Luke Bailey

You don't need spousal consent at any age in a DC plan that does not have J&S, although of course you do need a distributable event, which will vary. And yeah, it has happened at at least one law firm I know of. Wife (soon thereafter a widow; not by her own hand), was not happy. What I think you are highlighting, Jake Wright, is that in what may otherwise seem a comprehensive system for protecting spousal rights to benefits, the ability of a participant to obtain a loan or distribution from most DC plans without spousal consent is a gap, which may or may not be justified by the administrative inconvenience that would otherwise occur.

Well, you could do it, Mike, but it could be a big problem if one business has greater value. Would put the marriage to the test, that's for sure. I've never seen it in practice, although I'm sure some have used, e.g. two equally successful physicians who want different retirement benefits.

Right. And folks did not realize it was in there and that they were covering employees of another company. A lot of potential problems. I agree with you that from a legal standpoint, it does not make sense. I'm not sure if the IRS still approves plans with that language.

Mike, why do you say "unlikely?" You would have to follow all of the rules of 1563(e)(5) carefully, and in a community property state you would need a separate property agreement.

Yes. With ERISA and Code, you're never quite through answering questions. Still waiting for that simplification bill.

Good point, MPLSLAW, but then you'd have another problem, because 2% S corp shareholder employees are treated like partners for Section 125 plans and most other "fringe benefits," so can't participate.

Thanks, Larry. Well aware of prototype vs. VS distinction, of course. Mostly see prototype. And sure, its an amendment in the sense that you have to complete the AA correctly, or go back and stick in some slip pages. What I have come across, of course, is folks with a small CG group and overlapping entrepreneurs, where one member has taken lead on payroll, etc., and they don't read the AA closely enough to realize that all the companies have to be listed and sign once. Used to see a lot of prototypes that had language where each CG member was deemed to adopt, but that had problems as well, of course.

Pension Admin, why wouldn't it help?

JMP, if it is a preapproved plan there will usually be a section towards the front of the adoption agreement where primary employer is designated, another place close to the first where you can list the "other adopting employers," and a signature page at back of document for the "other adopting employer." You should check both the adoption agreement and the basic plan document for governance provisions, e.g. there should be a "lead employer" that makes rules, can adopt compliance amendments, etc.

ESI2015, by "nonqualified 457 plan," you mean 457(f)?

Tax Cowboy, I have done this before. Arguably, if it's likely they are going to find it anyway, it may make sense to fix during audit and then bring to attention of EP agent, showing that you have fixed and how. Depending on agent, it may get you some credit. But you are in Audit CAP, for sure, and it is a negotiation, so having saved the agent some work and being up front may get you some points.

And if not, did they ever live together as man & wife in a state that did recognize common law marriage?

Gilmore, that would appear to be a reasonable interpretation. You would likely want to have the Plan Admin'r adopt a uniform written policy.

UR welcome, Gilmore.

The CARES Act loan provisions do not exclude principal residence loans, which of course can have a longer payment period than 5 years.

justanotheradmin, it can (and has), been done, but Kansas401(k) has a pretty good list of the problems here, to which I will add that theoretically the plan could be involved in a lawsuit regarding the investment, e.g. real estate development. Doing this, if the plan must, requires really good forms with indemnification provisions.

thepensionmaven, you talking about the CARES Act suspension? Section 2202(b)(2)(A) says the suspension applies to "an outstanding loan (on or after the date of enactment of this Act)…." That's not ambiguous. A new loan taken out on or after the date of enactment is outstanding the second after it's made.

jmartinrps, you say that the match is allocated at end of year. A true-up usually occurs in plans that have payroll-by-payroll matching, and compensates for participants' who have a nonuniform elective deferral pattern who would otherwise get a lower match for the year than someone who contributed evenly throughout the year, because sometimes they contributed more than the maximum that gets matched for a payroll period, and sometimes less. So is this really a true-up? The true-up language you quote is discretionary. Why exercise the discretion?

The determination of whether there is sufficient information here to make the payment based on the conclusion that the participant is not married is one involving discretion, and so is a fiduciary decision to be made by the plan administrator. If a decision is reached that the evidence is sufficient, the distribution is made, obviously a problem will arise only if it later turns out that the individual was married and the spouse demands her benefit. In that case (a) you will want a clear record, for a number of reasons, that the plan administrator (i.e., employer) did not delegate the decision to its nonfiduciary (i.e., the TPA), and (b) you will want to be able to demonstrate that you met the standard under the statute for "spouse cannot be located" (ERISA sec. 205(c)(2)(B). If the spouse does come out of the woodwork and the plan administrator has not met that standard, it will need to pay part of the benefit twice.

Agree with Chaz except regarding being counterintuitive. It's not. Section 125 is just a tax rule that gives you a pass on constructive receipt/assignment of income issues if you follow it's rules. If the company gave the president the choice between taking the premium as additional cash or having the premium paid by the company, then that would be a 125 issue. But paying the premium for him or her, without giving him or her a choice, means it's not part of the 125 plan. I assume it is not written into the 125 plan document that the President automatically gets free coverage, but even if it was you would have same result.

Makes sense to me, EBECatty.

OK. Thanks for the clarification, Mike. A lot of plans only have cash-out and buyback provisions, so in many cases you would need to add segregated account language and the reg. sec. 1.411(a)-7(d)(5) formula to handle, but could be done.

EBECatty, I think based on the definition the IRS used in the final ICHRA rule this is an HRA. How would it not be an ERISA plan, it provides welfare benefits to retired employees? If an ERISA plan, how would it not need a document, SPD, and 5500? Regular COBRA rules, which means a diminished COBRA exposure for retiree plans. When they retire they need COBRA election opportunity. If choose this instead, that is their choice and the termination of employment expires for the individual as a qualifying event, but can pop-back up, e.g. for widow/er, divorcee, etc. if coverage would terminate for that person. See Treas. reg. 4980B-3.

Michael B., I am spitballing this, but I will vote no, i.e., that even though the info on IRS website saying you cannot terminate mid-year is just for SIMPLE IRAs, they would apply same thinking to SIMPLE 401(k)'s. I think the problem is that it would not even be clear that a SIMPLE 401(k) plan that terminated mid-year would have to pass ADP and (if applicable) ACP, so the requirement for a full-year commitment to the contribution regimen is important to statutory purpose. Maybe someone else will be aware of guidance on this. It should be covered in the termination section of the plan document, I would think. Have you looked at that?

OK. Good point about what I said, Larry. But I don't think we can entirely throw away the fig leaf. Could be wrong.