CuseFan

I have seen plans that say if the participant has made a valid election for an optional form but dies prior to the ASD that the election is honored, or the actuarial equivalent of the benefit (100%) gets paid - but most plans say if the participant dies before benefits commence (i.e., ASD) that the QPSA rules apply, which would nullify any elections that may have been made. The waiver is specifically for the QJSA, so pre-retirement spousal rights are not waived/consented. If a spouse signed a consent to a QPSA waiver and then the participant retired shortly thereafter they would still need to execute QJSA waiver/consent for something other than the J&S. Unless the plan explicitly says differently, i think the QPSA provisions trump the participant elections if (s)he does not survive to the ASD.

are you searching for a unicorn here? i hope not, good luck!

yes, on 12/31/2018. the 2017 in-service should not include any RMD since still working

Love the conversation here! Let's try another context - different but similar. HCE has excess deferrals and/or match in 2016 due to failed ADP and/or ACP test. HCE dies in January 2017 before testing is done and corrective distribution determined. Plan pays corrective distribution in March to who? Estate or death benefit beneficiary? Again, a required corrective distribution and not a death benefit - who gets it? Let the arguments commence! (What better to do on a Friday afternoon? Certainly not 5500s!)

i guess their thought was that the surviving spouse would get the (100%) lump sum so the QPSA is satisfied - which may be true, although when does someone designate a beneficiary for a lump sum? - and their opinion is that the spouse already signed off. However, that waiver was for the QJSA, not the QPSA, and I also think the plan is then paying out more than it should. Thanks for your input.

Thanks guys. My first thought was it couldn't be eliminated but changed my mind as I researched a little and was looking for some confirmation. Enjoy the weekend!

Why do my colleagues save up their questions for Friday? Participant in DBP makes a valid election - assume lump sum, and all the forms are properly completed and submitted - for an annuity starting date of 10/1, but the participant dies today (9/29). Unless the Plan states otherwise (which I've seen, but rarely), I believe the QPSA provisions of the Plan apply and the benefit election is moot. Furthermore, I think Plan language is fairly explicit that if the Participant dies prior to the ASD his/her surviving spouse gets QPSA. My colleagues were thinking election should be honored.

Plan QPSA is defined as 50% survivor annuity but the Plan provides a total death benefit that is actuarial equivalent of 100% of the accrued benefit. The portion of the death benefit above and beyond the QPSA is an ancillary benefit, but is it protected or can the Plan be amended to eliminate it?

I agree with you that the missed 2016 RMD that would be paid now is a corrective distribution and not a death benefit distribution, and in that regard is due to the (now deceased) participant which is now represented by his estate. I think the only way it can be paid to a beneficiary is if it is a death benefit and, I believe as you do, this is not a death benefit.

My parents must be of the same generation as Belgarath's because I heard the same thing growing up - and it carried weight as there were (and still are) six of us.

also, if the comp limit comes into play for the owner, if you terminate before year-end then you have to pro-rate the limit, right?

A recent post in this forum discussed this issue in a similar context and the issue was raised that a new plan would be considered similarly to an amendment of the prior plan when looking at discrimination. That is, you terminate one plan with employees and start a new one in the same year but without employees and then provide an employer contribution in the second plan. Not saying yes or no, but it's a gray facts and circumstances situation.

From Form 8554 (ERPA Renewal): • You must complete 72 hours of Continuing Professional Education (ERPA–CPE) over the three-year enrollment cycle to remain active. This must include at least 2 hours of Ethics CPE each year. • Exception: If this is your first renewal, you have to complete 2 hours of CPE for each month you were enrolled, including 2 hours of Ethics each year. If you have re-taken and passed the ERPA Special Enrollment Examination (ERPA-SEE) since your last renewal, you are only required to take 16 hours of CPE, including 2 hours of Ethics, during the last year of your current enrollment cycle. The Form seems to confirm what the IRS agent said, although I agree with RBG with respect to following C230. On another note, what November conference provides over 70 hours of ERPA specific CPE? Heck, I would automatically renew you on the spot for sitting through that!

Well, if they are separate for coverage ("dispensation") then they are separate for nondiscrimination.

This is why there are the M&A coverage and nondiscrimination testing transition rules. You can treat as separate entities for the rest of 2016 and all of 2017 provided you don't amend coverage or benefits. That gives you time to analyze the aforementioned mess and make prospective (2018) changes to the plans to ensure future compliance.

Fees are currently for various documentation assembly and representation and answering questions. I agree that if we got into issues and necessary corrections that could be a different story. Thanks

Thank you both for your input. The plan does allow for payment of expenses. We typically suggest counsel opinion in gray areas, but the fee will be immaterial to both the plan and the employer, so likely not worth that hassle. Was hoping it would be more black and white - I'll suggest they pay directly to avoid any potential issue just in case. Thanks again.

Client's plan is being audited by IRS. We provide support services to the client/plan for the audit and charge a fee. Is that fee eligible to be paid from plan assets?

I believe the "standard" qualified plan coverage and nondiscrimination rules apply to matching contributions (410(b) and 401(m) ACP) and non-elective contributions (410(b) and 401(a)(4)).

exactly. discretionary amendments can be adopted any time until the end of the PY provided they do not cut back benefits. the 8/1 amendment could have (should have) been made effective 1/1.

Does the tax-exempt board (not this lone director) have any say over the for-profit entities? I assume no. Do any of the for-profit entities have the ability to appoint 80% or more of the tax-exempt directors? My guess is also no, unless this main director/F-P owner has such control over the tax-exempt that he can appoint all or most of the other directors. if, and only if in my opinion, that is the case would there be a control group. Whether the organizations have anything to do with each other is, as you know, irrelevant when determining a control group. if I'm 100% owner of a car dealership and also run/100% control a tax exempt foundation, still a control group. However, check out the Qualified Separate Lines Of Business rules - those might help.

The Dr's participation in the PEO plan is as a participating employer in a multiple employer plan, correct? Yes, you should be able to aggregate her PS plan with CB for testing (must have same PY) and yes, allocate the necessary PS in the PEO plan to pass as if a single employer plan. I would feel more comfortable with the arrangement having the control over both plans - i.e., starting a separate single employer PS-K, but if the PEO document has the necessary flexibility (which it appears to have) and that plan has a quality service provider, then why move?

If the plan terms require commencement at NRD, that truly is the issue at hand. The plan should (1) be sending benefit commencement paperwork to participants 3-6 months in advance of their NRD and (2) if completed forms are not received by NRD (also the ASD) then they should be commenced in the normal form. Typically plans also allow deferral to RBD, some requiring a written election, others making that the default election if an affirmative election to commence is not made. You need to verify plan provisions and follow them, otherwise you have an operational defect - and DOL is becoming very cognizant of this issue of plans not commencing deferred participants timely at NRD. If deferral is the default election then you follow the above steps with respect to the RBD rather than NRD. There is no enticing needed - you send forms with a due date and explicitly tell them if not returned with a valid election by X date then they will automatically be commenced as of Y date in the plans normal form Z, and then you follow through. If participants are missing, that's a different story, but if benefits are payable under the terms of the plan you are not held hostage by unresponsive participants.

You are correct. 403(b) Answer Book - Seymon-Hirsch and Anderson-Briggs,Q 11:9,Is an arrangement that provides employer contributions subject to ERISA? Last Updated: 7/2017 Yes. DOL Regulations Section 2510.3-2(f) (see Q 11:2), which sets forth narrow criteria exempting a Section 403(b) arrangement from ERISA, permits an employer to collect salary reduction contributions and forward them to the funding agent. An arrangement that provides any contributions other than salary reduction contributions creates employer involvement beyond what is permitted by the exemption. Such an arrangement would be subject to ERISA unless the employer was otherwise exempt as a governmental or church plan sponsor. Employer matching contributions to a separate plan that are made by the employer on the condition that an employee makes voluntary contributions to a Section 403(b) arrangement would also cause the Section 403(b) arrangement to fail to satisfy the safe harbor. A Section 403(b) plan does not fail to comply with the safe harbor merely because the employer also maintains a qualified Code Section 401(a) plan. However, DOL Advisory Opinion 2012-02A clarifies the DOL view that conditioning employer contributions to the separate plan on the employee making voluntary salary reduction contributions to the Section 403(b) plan would be inconsistent with the limited employer involvement permitted by DOL Regulations Section 2510.3-2(f) (see Q 11:2) and would also conflict with the requirement in DOL Regulations Section 2510.3-2(f) that employee participation in the Section 403(b) arrangement be completely voluntary.

For a small CBP, which I assume has not been around for ages, I agree that having a SSN shouldn't even be questioned, but that doesn't guarantee you can find someone, or that an insurance company will write an annuity contract. However, I've seen "ancient" DB plans that have very aged TVR benefits tied to a first initial and last name and nothing else - and it boggles my mind. Anyway, even though not a PBGC plan, is their missing participant program a possibility? Heck, they'll take missing DC participants now so why not non-PBGC DB/CB plan participants?