Effen

I am not really sure, but assuming the participants are still in the union and there has been no separation from service, I would think they would continue to earn vesting credit in their MEP benefits in the future. Not 100% sure of that. If they are leaving the union, then they are probably term non-vested in the MEP benefits. The MEP would have no obligation to then, nor would they generally care about people who leave the union. This is something the labor lawyer should be asking about as they negotiate the withdrawal. The "recompense" would have to come from the employer, not the MEP. The employer is choosing to leave so they are the one who needs to "make it right" for their employees if they want them to go along with the withdrawal.

Oh, sorry. I just assumed it was but you are correct the OP didn't say that. I think the PBGC missing participants can only be used by terminating plans.

PBGC missing participants

Good advice from both David & BG5150, but to answer your question directly, no problem with lump sum assuming it is permitted by the plan document.

Nothing wrong with it, assuming it is permitted by the plan document and occurs after the participants is at least 59.5, or whatever minimum age is set in the document, if higher.

If that is true, the relative value disclosures should make that apparent to the participant. If your QJSA is not the most valuable (ignoring the LS), you have a different problem. For example, lets say you have a 10CC of 1000 w/ LS value of $140,000. Using plan AE the 1000 10cc = 1050 as SLA. The SLA of 1050 would have a LS value of $142,000. That is ok and the participant would only be entitled to the $140,000. However, your relative value disclosers should show the SLA is worth 101.5% of the 10CC. Lots of different ways to do it, but the participant s/b able to determine the SLA is a higher value than the 10CC. Where you have a potential problem is if the QJSA is not the "most valuable" form of payment. For example if your J&50 option is only worth 97% of the 10CC, you have a potential problem with 1.401(a)-20 Q/A 16.

Sorry, I think I misread your first statement and thought you had plan factors for the lump sum as well. Is this a potential 415 limited lump sum? If so, then it does get more complicated. Ignoring 415 limits, you would apply the 417e rates to the normal form (10cc). No need to convert to Life Only before determining the LS, unless 415 limits are in play. You would use the 417(e) interest rates and applicable mortality table to determine the LS value of the deferred/immediate 10CC accrued benefit. The plan document should tell you what rates to use, whether to use the immediate or deferred AB, and what do with early retirement subsidies, if any. Typically, the LS is the PV of the deferral annuity in the normal form, but not always.

b. The participant would be entitled to the great of the two lump sums. You also need to make sure your relative value disclosures accurately compare the values. Correct, the 417(e) lump sum is the minimum amount payable to the participant. If the plan AE provides a greater amount, the participant would be entitled to the larger amount.

"401(a)(26): In general. In the case of a trust which is a part of a defined benefit plan, such trust shall not constitute a qualified trust under this subsection unless on each day of the plan year such trust benefits at least the lesser of ..." I don't know how you could satisfy the "on each day of the plan year" requirement using an accrued to date method. I don't use accrued to date for any of my testing, so there might be a way, but without doing a lot of digging, I can't see how it would work.

I am not really sure what the question is, but this might be helpful.

To me, that was the point of the thread...you won't find any black/white answers. Safe approach is the limit the deduction for 2021, aggressive approach is don't. This should not be your call. Present the facts as known to the plan sponsor and their accountant and let them make the call.

Recourse from what? The QDRO cannot supersede the plan's provisions. If the plan document does not permit a lump sum, then they are not legally permitted to pay one. If the participant is eligible for early retirement under the plan, you might be able to start receiving the monthly benefit prior to the participant's normal retirement date, however, the reduction for early commencement would be significant. Likely more than a 50% reduction at 55.

No. That just means that whatever benefit he had earned as of June 16, 2016, you are entitled to 40% of it. That statement does not impact when, or how, you will be paid those benefits.

check out 1.401(a)(4)-5. Plan amendments and plan terminations before proceeding.

There is a lot here and it is difficult to address all the various issues you raised. 1) If the plan is being terminated, you should have been given a lot more than "a page to sign". You should have received a benefit election package which detailed your options on the distribution. Assuming the amount of your lump sum is > $5,000, it would have explained your monthly annuity options, as well as your lump sum option. It should have also provided tax information related to the distribution, and spousal consent forms. 2) You have the right to request a benefit calculation worksheet that details your benefit amount. 3) You have a right to a Summary Plan Description that explains how the the plan works and the benefits are determined. This should also define how any excess assets are allocated. 4) Regarding the allocation of the excess assets, they must be allocated in a non-discriminatory manor. Discrimination in this setting only looks at Highly Compensated Employees (owner) vs. Non-Highly Compensated Employees. (These are defined terms under the law.) Because the testing for a cash balance plan is typically done by looking at the benefits paid at Normal Retirement Age, older people often get more than younger people because younger people have longer for the money to accumulate. Often the allocation is done based on age and compensation. Older & higher paid get more $, younger & lower paid get less $. If you have a 65 year old making $200,000 and a 25 year old making $20,000. The plan can give $50,000 to the 65 year old and $191 to the 25 year old and that would not be discriminatory because each would receive 25% of pay at 65, assuming 8.5% interest. 191 * 1.085 ^ 40 = 5000/20000 = .25 50,000/200,000 = .25. This is just an example to illustrate the point that younger people will likely get less. The actual allocation is often more complex, but this illustrates the method.

My experience is the PBGC is pretty open to conversations. I suggest you give them a call and ask how they they want you to proceed.

in that case, there is no QDRO so the plan did nothing wrong. However assuming the divorce decree awarded you half of the participants account balance, you will need to contact your lawyer and sue the participant to get it back. Just like if the court awarded you the car, but your ex jumped in and drove away.

You have a legally protected right to a copy of the plan document. The Plan Administrator must provide it upon written request. Send the Plan Administrator a written (paper) request for a copy of your benefit calculation worksheet, the Summary Plan Description, and the Plan Document, including all amendments and attachments. They may charge you a reasonable copying fee. The only way to know if they did the calculation correctly is to see the plan document.

There are several alternative methods for handling rehired participant who previously received a distribution. As Hojo said, the actuary appears to be following one of those methods. In order to know if that method is appropriate, you should request a copy of the plan document. The plan is only permitted to offset for prior distributions if it is explicitly stated in the document. If the plan document does not explicitly state the benefit should be offset for prior distributions, then they should give you the additional accruals without the offset. Make sure to request a copy of the document that was in effect in 2016, and any subsequent plan amendments. Also as Hojo said, this will be a legal document, full of a legal phrases, but there is usually a section specifically related to Late Retirement or Postponed Retirement or Rehired Participants that will contain the language you will need to review. Also, request a copy of the Summary Plan Description. This will be written in plain English, but it might not be specific enough for what you are looking for.

One small tweak, I don't think you would prorate the normal cost for the short plan year. The normal cost should reflect the anticipated accrual. If you used an elapsed time method for accruals, then proration might be appropriate, but if you used 1000 hour rule, the normal cost might be either a full year's accrual, or no accrual.

I probably would not have classified that way. Plan is terminated, no harm, no foul.

Your questions are very confusing. 1) The QDRO should state what happens to the share of the participant's benefit that was assigned to the AP if the AP dies first. Again, the results may be different depending on if the AP dies pre/post commencement of benefits. 2) Is this intended to be a statement, or a question? What do you mean the "first spouse ... is the Second Spouse"? on the Note: This is very critical. If the participant was already receiving payments when the QDRO was executed, generally, the only option is a "shared interest" payable in the form previously elected by the participant. In other words, the participant elected a form of payment and a possibly a beneficiary at the time of retirement. Those provisions generally cannot be changed. Therefore, the QDRO could only assign a portion of the benefit the participant was receiving to the AP. In that situation, if the AP died first, the payments would generally revert to the participant. If the participant had elected a joint and survivor benefit with the 2nd spouse as beneficiary then the benefits would go to the 2nd spouse on the death of the participant. If the participant elected a life annuity, all payments would stop upon the death of the participant. This is just the way I think it should have been handled. Others have different opinions so you need to read the QDRO. It will contain the answer.

Echoing what Mike said. Lots of possibilities, the QDRO will contain the answers. The QDRO splits the participant's benefit into two pieces. One for the participant, one for the AP. "shared interest" vs. "separate interest" relate to how the benefits are treated upon the death of either beneficiary or spouse. You need to read the QDRO for details because there are too many options to try to explain in a short response. Also, California is a "community property" state, so that likely complicates things as well. Either way, regarding the piece that is assigned to the participant, if you were the spouse of the participant at the time they commenced payments, they either elected a Joint and Survivor benefit with you as beneficiary, or you waived your rights and they selected a different form of payment, or beneficiary. The piece that was payable to the AP either reverted to the participant or stopped at the time of the APs death depending on the language in the QDRO and the AP's election. If it reverted to the participant, and if you were receiving the participant's share, it is possible that it would go to you, but the QDRO language and participant's elections will control. It is also important to know if the AP and/or participant died before or after retirement benefits commenced. The QDRO likely treats these events differently.

I think it would definitely part of the accrued benefit. When you allocate excess assets, you are essentially increasing everyone's accrued benefit, that is why you need to test it for non-discrimination. Either way, better safe than sorry. Just amend the plan to state that the accrued benefit can exceed $3,500 if it is the result of the allocation of excess assets at the time of termination.