Alonzo Church

A good rule of thumb is that the w-2 employer is the employer for ERISA/401(a) purposes. If you follow that, you should survive an audit. Sometimes, you can use the controlled group rules or the affiliated service group rules to create a single employer. That does not appear to be the case here.

You don't have a single employer plan. If you are talking about a dc plan, you have a MEP and that's likely OK, though you need to treat each w-2 employer separately. If you are talking HW benefits, you probably have a MEWA, and if that's the case, things can get very ugly, particularly if the plan is self-insured.

If it were me, I would have employer C adopt employer B's plan as an adopting employer, and not bother with old plan, new plan, and then transfer plan sponsorship. No mess, no reason for the regulators to think there was an actual new plan. (Because there really isn't) By the way, Treas Reg 1.414(r)-5(d) applies when the employers are in the same line of business, but everything is happening due to corporate transaction. It's a pathwy to dealing with merger situations where there are some changes to benefits that would not be allowable under 401(b)(6)(C).

Consider these additional questions: Does Company C plan just cover Company B employees? Is Company C plan providing the same benefit as the Company B plan, or are the benefits different? Have you looked at the QSLOB rules? Particularly Treas Reg 1.414(r)-5(d)?

If the meeting was to fly down to the company worksite to explain the valuation, I don't see why charging the trust is a problem. It's an administrative expense, and probably allowed for in whatever engagement letter the company signed with the actuarial firm. if there was any other business carried on at the meetings that involved plan design or corporate liability calculations, the travel expense probably need to be allocated between the company and the trust.

Stephen20. I would think a plan like you describe would have a last day of the plan year rule for the profit sharing contributions. If it doesn't, I would be worried about setting up account for employees who have already left, and then finding and cashing those people out. I think you will want to suggest that tweak to your client going forward.

The program you describe is legal and unusual. One question -- are the profit sharing contributions made in each payroll, or is there a one time contribution after the year ends?

Make sure that you suggest in writing that the client have the amendment reviewed by counsel. Also, you may want to be sure the amendment does not take your plan out of prototype (if the plan is a prototype.)

For an optional form of benefit, the critical factor is the marital status at the time of benefit commencement. Your plan may have a one-year requirement as to marriage, but most plans do not. As Mr. Zeller indicates, you may be eligible to designate a non-spouse beneficiary as well. (I would assume you know if this were the case already, but it's best to check.)

joel: I am not an expert in New York law, which is what governs here. But a quick google unearths this: https://www.tax.ny.gov/pdf/advisory_opinions/income/a05_3i.pdf If you have a problem with the legal interpretation here, have at it. But, as you have seen, this group is not going to dispute the opinion of a regulator acting in the area of its authority.

If you don't want to pay for a QDRO, you could remarry before the benefit commencement date and get divorced again after the pension starts. Don't commit fraud. You could end up losing your partner his/her benefit.

Employees are entitled to COBRA benefits from PEO at 102% of the "cost of coverage". If an employee ends up being charged less than that and gets the coverage, all good. If the fee is more, or the PEO discontinues coverage, that's a COBRA violation unless they discontinue coverage for all their employees.

Whose name is on the w-2 these employees get? The client or the PEO? Also, how has COBRA been handled over time? Quick answer would be that the PEO's response would be OK if the dying employer is the company of record on the w-2. If the PEO is the company -- this smells.

This is a plan document thing and how its worded. Frankly, I would think you would want language including all programs automatically to avoid accidentally missing a filing when an excluded plan gets over 100. (A missed schedule A is an amended return. A missed filing is correspondence with the DoL and a penalty.)

I think there is a potential issue with each rate of match being available to a nondiscriminatory group of employees, if you don't do a 414(s) test on the compensation. As an extreme example, assume the only people who don't have commission comp are the HCEs and there is a 4% of comp max on the match. the HCEs can receive a 4% of comp match. But a llot of the NHCEs can only get a match equal to 3.5%, 3%, etc on their comp.

Is the new plan an actual PEP plan, or is it the same sort of open MEP that was around prior to the SECURE Act? Also, did you attempt to trigger distributions as a result of moving from Plan A to Plan B?

Per the regulations (1.401(k)-2(c)(2)(iii) "a plan is a successor plan if 50% or more of the eligible employees for the first plan year were eligible employees under a qualified cash or deferred arrangement maintained by the employer in the prior year." For most purposes, a pre-SECURE Act MEP is treated as single-employer plan maintained by an employer with respect to employees of a specific employer. So I think you use the ADP of the year before spinoff.

Joel: Surely there are other cities in New York with a 403b annuity fund for their teachers. Are they treated differently? Have you looked? In any event, there may be special legislation that applies only to NYC teachers. (The state can do what it wants with tax laws) None of us here are likely to know the ins and outs of New York State tax law or feel that we need to argue the proper interpretation of that law with the bodies that enforce it.

If I read the circumstances correctly (Pooled PSP), these employees are in a MEP established under pre-SECURE Act law?

I wonder if a PEP Plan for missing participants may someday appear. Getting scale would be a problem, but it would be a way for employers to bail out of situations like this.

If you have late term vesteds, you have to pay in accordance with IRC 401(a)(14). That means an initial payment of the aggregate payments missed since age 65. plus interest. There is no actuarial increase on the remaining payments. If there are true late retirements, the payment should be actuarially increased, unless plan allows for annual offset of actual benefit accrual during period of late retirement. (It does not sound like it does.) Ask your lawyer if the distribution of a suspension of benefits notice that does not address a late retirement situation is sufficient for suspending the benefit of such a person.

Luke -- I believe the SECURE Act mandated the agencies to provide guidance in this area. They have not done so.

What has the Plan done with late retirees? How have benefits been calculated? My own reaction, when I see a situation like this, is to figure out what has been done and then see if this comports with a reasonable interpretation of the plan documents, the SPD, the notices that are handed out, and what regulations require. I don't think you gave us that in your question.

Luke -- yes, I was speaking of CPA firms.

I have dealt with auditors on similar questions where the deferrals are sent to the recordkeeper/trustee, but not allocated until later. In each case, the auditors were satisfied that there were not late contributions that had to be disclosed on the Form 5500 (and in the financial statement schedules). If the TPA is not actually a trustee and the assets are not in trust -- you have a problem. Honestly, though, that problem would be with the way you have set the plan up.