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I'm looking for perspective on the issue of the Top-25 restricted payment rule in DB plans, or specifically in this Cash Balance Plan. We have a participant who is among the Top-25 highest paid employees and would be restricted from taking a lump sum under these rules under normal circumstances. The relevant facts are as follows: Individually designed DB Plan effective July 1, 2009, restated July 1, 2021. Plan has only ever covered HCEs (NHCEs have never been covered; professional medical group). There are approximately 60 participants, but about 70 employees total. Currently less than 100% funded, but still above 80% threshold. Benefits include interest credits tied to actual market returns, subject to anti-cutback rules (participants effectively "fund" their own benefit). Plan Document includes legacy restricted payment language referencing: Top-25 highest paid HCEs Current liabilities Escrow arrangements An explicit exception stating the restriction does not apply if the plan never benefited any NHCEs. Here are my two specific questions: 1. From a technical standpoint, is it correct that the legacy top-25 restricted payment rule does not apply in an HCE-only plan, consistent with the "never benefited NHCEs" carve-out found in older individually designed documents? 2. Setting aside funding level thresholds which are not currently triggered, how would you view the risk of allowing distributions in a less than fully funded HCE only DB plan, where early distributions could materially shift funding risk to remaining participants due to anti-cutback provisions? Particularly when the participant seeking the distribution is among the Top-25 highest paid? More generally, is this just a known but acceptable feature? Is it still legally required to not allow a top 25 paid employee to take his full lump sum? Is this a fiduciary concern requiring discretionary limits? Or if this is not a legal issue, is this something that should be voluntarily adopted to prevent funding issues? I appreciate any insight you can provide.

Hi to All, My most thought provoking client called a few days ago asking whether we keep records back into the 1990s and of course, we don't. He had a phone call from a former employee who received one of those infamous letters from the Social Security Administration saying that he "might" be due a benefit from my client's retirement plan. My client did happen to have proof of some sort in his office showing that this man was indeed paid out in 1998 and no further benefits are due. However, my client wants to know what would have happened if he didn't have or couldn't find this information. We have his plan's activity in our computer software back to 2005, and we have paper copies of everything for the last 7 years, but nothing as far back as the 90s. Whenever this has come up before in the various places I have worked, the position has been taken that if the plan does not have a balance for a certain participant today, then he must have been paid out in the past. So far no participants that I dealt with have ever insisted that I "prove" that he or she was paid out. How are other firms handling these inquiries? Have any of you had a participant who wouldn't take "no" for an answer and insisted on proof that he or she had been paid out in the past? Thanks as always!

Hello. We have an employee requesting a hardship withdrawal to prevent eviction/foreclosure of a mortgage on their primary residence. The documentation provided shows a mortgage statement under someone else’s name, however the address matches the participant’s ID and he considers it his primary residence. Not sure how the two are related, but perhaps it’s a relative or partner in which I assume he pays rent to (although there is not lease or rental agreement). My question is: can we approve this? Here is the safe harbor definition: “payments necessary to prevent the eviction of the employee from the employee’s principal residence or foreclosure on the mortgage on that residence.”

Hello! First time here. It's great to see so many HR professionals and the advice you're giving here is invaluable. I've created this infographic about employer benefit trends throughout 2019 and into 2020. It includes benefits that employers are trying that you may not have even heard of. Take a look and let me know what you think. Here is the source for this graphic. Custom HCM Software Development Thanks!

An alternate payee would like an application prepared so that they can start receiving their benefit. Plan Sponsor is ok with this as long as the alternate payee pays for the application to be prepared…is this allowed? Document does not provide much help.

If a campany has an existing serverance plan already in place and outlined in an employee handbook, and the WARN act is initiated, can the employer reduce the amount of servernce an employee receives by the WARN benefit?