psmnlaw

Unique situation - would appreciate any thoughts/insights. Background: Participant worked in disqualifying employment for more than a decade while receiving pension benefit. Administrator found out and suspended benefits several years ago. During suspension (and continued DE), participant reached age such that benefits should have resumed at 75% rate, but didn't. Consequently participant has received a large overpayment, but also didn't receive 75% benefits for a several-year period during which they should have been paid. We're now trying to set things straight. Question: Must the fund repay several years' worth of unpaid 75% benefits in a lump sum, and then resume monthly reduced benefits? Or can the fund simply offset that unpaid amount against the participant's overpayment, arrive at a net overpayment, and then resume monthly reduced benefits? This is apart from any separate action the fund may take relative to the overpayment - just want to get the resumption of benefits right.

RBG more effectively makes the point I tried to make earlier. Thanks to all for comments.

Fair enough - thanks. But if we assume no ownership stake and that both are salaried (one HCE, the other non-HCE), then there's no problem I can see in classifying them as such for purposes of this approach.

Understood - thanks. But if the spouses themselves are not HCEs, does it matter that the decision-makers are HCEs? Presumably the spouse-as-participant wouldn't be considered an HCE simply by virtue of their marriage to an HCE if the spouse has no ownership stake and a sufficiently low salary. Or do you see it differently?

Hi K2R - I'm not saying it would, I'm just trying conceptually to identify potential problem areas. (I was also assuming that the spouses were not HCEs.) Thanks.

Thanks, everyone.

Thanks, RBG. Our (tentative) view was that the "exclusive purpose" rule requires that fiduciaries discharge their duties "for the exclusive purpose of providing benefits to participants and their beneficiaries," see 29 U.S.C. 1104(a)(1)(A)(i), and the question is how inclusive we can read the term "participant." If the plan makes spouses participants, then the "exclusive purpose" rule is not violated.

Fair enough; I meant only to ask whether you based your answer on these definitions or on something else. Thanks.

Thanks, Mike. Is the problem Section 3's definitions of "participant" and "employee," or is there yet a more fundamental reason why this is unfeasible or otherwise inconsistent with ERISA?

ETA Consulting LLC: To clarify, do you mean "Nope" as in "Nope, there are no legal impediments" or "Nope, this is not feasible"? Thanks!

The potential for HCE/non-discrimination problems is a helpful insight. I get the sense that the hurdles to this approach are more practical in nature than they are legal in nature, and that there would be a legally permissible way to do this (saving for another day the practical problems everyone has identified). Thanks, KarolineWriter. Perhaps I'm misunderstanding your comment, but I see this as distinguishable from the question whether an owner of a business can be deemed a participant, which I believe the Supreme Court answered affirmatively in Firestone. My question is whether the no-show employee/daughter's spouse could also be considered a participant.

Thanks, all! The reason to do is that some employees' spouses' retirement plans have high administrative fees, so we considered setting up a new "clone" of our existing DC plan specifically for those spouses. Then I thought "if we can, why not just have them be participants in the existing plan and save the cost of setting up a new plan from scratch?" I still don't see how we get around the definitional issue that Section 3(7) raises, but I'm just trying to work through any other potential issues as well.

General question from a relative ERISA newbie. In the context of a multi-employer DC plan, is there anything in ERISA that would preclude an employee's spouse from being considered a "participant" in the plan? I.e., suppose that an employee's spouse has a separate retirement account that they'd like to roll over into the plan, and the plan were amended to define "participant" as including both employees and their spouses. Is that a crazy idea? I understand Section 3(7)'s definition of "participant" refers only to employees and former employees, but other than that, I'm trying to figure out if this is even remotely feasible. Appreciate any/all feedback. Thanks.