OR-ERISA

Employer prefunds non-elective contributions for all employees (HCEs and NHCEs) to an EExEE cross-tested plan. These prefunded contributions are allocated to the accounts of individual participants at the time of contribution, and the participants have investment control of the funds. The Plan does not have a PYE employment requirement. Employer adopted a policy saying that allocations for HCEs that leave before year end are at the sole discretion of the employer. An HCE terminated mid-year. The HCE had received pre-funded allocations before termination. After year end, Employer exercised its discretion not to make any contributions to the terminated HCE, and withdrew those contributions from the HCEs account, allocating them to the accounts of other participants. Can the Employer do that? What does the Plan need to say to allow it, and what regulations apply? Thanks in advance.

Yes, I agree with your approach, Larry. Thanks!

Hello, I am looking for sample policy language that would guide trustees in conducting interim valuations for a pooled plan that has been annually valued in the past. This topic was discussed in 2012 (see below), but I was curious if anyone has come up with a policy since that time. Some posters in the 2012 forum discussion advocated for not adopting a policy and instead leaving interim valuations up to the discretion of the trustees via broad interim valuation plan language. The thought being that the policy would potentially force the trustees to take action when it practically does not make sense. If no one has policy language, has anyone seen any triggers of interim valuations that were helpful, or mechanisms that would help mitigate loss in the case of large distributions taken after a substantial market drop? I am not so concerned with nondiscrimination issues at this point in the analysis. Thanks!

Looking for input regarding the calculation of the amount an employee is required to repay under Rev. Proc. 2019-19, Section 6.06(4)(a). The Overpayment amount is $100,000.00. Under Section 6.06(4), the repayment amount would be $100,000 adjusted for Earnings at the plan's earnings rate. In the current investment environment, the Plan has suffered significant losses. Is the demanded repayment amount $100,000 minus the losses at the plan's earnings rate up to the date of repayment (e.g, $96,500)? Or is the repayment amount merely $100,000 not adjusted for a loss (because there are simply no earnings)? Thank you in advance for your input.