DR245

I honestly don’t know the full details of the fallout between the plan sponsor and the prior actuary. From what I’ve gathered, that original firm was the one who gave the bad advice in the first place — which led to employees being excluded from the plan. What confuses me is that even after acknowledging the compliance issue, the sponsor apparently moved forward with a Voluntary Correction Program (VCP) using that same actuary, only to “fire” them a few months later in the May/June timeframe. Whether the switch was due to cooperation issues, billing disputes, or an effort to reset the process is unclear. But the timing feels strategic — especially since I’ve still not received any updated benefit estimate, plan documents, or timeline despite multiple formal requests. I’m also beginning to wonder whether this is a stall tactic tied to potential underfunding. Based on the publicly available Form 5500 filings, it appears the plan may not have enough assets to cover all retroactive benefit obligations. If that’s the case, it would explain the hesitation to finalize calculations or allow distributions — particularly in my case, as a terminated and vested participant who would likely trigger an immediate payout. Follow-up question: Does switching actuaries mid-VCP typically result in this kind of prolonged delay — especially for a small plan with only a few participants? Or does this situation seem more indicative of sponsor-side mismanagement (or worse, financial avoidance)?

Thank you all for the thoughtful and informed replies — very helpful to see these perspectives. To Lou's question about industry: the plan sponsor operates two small businesses in e-commerce/consumer goods. The DB plan was created in 2020 but initially excluded all employees (including me), and only in 2024 did the sponsor acknowledge this oversight and begin corrective steps — apparently after IRS review. The PBGC angle is one I hadn’t considered directly, but that could explain part of the timeline if termination or underfunding is involved. Re: IRS VCP or Determination Letter Process — I believe they are indeed going through the Voluntary Correction Program. The sponsor mentioned working with a new actuary (Alliance) to fix the prior setup and implied the IRS had already been involved before the switch. That said, I’ve still never received a Summary Plan Description (SPD), updated estimate, or any election paperwork, despite asking since last October. To both Lou and Effen’s point about filing a claim: great advice — I haven’t filed a formal written claim for benefits yet, just detailed email requests and a DOL complaint. I’ll be submitting a formal claim in writing this week and will explicitly request the SPD again. That should trigger clearer obligations on their end and create firmer documentation. And to Effen’s larger points: I agree the sponsor appears to be trying to fix things, but the lack of any communication for months — even after promising a September resolution — has crossed into unacceptable territory. I'm the only terminated participant over age 55, and I was told (verbally) that final resolution would arrive by 9/30. That now looks unlikely. The switch to Alliance may explain some of the delay, but not all. Silence for months with no estimate, no documents, and no updates — despite repeated formal requests — just doesn’t feel like good-faith administration at this point. I'm documenting everything and now exploring escalation options within the DOL and potentially legal support if this continues into Q4. To give you a sense of how communication is being handled, here’s a quote from the plan sponsor’s most recent email to me (sent this morning, after I asked if we were still on track for September): “You will be receiving a significant benefit and it is very costly and stressful for me. I wish you would respect this and refrain from continuing to demand dates and resolutions. I have been advised that we are following all of the correct procedures.” Reading that made me feel like I was being unreasonable or out of line — even though all I’ve asked for is a status update and basic documents related to my benefit. It feels like I’m being blamed for disrupting a process that has provided no timeline, no estimate, and no transparency for over a year. Thanks again for the thoughtful replies and reinforcement on the claim filing path — I’ll update if anything changes.

Hello, I’m a terminated participant in a small employer-sponsored Defined Benefit Pension Plan that was retroactively amended after the plan sponsor realized employees were mistakenly excluded. I’m looking for advice from those familiar with ERISA compliance and DB administration — especially regarding timelines for distribution, participant communication, and what constitutes a “reasonable” delay. Here’s a timeline of events for context: 🗂️ Timeline of Events Mar 2012 – Began employment at Company A. 2015 – Company B launched; work shifted there, but payroll remained under Company A. Jan 2020 – Owner established a Defined Benefit Plan without informing or including employees. Aug 2024 – Employees notified the plan would be frozen effective August 31. ➡️ Plan sponsor claimed he had received bad advice and was correcting the error. Sept 2024 – I was involuntarily terminated shortly before turning 55. ➡️ Termination was attributed to cost concerns related to plan corrections. Oct 2024 – Received an estimated benefit calculation (2020–2023 only). ➡️ Sponsor stated 2024 portion was still pending. ➡️ I turned 55 and became eligible for benefit commencement under ERISA. Dec 2024 – Mar 2025 – Followed up multiple times. Sponsor provided vague responses, no new documents, and no updated calculation. Jun 2025 – Sponsor stated original actuary was replaced by a new vendor who is re-reviewing everything. ➡️ Promised to resend plan documents and updated estimate — nothing received. ➡️ I spoke with DOL rep, who said resolution was expected by September 2025. Sept 2025 – With four days left in the month, still no update. I followed up again. ➡️ Sponsor responded defensively, said the situation is "stressful" and “complicated,” and that he “can’t provide details” until authorized. Also discouraged me from speaking to DOL or other employees — despite his lack of communication. My Questions: Is it common or acceptable for a DB plan sponsor to take over a year to finalize calculations for 7 or fewer employees? Does switching actuarial firms justify months of silence with no updated estimate or election paperwork? At what point does this become a breach of fiduciary duty or an enforceable ERISA violation? What recourse does a participant have when the plan sponsor won't respond, and DOL appears to be passively monitoring? Thanks in advance for any insights. I'm trying to avoid escalation, but the silence and lack of transparency have gone on far too long.

Would it be employees not receiving proper documents regarding the plan in place?

Thanks so much for the info and I believe you likely hit the nail on the head with your speculation. I did ask for the plan description/details yesterday and the owner said he will forward my request to the attorney. I will check out your link as well.

A bunch of employees at our company received this notice on 8/16/24. None of us were aware that we were part of this program. To this date, we have not been told anything else or status of what is going on. What are some of the appropriate options we should be considering? Just merely wait and see? Meanwhile, I am one of the employees that was ultimately terminated on 9/27/24, due to cost cutting measures, directly/indirectly tied to this debacle that has apparently caused financial hardship to the "Company". NOTICE BELOW "Company" put a retirement plan in place in 2020. We are now actively working to make sure that retirement plan complies with federal and state law. Even though you are not paid employees through "Company" it has been determined that you should still qualify under the plan. While the employer will be contributing on your behalf, we have decided to freeze that retirement plan. Attached is a notification to inform you that we are freezing the retirement plan. We are working with third party actuaries to calculate your specific benefit and will provide that information to you very soon. To: Participants in the "Company" Defined Benefit Plan (the “Plan”) From: (the “Company”) Date: August 16, 2024 Re: "Company" Defined Benefit Plan – Changes in Your Future Pension Benefit Current Plan Formula Currently, under the Plan, the annual benefit payable as of your normal retirement age (age 63) is generally calculated as an amount equal to ten percent (10%) of your average annual compensation since the Plan’s inception date (January 1, 2020) multiplied by your years of credited service as of the Plan’s inception date (January 1, 2020), which shall not exceed ten (10) years. The resulting annual benefit will be paid to you as of your normal retirement age under the Plan. Change to Plan Formula Effective as of August 31, 2024, the Plan will be amended to freeze the Plan. As a result of such amendment, no Plan participant will earn any further benefit accruals, no further compensation will be recognized, and no further service will be recognized for purposes of the Plan. The amendment will not result in the loss of any pension benefits accrued through August 31, 2024. The benefits accrued as of August 31, 2024 will continue to be held in the Plan’s trust on your behalf as a participant in the Plan and will be paid in accordance with the terms of the Plan. General Obligations This Notice is designed to satisfy the Company’s obligation to notify you of a cessation of future benefit accruals with respect to your retirement benefit under the Plan, as required by Section 204(h) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and Section 4980F of the Internal Revenue Code of 1986, as amended. This Notice is intended to explain the changes to the Plan in non-technical terms. Please note that if there are any discrepancies between the information provided in this Notice and the Plan document, the terms of the Plan document will govern. Participation in the Plan is not a guarantee of continuing employment with the Company or any of its affiliates.

There was a definite sense of animosity during this last issue with the company and this appears to be an honest mistake and only effected 6 months of pay. Does prudent mean it's a sensible/responsible fix but not absolutely necessary or is this the type of administrative error that HAS to be done through a VCP? Thanks!

I'm not sure this is a valid issue but given my history with our company's SIMPLE debacle from 2020, I wanted to cover my bases. We hired a new accountant for Q422 and they used the wrong election form for my 2023 deductions. I chose 4% for the past two years and they used my 2021 election form which was a 3% match. I realized this after my 6/15/2023 check (due to other issues with our FLEX program) and brought this to their attention. They decided to make up for this difference by adding the missing amount to the next 11 checks until all missed deduction amounts are accounted for. My question: Is this the proper way to do this (or perfectly ok) or does the company need to go through a proper correction method (i.e. VCP)? Thanks!

Ok, that is what I "basically" thought that a normal VCP would include. As a current employee of this company, I've seen former employees omitted and I, for the life of me, can't figure out why and assumed there was some legal loophole to exclude my former co-workers. There must've been something that the employer and ERISA attorney agreed to, for one reason or other, to exclude them? Thank you for answering in such a way that adds validity to what I thought all along.

I guess then I was looking for a more general answer as to how a normal resolution would be administered for former employees, given no unusual circumstances other than having worked there for a period of time while the plan was in place. It was my understanding that former employees were treated the same was as current in terms of making them whole but perhaps not.

I'm not sure I'm reading your reply correctly but what if the employer excluded past employees from the VCP filing as a way to not pay them? Would this even get past the ERISA attorney though? Or would the ERISA attorney first demand to see all the W2's for the time period of the mishandling of the program and start there?

Are there any legal loopholes that an employer can use to not pay former employees for a SIMPLE IRA plan that was not administered properly (at all)? For example, an employee was at the company for 5 years and during this time there was a SIMPLE IRA plan in place but the employer failed to notify any employees for 12 years. Fast forward to 2020 and the employer was notified and fixed the mistake for the current employees but never contacted any former employees. When the employer hired an ERISA attorney to handle the VCP, is there anything available to the attorney to NOT consider past employees, especially when they could be easily contacted? Thanks

Thanks for replying and perhaps you're right. If the one EE has been made whole, even after having to beg and practically threaten the ER with reporting him, what's the big deal? I can see that. However the ER is less than honest about anything that pertains to money and this isn't the first instance of him trying to get out of paying for something legitimately but that's for another story and time. I was not aware of the "ongoing election" portion and that the yearly check in with each employee wasn't necessarily required? I thought the ER and/or Administrator had to meet or consult each election period and get signed election deferrals (keep the same or change election options etc..). So then if that's not the sticking point then it does come down to the ER not giving a s&*t about the former employees who worked for him over the years and were essentially cheated out of their IRA contributions. And I guess I would agree with you about the time-table for a VCP to be fully completed and approved given that the time frame from finding out about this whole mess (2/1/20) to the time of our deposits (3/25/20) was a rather short period of time for all that to happen appropriately and blessed by the IRS. You mentioned "reluctance to include them in the fix.". Is all this just guidelines etc.. that the ER and attorney should follow or not follow and if they don't, are they legally obligated to fix this properly and can/should be held accountable for the possible mishandling of the VCP? From what I've read that's been posted on similar situations, if not handled correctly or timely, serious fines and/or criminal penalties seem to be the potential result of these types of scenarios. And if they just "did something that they thought was reasonable" and handled it on their own, and they are found to have done that and more or less screwed it up, would there be other consequences for this ER/Attorney combo by going rogue or is that a common occurrence as well? Again, thanks for the input and ultimately I suppose if this is bothering me enough, I'll have to make the call to simply report my reservations about the entire situation to either the DOL or the IRS or both I guess.

I would be interested in receiving some good advice on what to do with this eroding situation since early February of this year. I did create an initial post on the issue and at the time, the fix was weeks away and results unknown as to how my boss would handle the entire situation. And to true form he let me (and others) down terribly, in my opinion. So I'm turning to the board for "expert" advice based on my telling of what I perceive to be fairly factual evidence of wrongdoings and misdeeds and he should certainly be held accountable in some way. I have questions about the attorney's responsibilities in this as well. I will try to be concise with what has unfolded. We have 6 current employees affected by the lost IRA contributions as of 2/1/2020 that were "overlooked" for every current employee except one apparently. An ERISA attorney was hired to move forward with the VCP and as of 3/25/2020, we all had our new IRA amounts deposited into our accounts, fixing the error. My years affected were from 2013 - 2020 and others were very similar to that time frame. However the one co-worker who has been with the company for 15 years was not given anything during the VCP for reasons we are not aware of. The ER sat us down with a memo (attached) in hand and read from it verbatim, explaining the entire situation and what he planned to do about it. This is the part of the memo that shines a light on the ER's intentions: "However, if an eligible employee was given an opportunity to make an election to defer into the Plan (and chose not to do so), no corrective contribution will be due for that employee." This individual was offered, what appeared at the time to be the SIMPLE IRA plan, by the plan representative in 2008 (the first year it was offered). The EE turned it down due to another investment that he was provided by the ER a year or two earlier and thought this was one of the same and didn't want to contribute from his check at the time. What has come to certainly be known as the company SIMPLE IRA plan was never again offered in any way, shape or form to this EE and also to our current employees. This is why we all received our lost IRA for this lengthy time period, no questions asked, but this one EE was left out and he thinks it has something to do with the initial ask and decline in 2008. Fast forward to the dust settling on the VCP and this EE drafts a 4 page letter explaining and pleading for some explanation as to why he was left out. Silence for quite a while until ultimately the ER decides it best that he go ahead and deposit his IRA portion, 5 months after the closure of the VCP. Just to be clear, the ER did speak briefly to the EE shortly after the closure of the VCP and everyone else had received their "fix email". He was sorry that he couldn't do anything for the EE and he had the "document" with his signature (guessing the one from 2008 where he declined the deductions for that year). The EE asked to see the document and any evidence proving he had been asked each year and declined each time, to which none have been provided to this date. Now, if this isn't bad enough with the ER trying to conceal and basically steal the money from the employees over the 12 year period, he tried to do it again to the one CURRENT employee AND still has not contacted any of the FORMER employees. I know of at least 4 former EE's that had worked for this company for 3-4 years each during this time frame (2008-2020). How can this be? How can both the ER and the ERISA attorney have an opportunity to fix this egregious error and make the final decision to look over the 1 EE (with no investigation or even a question as to his status) and also not contact 1 former EE about this error and appropriate steps to fix their situations? Something is terribly wrong here or I am terribly misunderstood how a VCP is supposed to unfold or at the very least, the requirements that the ER and ERISA attorney need to meet to finalize the VCP. Please offer advice/suggestions as to what would be the next step in holding this ER/ERISA attorney accountable? I feel he purposely left everyone out the first time around (year after year) and when he had the opportunity to fix it (after getting caught), decided to screw some people over once again, including an EE who has been with the company since day 1 (2005). Also as a side note, the ER has ample opportunity to reveal the company IRA plan at the time of hire for us past 4 employees but never, not once, did the EE mention the IRA to any of us during the hiring phase. Thanks! DR245 p.s. I'm attaching the actual MEMO, read verbatim by the ER at the company meeting on 2/25/20. I brought the entire IRA situation to his attention on 2/1/20.

I would be interested in receiving some good advice on what to do with this eroding situation since early February of this year. I did create an initial post on the issue and at the time, the fix was weeks away and results unknown as to how my boss would handle the entire situation. And to true form he let me (and others) down terribly, in my opinion. So I'm turning to the board for "expert" advice based on my telling of what I perceive to be fairly factual evidence of wrongdoings and misdeeds and he should certainly be held accountable in some way. I have questions about the attorney's responsibilities in this as well. I will try to be concise with what has unfolded. We have 6 current employees affected by the lost IRA contributions as of 2/1/2020 that were "overlooked" for every current employee except one apparently. An ERISA attorney was hired to move forward with the VCP and as of 3/25/2020, we all had our new IRA amounts deposited into our accounts, fixing the error. My years affected were from 2013 - 2020 and others were very similar to that time frame. However the one co-worker who has been with the company for 15 years was not given anything during the VCP for reasons we are not aware of. The ER sat us down with a memo (attached) in hand and read from it verbatim, explaining the entire situation and what he planned to do about it. This is the part of the memo that shines a light on the ER's intentions: "However, if an eligible employee was given an opportunity to make an election to defer into the Plan (and chose not to do so), no corrective contribution will be due for that employee." This individual was offered, what appeared at the time to be the SIMPLE IRA plan, by the plan representative in 2008 (the first year it was offered). The EE turned it down due to another investment that he was provided by the ER a year or two earlier and thought this was one of the same and didn't want to contribute from his check at the time. What has come to certainly be known as the company SIMPLE IRA plan was never again offered in any way, shape or form to this EE and also to our current employees. This is why we all received our lost IRA for this lengthy time period, no questions asked, but this one EE was left out and he thinks it has something to do with the initial ask and decline in 2008. Fast forward to the dust settling on the VCP and this EE drafts a 4 page letter explaining and pleading for some explanation as to why he was left out. Silence for quite a while until ultimately the ER decides it best that he go ahead and deposit his IRA portion, 5 months after the closure of the VCP. Just to be clear, the ER did speak briefly to the EE shortly after the closure of the VCP and everyone else had received their "fix email". He was sorry that he couldn't do anything for the EE and he had the "document" with his signature (guessing the one from 2008 where he declined the deductions for that year). The EE asked to see the document and any evidence proving he had been asked each year and declined each time, to which none have been provided to this date. Now, if this isn't bad enough with the ER trying to conceal and basically steal the money from the employees over the 12 year period, he tried to do it again to the one CURRENT employee AND still has not contacted any of the FORMER employees. I know of at least 4 former EE's that had worked for this company for 3-4 years each during this time frame (2008-2020). How can this be? How can both the ER and the ERISA attorney have an opportunity to fix this egregious error and make the final decision to look over the 1 EE (with no investigation or even a question as to his status) and also not contact 1 former EE about this error and appropriate steps to fix their situations? Something is terribly wrong here or I am terribly misunderstood how a VCP is supposed to unfold or at the very least, the requirements that the ER and ERISA attorney need to meet to finalize the VCP. Please offer advice/suggestions as to what would be the next step in holding this ER/ERISA attorney accountable? I feel he purposely left everyone out the first time around (year after year) and when he had the opportunity to fix it (after getting caught), decided to screw some people over once again, including an EE who has been with the company since day 1 (2005). Also as a side note, the ER has ample opportunity to reveal the company IRA plan at the time of hire for us past 4 employees but never, not once, did the EE mention the IRA to any of us during the hiring phase. Thanks! DR245 p.s. I'm attaching the actual MEMO, read verbatim by the ER at the company meeting on 2/25/20. I brought the entire IRA situation to his attention on 2/1/20. SIMPLE IRA memo.docx

I was thinking along the same lines as you on both counts. Making us "whole" with the program, perhaps including proper timelines of events etc.. but not sure the IRS will see it that way and provide the exception for the lost years of contributions and availability for early withdrawl and reduce the penalty from 25 to 10%. Thanks for the reply.

I was one of many employees who had their contributions corrected over an 8 year time span. Our boss did not inform anyone of the SIMPLE IRA and had to correct 5 employees and make them right. Now I'm in need of some of those funds (not Covid related) and was curious if there was any stipulation or exception for my scenario concerning the normal 25% early withdrawl penalty (vs. 10% after two years) due to my circumstances Since I normally would've been "vested" or whatever the proper term would be as of 2015, do I fall into the 25% penalty regardless since my contributions were finally deposited in March of this year or do I potentially get an exception for my case? Thanks!

That is helpful and good to hear. I was hoping fpr something along those lines as opposed to possible audit investigations and closing the program down etc.. Thanks!

I just found out a week ago, while having my taxes prepared, that our company offered the SIMPLE IRA plan. I noticed the "X" on box 13 and to be honest, never looked/noticed before. Please excuse my fail to notice previous years. I started in 2012 and checked all my past W2's and all had the check from 2013 on. I asked the owner about this and he setup a meeting with me a few days later. After initial investigation on his part he came to the conclusion that I wasn't aware/notified of the plan and he was concerned and assured me that this was 100% unintentional. He stated the program was established/implemented in 2008 and he's aware that some employees have been contributing and others haven't. I should mention he's VERY hands off in these situations and relies on other parties to take care of HR types of tasks, given we are so small and we don't have an HR dept. I confirmed with other co-workers and most all were totally unaware as well. One EE in particular has been employed since 2005. Since we've always had 2 facilities (corporate/warehouse), up until 2017, it's feasible to understand a potential communication issue (albeit unlikely) due to 2 sites but still not excusable. The employer recognizes the severity of this and is working with others to understand the impact and come forward with a plan to amend/repair. I want to stay positive and optimistic and take him at his word about the total lack of proper communication and give him the benefit of the doubt with this revelation. My concern is how something like this (involving possibly up to 10+ employees [past/present]), spread out over that 11-year time frame and how this will possibly be rectified? If I can assume this was an honest mistake, as the owner stated, can this be fixed by the tools/guidelines in place for this sort of thing? My hope is that it can because I would obviously want this to be a viable program and would like the years I missed out on, to be properly/fairly compensated and have a good program going forward while I'm here. Basic details: Plan established 2008. Magically appeared on my 2013 W2 and ever since then (box 13). I will say that the EE that has been with the company since 2005, verified that the checkbox was not checked until 2013 as well so that's a little concerning. Notification/forms were not presented for a majority of the off-site facility EEs and can't speak for the corporate side EEs. Employer said he signed up for the 3% matching option (I'm aware of how those work since I've been studying the ins and outs of the SIMPLE IRA program feverishly since I found all this out). Employer did state that our broker did tell everyone but I know this is obviously not true and I haven't seen him since I started in 2012 and he's never spoke to me about anything, that I can be sure of. Trust me, based on all I've been reading concerning similar situations, I realize the word "egregious" comes to mind but wanted to find out from the professionals in this forum if this plan is recoverable or a lost cause? I think that explains my predicament and really looking forward to some good advice from this forum. Thanks for the help! DR245