‘A ROSE BY ANY OTHER NAME……., WOULD SMELL AS SWEET’
William Shakespeare From His Play Romeo and Juliet
During the height of the pandemic congressional consent as it relates to the easing of both the distribution rules and the taxing of those distributions under the Internal Revenue Code was granted to certain types of Defined Contribution Plans. Money Purchase Defined Contribution Plans were not one of those types of Plans that consent was provided.
Was this a congressional oversight? Most assuredly. But the fact remains that despite this Plans and other Money Purchase Plans multiple calls for equal consideration, and for reasons still unknown to this Plan, congress never acquiesced.
Nevertheless, should another national crisis occur, the Board wishes this Plan to be aligned with those types of Defined Contribution Plans that already have a statutory precedent in both of the aforementioned areas of concern. Profit-Sharing Defined Contribution Plans are one of the types of Defined Contribution Plans that fall into that category. Consequently, the Board’s intent is to amend the Plan to convert it from a Money Purchase Plan Defined Contribution Plan to a Profit-Sharing Defined Contribution Plan.
When will this Conversion Occur?
As of this writing, the conversion is scheduled to occur on Monday, October 2, 2023. If the Plan can get the conversion completed before that date, you will be notified.
What does this Mean for You?
For the reasons that the Plan will continue to operate in the same exact manner as it did as a Money Purchase Defined Contribution Plan, there is absolutely no action that needs to be taken by you. In other words:
- Employer contributions will continue to be made to the Plan on your behalf in accordance with the provisions of the Collective Bargaining Agreement between your employer and the International Brotherhood of Electrical Workers, Local 697. Or, if working under a Participation Agreement, between the employer and the I.B.E.W. & Electrical Industry Local 697 Money Purchase Plan.
- All vesting rules and provisions remain exactly the same. Accordingly, and just like it was for the contributions made to the Money Purchase Plan and Trust, contributions earned for work performed for covered service on or after the conversion, and subsequently contributed to the Profit-Sharing Plan, will remain yours from the first dollar contributed on your behalf.
- Your current investment elections will remain the same. Consequently, employer contributions earned on or after the conversion will be invested in the same exact manner in which you had elected to have the Money Purchase Plan and Trust contributions made.
- All participation rules, investments, forms of payment, loan provisions, voluntary contribution provisions and the rules surrounding distributions and the timing thereof, will remain the same.
What will change?
Actually, other than the two exceptions listed directly below, very little. Meaning; the Plan will continue to operate in the same manner as it did when it was a Money Purchase Defined Contribution Plan.
With that said, participants are hereby advised of the following changes to the Plan:
- That even though the Plan is converting to a Profit-Sharing Defined Contribution Plan, the law necessitates the Plan to continue to treat any Money Purchase Plan account balances as benefits under the Money Purchase Plan.
This means that participants will see two separate line items within their accounts. One represents the balance of the monies contributed and earned while the Plan was classified as a Money Purchase Plan and Trust. The other line item will reflect any employer contributions earned on or after the Fund becomes a Profit-Sharing Defined Contribution Plan and, of course, any interest earnings on those contributions.
- After the conversion is complete the Plan will no longer be called the IBEW & Electrical Industry Local 697 Money Purchase Plan, but rather the I.B.E.W. Local 697 Defined Contribution Plan.
What do you need to do?
With the exception of being on the lookout for a future notice, (that will “coincidentally” read almost exactly to what is listed directly above) absolutely nothing.