Luke Bailey

Tom, ignoring it might work, but then again months from now a participant, or all the participants, could make a claim along the lines that Peter Gulia explains above. If liability for the amount is clear and it's not you, risk mitigation might suggest striking while iron is hot.

Make sure that you are not simply referring to the J&S, but rather that the plan permits designating nonspouse beneficiaries for a benefit.

Theoretically, a refinanced loan can have a full 5-year term, but under Treas. Reg. 1.72(p)-1, Q&A-20 the $50k limit is going to be reduced by the highest outstanding balance of the old loan in the prior year. More daunting still, you would need to add the outstanding amount of the old loan at the date the new loan is taken out to the amount of the new loan and test that against the reduced $50k limit. The reg implies that if the replacement loan is for the same period as is left on the refinanced loan (so here, 4 years) then you would not need to add together the amounts of the refinanced and replacement loans in determining whether you were under the $50k limit as reduced by the highest outstanding balance in previous 12 months. The same reg explains that if the refinanced loan is designed so that the payments during an initial period of the refinanced loan equal to the remaining period of the replaced loan (so here, 4 years) are equal to the sum of the amount needed to pay off the replaced loan plus the amount needed to amortize the excess of the replacement loan over the refinanced loan over its maximum term (here, 5 years), and the payments during the remaining period of the replacement loan (here, 1 year) continue for that period in the amount necessary to amortize the remaining balance of the excess of the replacement loan over the refinanced loan, then you're OK. The reg is not a masterpiece of clarity, nor is my explanation above, unfortunately.

I agree with Bill Presson. Facts don't seem right. My guess is that they did an autopsy and ordered a toxicology report. That may take a couple of months to be completed, but this was done before cremation so eventually the death certificate will show cause of death. Plan administrator should contact the medical examiner's office.

Would need more facts, but generally there is the ability to tell MEP to spin off the part of the MEP for that employer into its own plan sponsored only by employer.

As Peter Gulia points out, definitely need a lawyer. If plan paid on fraudulent signature, need to examine remedy against plan potentially. Also, state court might impose a constructive trust on funds in hands of person who withdrew funds. Just possibilities to consider.

As CuseFan points out, the signature would not only need to be forged, but witnessed by a plan administrator representative or notary. What are the facts here Eric Hanford?

As C.B. Zeller implies, you have to read the plan document because there is a small chance that your plan contains a 5-year suspense account provision instead of a cash-out and buyback provision, in which case you would have to vest the suspense account. Also, you do not provide a full description of potentially important facts. If the individuals were a substantial portion of the workforce and they terminated in connection with a winding down or shrinking of your business, you could have what is called a "partial termination" that would require full veting.

Dare Johnson, that's a great case. J Simmons should definitely work with their CPA to see whether they can use it. Looks on point. That would be good, since the Tax Cuts and Jobs Act of 2017 basically suspended theft loss deduction through end of 2025.

I am (a) not very well versed on this issue and (b) of the same view as C.B. Zeller. But also, is there a difference between saying, "I have no idea how they can check for that" and "Here's what you can do to flout the regulation and not pay tax." Doesn't the latter border on some sort of fraud, at least civil, or conspiracy to evade tax? It is definitely evasion that is in question, not avoidance, assuming the reg is a valid interpretation of the law.

So in this case the "hold" that the plan administrator put on the account was not just on distributions, but investment changes. The participant had Amoco stock in his account and was barred from selling it, resulting in an investment loss. He won the litigation. Query whether in a typical 401(k) where investments are in mutual funds and the hold is only on distributions, not investment changes, by participant, you would have any compensable loss.

You and the attorney for the participant, or the court if this is contested, will decide how to divide the benefit. Determining the portion of the benefit that accrued during the marriage and giving half of that to each party is a rational approach and a possible starting (and ending) place, but ultimately it is a negotiation and the division of other assets could have an effect on how the retirement benefit should be divided.

This general issue has come up before on BenefitsLink and the take-away has been that while the regulation quoted by Paul I plugs the potential loophole under the statute, there it probably is not being enforced. I guess the IRS could enforce it if it wanted to. Right now, if a participant goes over the 402(g) limit with pre-tax the IRS adds up the amounts on the participant's W-2's and sends the taxpayer a notice that it is including the excess in income. Given that Box 12 will show whether some or all of the deferrals were Roth, the IRS could do a little more math and advise the participant that a portion of the amounts they had contributed as Roth would be included in income, earnings also, on the way out of the plan. But it would be complicated, although not impossible to enforce after that point. I don't think they are doing this, though.

Such an excellent discussion of a very practical topic on which, as far as I know, there is very little law. My take on this issue when I have had to advise clients is that while ERISA and the DOL's guidance unfortunately does not provide protection to a plan administrator that wants to do the right thing (i.e., hold up a distribution when it has notice that a QDRO will be coming), such that a participant who has the right to take a distribution has a good case on paper that the plan should pay him or her, how practical is that lawsuit actually? It's an ERISA claim for benefits, so the most the plan has at stake is the benefit amount, and that's not really at risk because the plan is not paying it to anyone, but rather simply holding on to it until the state court has decided whether and how it should be divied. The issue is only the timing of the payment. So, a participant who, for whatever the reason, wants to take a large distribution that would drain their account before the nonparticipant spouse can get a QDRO would have to hire a lawyer to go to court under ERISA and claim that the plan's delay in paying the benefit was a violation of ERISA. Best case scenario for the participant is they win that lawsuit and the plan pays the benefit. I doubt the plan would have to pay attorney's fees. But by that time the nonparticipant spouse will have had months of notice of what the participant is trying to do and the QDRO will probably have been served anyway. In other words, the participant's lawsuit seems more like a hypothetical than a realistic scenario. (Of course, I am excluding here a situation where the nonparticipant spouse is acting unreasonably, e.g. making an unrealistic claim regarding the benefit and slow-walking the QDRO process.) So, while the law on its face is against the plan that wants to delay the distribution, I think the law in practical effect poses little risk for the plan.

If the employer determines that the person is not top-hat eligible, it should probably distribute the balance to the employee. Even if it does that, I think the jury is out on whether the plan will ever be a good top-hat plan or instead is permanently "tainted" as an ERISA-violating unfunded non-top-hat plan. At least, I'm unaware of guidance or a case on the issue.

Note that if the employer does not meet the extremely hard to prove either way requirement of the Rev. Rul. and 415 regulations that it have a credible fear of litigation, the result is that the additional amount would be treated as a contribution, so subject to 415(c) and to nondiscrimination testing, which might or might not be a problem.

Santo Gold, CuseFan is totally right re the above, and it may be even simpler. Is the "top assistant['s]" $250k on a W-2 from the Dr. or does the cash go to the company she owns before it's paid to her? If her company is not getting paid, it presumably is not providing any services to the Dr.

I think that's what is expected to avoid violation of the provision quoted by Brian. The insurer is just telling you that the group premium is different based on the Medicare eligible. You can't pass that through to the individual employees.

I would check whether this plan is aggregated with another for the NHCEs, and if not I would inquire whether someone has thought through the 410(b) issue.

So what you're really saying, I think, is that they are vested, unless the prohibition on working currently (i.e., while employed for the first employer) for a second competing employer is enough to prevent vesting, which is a determination based on facts and circumstances, but seems doubtful. Under 457(f) proposed regs, if the benefit is payable within the short-term deferral period, actually or constructively, it becomes subject to IRC 409A. So if it takes longer than 2-1/2 months after the end of the year in which vested (see above as to substantial questions regarding when vested), you might want to include on W-2 so that "constructively" received. Frankly, I found the proposed regs somewhat confusing on the point of "constructive payment."

I had a similar experience/issue with a 401(k) a few years ago. I think the right answer if the plan or SEP was NEVER qualified from the get go (which this one wasn't), is that there is no plan or SEP and so the person holding the funds (who is not a custodian because there is no plan or SEP) should just return them and report on a 1099-MISC. As Gary Lesser implies, probably will be difficult or impossible to get the custodian to agree.

If the NQDC plan is an ERISA pension plan (e.g., defers to the end of employment, at least mostly), then ERISA preempts state law, but has no rules. Employer is not a fiduciary. So what you are trying to do with communications is (a) be helpful to participants by letting them know what they are getting by participating and/or (b) prepare your defense in the event of litigation. Tell the participants how their benefit/account amount is determined, when they can be paid, the risk in the event of insolvency, and that the plan only covers a top-hat group and what that is. Also, the fact that distributions will be subject to ordinary income tax with no rollover ability, how/when FICA applies, any vesting rules, access to funds (or not) for financial emergencies.

Carla G., since this is an IRA you are under your state's law. I suggest going to a state court to have a new order awarding your client's share of the IRA.

And 457(b) plans as well.

The main point of 414(m)(5) was to prevent, e.g., an individual who might have been President of a company, including a public company that was in the manufacturing or another non-service business, and who might not have any ownership in the company for which the management functions were provided, from providing his or her management services through a personal corporation that might, e.g., sponsor a DB plan for that single individual. So sure, the recipient of the management functions does not have to be a service company, just based on the statute, even in absence of regs or any other guidance.