will not be given a profit sharing contribution. As long as coverage and nondiscrimination pass with these people included as zeroes (in the denominators only) I think we're good - and it isn't an issue as this is a fairly large plan. Who is correct CB or DC providers and why, if anything different or additional from above regulation? Thanks

The back-door Roth would be done through in plan conversion, I'm sure.

If they want to include the effect of the amendment in their valuation, which would increase the minimum required and maximum deductible amounts, but it's not required.

Rest assured, she is in the plan. Whether she is entitled to an allocation depends on those respective provisions.

That would make for a great presentation or panel discussion at a conference! Personal opinion is that cybersecurity is a shared responsibility of all related parties, including the participant. But, like 404(c) where you must educate the participant to off-load fiduciary responsibility for investment selection, I think plan sponsors also bear the onus of keeping their participants informed regarding the security of their retirement accounts. Assuming buy-in on the initial premise, the next discussion is how plan sponsors do this and whose help do they enlist? RKs are probably best positioned to help as could legal counsel with subject matter expertise. And this is not a one and done affair, the more the issue is put in front of people the more they'll be aware - and if it is stressed that they share responsibility, including the risk of loss (i.e., not an automatic that others will reimburse them for their own security lapses) then hopefully they will pay attention. My humble thoughts.

Yes. People often think of transition rules only for mergers but they work the other way as well. You do not get a free pass on testing, unless no one (or no HCE) is benefiting. I would not terminate until 12/31/2021 and use permissive aggregation (and transition rule, as no longer part of CG at year-end). Terminated employees can get distributions, although I don't know if you need to leave a person (owner/seller?) to keep the plan open - I don't think so, because the plan doesn't need to have assets all the time.

Agree on both counts - doesn't look kosher but seems to follow letter of the law. I don't know, just posing the question, if you count this doctor's past service with unrelated employer for eligibility, would you have to use that for lookback year compensation which could then make him/her an HCE and thereby create a discrimination issue? I don't think so, but looking under all the stones for gotchas.

Since plan for 2020 can be adopted by tax return due date per SECURE Act, I think that is possible.

Good questions. I think you look at the merged plan for 2022. Bigger picture - consult with buyer to do the right thing and fully vest people losing their job as result of the transaction regardless.

Not too clear on the situation from your description, but it sounds like she should have commenced in 2004 because actuarial increases to her benefit would cause such benefit to exceed the 415 limit of 100% of her high three-year average compensation (actuarial increases are often required after normal retirement age). Plans are required to commence benefits in such instance to avoid an impermissible forfeiture. The annuity option includes makeup of past annuity payments with interest, a correction the plan is required to make. I do not believe the makeup payments are eligible for rollover as they would be considered part of the annuity, but I would consider enlisting a qualified tax advisor for a definitive answer as the amount is likely substantial. I'm not sure a normal lump sum payment option would/should be possible as a correction, but this is an unusual situation. If the employee is retiring or is somehow allowed a new current "annuity starting date" (benefit commencement date, then maybe it's possible to get 17 years of annuity makeup and then a current lump sum of the present value of remaining annuity. Or is the lump sum being offered also retroactive to 2004? If so, that should be brought forward with interest. If a true lump sum in this fashion and no required minimum distributions (you say she is active) then that could be rolled over. Do not understand connection between workers comp rules from the 1980's and her retirement age.

Also, depending on the state, bankruptcy protection of IRA may not be as strong as qualified plan, so moving assets into plan could strengthen that protection.

Yes, you need to follow terms of the plan. If they require the match then you should allocate and then address 415 correction according to the terms of the plan.

Check plan language, my recollection was that an irrevocable waiver could be rescinded by the employer if necessary to satisfy coverage. Of course for 401(k) coverage, this was evident from the start and you're likely looking at QNECS for these people whether they want them or not.