Larry Starr

David, see my other responses for some answers to your thoughts. The first item is well covered I believe (that doesn't mean you will agree). On your second point, it is absolutely the decision of the client and we require a written request to do an interim. While I agree that the participant can buy back in, I don't think that's germaine to the issue. The question is does he get the bigger number or the smaller number from the plan, regardless of what he then does with the funds. Market timing just does not work, ever! We agree. But your money in the S&P 500 index, set your alarm clock for 20 years, and go back to work!

I doubt it is mostly a wash. The market historically goes up just about 70% of the time and down about 30%, so not doing interims tends to benefit those who stay behind.

WE have the same recommendation up or down. If the market has a significant change (which is of course subjective) up or down, we talk about doing an interim. If a substantial distribution is being made (which is also subjective), we talk about doing an interim. It's always the trustees' choice. And I don't think it has to be consistent; that is, there are no fixed rules (if it changes X%, we do an interim). And, I think there is a legitimate argument to do interims more in a down market, because we are "protecting" the employees who are still continuing with the company, just like vesting benefits those who continue with the company. FWIW.

No, not for the safe harbor of preventing eviction or foreclosure. Too late.

I disagree. It is perfectly rational for the plan admin/trustees to elect to have an interim valuation done in an environment of wildly changing daily values (which is not the norm). As of today, we have started suggesting that interim vals be scheduled as of the end of March, with the hope that the market has somewhat stabilized by then. But if we do an interim val as of 3/31 and it takes a couple of days (the norm) and there is a major market change on April 2, we certainly might suggest that the number be updated again (maybe as of April 3). I have no fear about "lawsuits". The language in the plan gives the full authority to the trustees to do this. If there is a big loss on April 2, they are acting as good fiduciaries in choosing to do another val on 4/3; otherwise, they are taking money from the remaining participants and giving it to the ones who are no longer there.

Derrin has covered this on the site: check out this link: https://benefitslink.com/cgi-bin/qa.cgi?n=49&db=qa_who_is_employer

There are other servicing firms; from your statement it sounds like you should be looking for a new one!

The Roth deferral is after tax (we all know that). The income that was deferred was paid to the employee in his paycheck and then deferred; therefore, it needs to be in the taxable income reporting in box 1, 3, 5. Are you saying that the accountant it double counting the Roth contribution somewhere (where?) by adding that amount AGAIN to the stated amounts in Box 1?

Our distribution forms package specifically has a dollar amount but also includes a sentence that the actual payout may change due to a more recent valuation. That takes care of not having to redo forms when an interim valuation is done. So, I am not persuaded that because they were told the amount and have returned the forms, they should be paid out "without delay". Just, FWIW.

It's still early and who knows what other guidance we might get, but I disagree with your statement (what you were told) that earnings have to be included. They do not. Proper language (including existing language that excludes earnings) is just fine. Me, I will modify to include earnings (why not) but most likely NOT expand to the other sources. We might have an occasional client that would want/need additional sources, but it will be a rarity.

Ah... a document problem! We do NOT use the prototype documents ever. We use only the volume submitter plan docs, and the lead employer has to adopt the plan, and then the supplemental participation agreements are signed by each additional adopting employer. So, in our circumstances, this could never happen. But I understand your issue (though I wonder why the document is written that way; I would still think the lead employer just signing the adoption agreement would be equivalent to the volume submitter scenario, but it appears that is not true. If I find some time this weekend, I will try to take a look at the prototype document language (assuming I can find it) and see how that works, only because I am curious.

I agree, except I don't know why it may be a little late; this might call for an interim valuation which is what we always talk about when there are significant changes in the underlying assets. If they want to wait a few days and see if the market recovers (it might; it often does) that would be ok. But at some near point in time they need to make their distributions and, if there is a significant change in the underlying value of the assets from the (probable) valuation date of 12/31, then an interim is possibly called for.

The question confuses me. The original plan should have been adopted by the sponsoring entity, then the additional adopters sign on as additional adopters. How could the sponsoring entity not have set up the plan, which means it would not have a participation agreements because it is NOT an "additional adopter" which is what the participation agreement accomplishes?

I think you may have a big problem; Ratherbegolfing laid it out for you. You can have any safe harbor method you want, but the plan HAS to reflect that specific decision ("definitely determinable" and all that). If you just switched back and forth without an amendment, you do have a problem.

I'm far from an expert on this issue and it is also state specific, but.... I wonder if the employe can be held to that UCC reference if, by definition, it is wage withholding. I would be very cautious about that route and would certainly want council to confirm that actually would prevail. But if it does, it is useful to know.

Thanks Ed. Good to know, but it does suck! Also, doesn't it also guarantee that problem of late deposits of on-going deferrals?

Well, the "plan" shouldn't be doing anything except hiring a good ERISA attorney who also has trust experience (or someone in his/her firm that can advise). This is not an issue for amateurs. And remember, it can always be paid in an interpleader and the judge can figure out if it is payable to the contingent beneficiary or not (which is really the issue that the plan needs to deal with). This assumes the contingent is still alive (is he/she?).

Which one is it supposed to be? If the SS-4 is what is wanted (which is what I would want), then do a simple amendment (one page) to change the name to include Pension. No big deal. If you want what the document says, ignore it because the only thing that matters with the SS-4 is the actual tax ID number which I assume is correct in both places.

I am not an expert on platforms and blackout periods, but isn't it just that the reallocation of the prior assets are in black out. Shouldn't they be accepting new money into the new available investments immediately? Just curious.....

Sounds like the screwed themselves. I would suggest you have a discussion with the accountant for their firm and ask him/her what they were thinking by not paying income. The accountant should know that is a Bozo No-No, and if he/she doesn't, he/she should be fired. Is there a chance that they are not actively involved in the operation of the business and that's why they don't have a W-2? And if that is the case, then they also are not employees and can't be in the plan. Let us know what you find out.

I disagree strongly. Even my own plan is funded with checks from my practice twice a month (which is how we all get paid). Many of my clients send checks because most of them are NOT on platforms. If you are a reasonably controlled business, sending a check with each payroll is not a big deal and not a problem. BUT there is still no excuse for NOT sending the check with each payroll, even if that takes a day or two. As I noted, that's what we tell clients is the rule, and it seems to work most of the time.

I would venture that such a description ("imminent risk of death") is not an adequate descriptor. Based on the description, it would seem easy for the trustees to determine he is disabled with just a note from his primary or his oncologist, which would seem to be the right way to do this. FWIW.

I take it the argument here was that they did adopt a plan, just that it can't be found. I would say that is factually different than "can I adopt a plan retroactively" for 2019 (which we can now do for 2020), which is how I read the original posting.

No, and it isn't likely that failure to adopt a plan is subject to VCP. What actually happened?

We, of course, will withhold at whatever rate they want for the federal withholding. But can the plan restrict it to 10%? I did not do the research, but I'm pretty sure the answer is no and the recordkeeper might be violating Federal law if they don't comply with what was requested on the W-4P. The participant can elect zero withholding with a properly filled out W4-P, or more than 10% if they want. Here is from the W-4P instruction; I think the highlighted last sentence requires compliance: Purpose of form. Form W‐4P is for U.S. citizens, resident aliens, or their estates who are recipients of pensions, annuities (including commercial annuities), and certain other deferred compensation. Use Form W‐4P to tell payers the correct amount of federal income tax to withhold from your payment(s).