acm_acm

The co-fiduciary issue is what I thought of immediately when the original poster said their company was a fiduciary for the investment advice. It seems like the fiduciary investment advisor knowing about potential issue with another fiduciary means something needs to happen. So following their own counsel's advice would be the first place to start.

A plan sponsor/TPA denied my wife's claim of 100% vesting b/c she left with fewer years of service than were required under the vesting schedule. We pointed out that she had already attained age 55, the defined NRA at the time she left. They had changed the NRA to age 65 since she left and applied the new NRA without looking back, so yes, TPAs and plan sponsors will screw this up even if applied only to new entrants.

Just because you can doesn't mean you should. Why would a plan sponsor want to go through this hassle? It's DC plan, not a DB plan. The participants have their money from B's plan. They will get new money in A's plan. They aren't losing anything. Why muck things up?

From above: "Client is anxious as this is for 2021."

Especially when said employee is the owner's spouse.

Put. The vesting. Down!

It would have to be very small DB benefit (< 0.5% of pay per YOS) for the participant to not already be counted as "benefiting" for 401(a)(26) purposes. I guess it's possible, but if so, it doesn't seem like a DB plan worth having around given the extra expenses of a DB plan.

I believe the prescribed vesting rules are a minimum, so one could vest quicker, say 0.25 of vesting service for each quarter worked. You would still need to determine vesting the traditional way to make sure the minimum isn't violated. The minimum type (cliff versus graded vesting) probably needs to be stated in the plan document.

It also means that one would have cost basis in their 401(k) in PA for any kind of taxable distribution before retirement, but I have never seen any service provider keep track of that including Vanguard that is HQ'ed in PA.

I am working on presenting such pros and cons to a client. I can think of fairly long list of cons, but the only *pure* pro I can think of is benefit security for the members/participants. Anything else I can think of has significant cons working against it. A taxable entity could get a deduction for contributions, but for medical that is significantly limited and would require an annual determination. The trust could invest in assets the plan sponsor can't invest in directly, but that's problematic. I.e., should any plan sponsor do this when the presumably have a core business/mission that they should focus on? Funding would lower the GAAP expense for the plan sponsor, but that is offset by the opportunity cost of using the money for something else. What am I missing as a pro(s)?

I understand "rules are rules" and this would be very important for most investment fund changes, but this happening with a MMF is not hill I would want to die on.

If sales tax applies, sellers are required to pay the sales tax whether or not they collected it from the buyer.

Thanks for sharing that, BG. My questions is, who came up with the "People Operation" name?

And the parsed out group gets tested by themselves, right? That would usually an easy pass, but one should make sure.

I think it's 1.5 * (FT + NC) - Assets, but I haven't worked on qualified DB plans in a while. I think you're allowed to include projected pay increases for that calc. If so, it should be the PUC AAL instead of the FT.

I also think that options can make it so that more than one person can waive their benefit under PBGC rules in a standard termination.

You misspelled "undocumented".

I would go with the "No HCEs benefitting" route over debating whether 0/0 exists or allows the plan to pass.

One of the reasons for a CB plan is so doctors/lawyers/other small employers can "understand" a DB plan, but it doesn't quite work out that way.

I participated in a plan where the loan *is* an asset of the plan and therefore it is an asset for all participants. It's not exclusively an asset of the individual account. That plan did *not* have participant-directed investments though, so not many plans could do this. But a participant could use this as leverage for his/her overall portfolio with the risks that always come with leverage plus the risk of not being able to repay the loan upon termination.

Yes. And the rules for determining what is and is not an ASG get murky there. It's OK to advise a client to some degree, but ultimately you should to punt to them and their ERISA counsel.

Wouldn't the rusk of losing the benefit count as a substantial risk of forfeiture???

Um, no. The Norris decision applied to a non-ERISA plan. It was made under Title VII and only tangentially refers to ERISA for support. A nonqualified plan must use unisex tables for benefits purposes. Note that this also carries over to determining the PV upon which to base FICA taxes. Many actuaries/plan sponsors will say to use the FAS assumptions for this, but you need to change to mortality basis to unisex. Otherwise, females will pay more in taxes on their NQ benefits than males, which would be a no-no.

That's a separate issue.

The penultimate bullet says "Does this company provide services to those companies or vice versa?" but I would phrase that as "Does this company provide services to any other companies or vice-versa?" ASG rules are not hard and fast, but I think one can get an ASG without any common ownership.