acm_acm

Seems like now would be a great time for a rollover!!!! (Actually, last December, but we're not time travelers.)

This reminds me of a plan sponsor who told me that he had a participant insisting that they offer tax-sheltered annuities (the investment products, not the actual annuities) in the 401(k) plan because they had read so much about what a great thing they were for retirement savings. But this example is even worse because the person would be converting a product with a tax-free "output" into a taxable output (at ordinary income rates).

I doubt there will be much, if any, a long term impact on the tables. Those who died are already dead and have no impact on future mortality.

Late answer, but you can have a non-top hat, nonqualifed plan, but it means you have to file 5500s for them and many other ERISA requirements, including PBGC coverage, may apply.

Just saw this reply. I have several nontaxable clients with funded OPEB plans (about the only funded OPEB plans that exist) and they either maintain separate accounts for Key Employees OR they make sure to not pay benefits for the retired Key Employee and their beneficiaries from the VEBA or other H&W trust. The point of the separate account limit isn't so much to limit the plan sponsor, but instead it's a limit on the participant because any amount allocated to their separate account counts towards their annual 415(c) limit. [I presume the 415(c) limit still applies to nontaxable entities.] I would check your logic with ERISA counsel, but in any case, is it worth risking a 100% excise tax over the matter? I usually recommend that clients not prefund their OPEBs (you're effectively vesting a nonvested benefit), but for clients that insist on prefunding the benefit I recommend 1) they identify all current and "former" Key Employees (because "former Keys" and their beneficiaries are still Key Employees for H&W trust purposes) and 2) to not set up any separate accounts for them and just make sure their benefits aren't paid from the trust. If #2 is a deal breaker for the client, then there is a lot of flexibility in what is considered a "separate account", especially if the employer is the trustee. Separate accounts can just be tracked in a spreadsheet as long as the trust spending for the Key Employee and their beneficiaries stops when the spreadsheet account balance hits zero. #1 is a must for any employer as soon as they put $1 in a H&W trust whether or not they decide to create separate accounts, which is another big reason why I recommend the client not prefund the OPEBs. Good luck.

Even if one can do something, one really ought to ask whether one *should* do that something. I know it's just $25, but in the current tight labor market, I find it head-scratching that someone would want to be thinking up ways to give employees a reason to be upset. Just sayin'.

The carrier's overall experience should have been good for 2020 due to the lower utilization that you mentioned, so I don't see why there should be surcharge for COVID.

How soon does the employer pay withholding and other payroll taxes? It would seem reasonable to me to deposit plan monies at the same time.

I'm not sure of the ERISA implications, but for accounting purposes these payments would be contributions to the plan.

I guess we are past the point of asking how they hired, paid and withheld taxes for someone without a SSN...

Questions like these make me want to reverse it to, "Why would you *not* get an EIN???"

This tends to make me think the original calculation is correct and then somewhere along the way her DOB got messed up in the system, but that being said, it's on them to show that the original calculation was done correctly reflect her 1938 YOB. It will depend on what the plan document used for actuarial equivalence for J&100%S 30 years ago. That is probably unchanged, but again, it's on them to show it.

The Vanguard STAR fund has a minimum of $1,000 for IRAs and the all-in fees are 0.31%. Their Target Retirement Funds have $1,000 minimums and the all-in fees are 0.15% or less. All of these funds, each on their own, provide ample diversification, likely much than any state plan could with a menu of choices. If you can't beat these options as a default, then why are you bothering establishing a "plan"?

I can't speak to what the attorney knows or doesn't, but I think it's pretty clear why the employer is trying to skip correcting the issue for former employees. And, just a guess, but it's likely the reason so many were improperly excluded in the first place.

I have heard IRS officials (Jim Holland, I believe) at conferences say that using the "fault" thing to decide whether to include interest or not is fallacious, and if payments are late, they should include interest. Period.

Best practice is program for ends of months as the beginning of ensuing months minus one day. It's easier than programming for leap years. Besides, in 80 years we'll have techs who don't know that 2100 isn't a leap year despite being evenly divisible by 4 (nor is 2200 or 2300).

My understanding that withheld taxes are out of most employers' "control" nearly instantly when pushed through payroll. In any case, if the employer can send the money to go the IRS, they can put deferrals in the plan at the same time.

Payday is when federal/state withholding, FICA, etc. are "segregated", no? Then why not DC deferrals?

I definitely agree that due diligence is required in M&A situations, but the one advantage of the "terminate and do not merge" answer is that while you may still inherit the acquired plan's problems in a stock sale, they are limited to a smaller group of participants and amount of plan assets. If you merge the problem plan into another plan, the leverage regulators would have over the plan sponsor is greater.

1) Money is fungible. 2) As someone who has both paid and received child support, I find your naiveté cute. Child support's purpose notwithstanding, it operates as an income transfer, plain and simple.

It would seem that having the ability to override a decision would mean the employer/admin would be responsible for *all* decisions, not just the ones they override, because they could have overridden a decision and didn't implies they are agreeing with the decision. That would certainly defeat the purpose of hiring a 3(16) provider.

Said another way, you don't have to set up a separate account for any Key Employee, unless you want to pay benefits from the VEBA for any of those Key Employees.

They certainly are required* for the tax-exempt entities I do OPEB work for. Just because an entity is tax-exempt, it doesn't mean it doesn't have a tax year. The requirement for a separate account for Key Employees has nothing to do with the deductibility limit. It has to do with nondis issues. * Whether or not you set up a separate account for a Key Employee is optional. What is required is that no expense for any Key Employee is paid from the non-Key (or general) account. This would include any Key Employees who retired before any funding ever occurred.

LOL

Correct. An individual only has *one* IRA of each type, traditional and Roth, with the former being composed of deductible and nondeductible contributions. All of the separate *accounts* in the traditional IRA are to be considered together as a single traditional IRA.