Effen

They are apples and oranges. The collective bargaining agreement is what makes it a multi-employer plan. A multiple-employer plan (MEP) is a group of unrelated employers. The first question I would have is why would they want to change it? Yes, there are DC plans for multi-employers. They are normally PS plans where the bargaining contract defines the contribution. Very few have 401(k) options.

Interesting. So you are saying other optional forms are available after separation from service, however, the only optional form available for an "in-service" distribution is a lump sum. I am not sure if that is kosher. Is this a volume submitter document? 1.417(e)-1(b) ... . A QJSA is an annuity that commences immediately. Thus, for example, a plan may not offer a participant separating from service at age 45 a choice only between a single sum distribution at separation of service and a joint and survivor annuity that satisfies all the requirements of a QJSA except that it commences at normal retirement age rather than immediately. To satisfy this section, the plan must also offer a QJSA (i.e., an annuity that satisfies all the requirements for a QJSA including the requirement that it commences immediately). I see this says "at separation of service", so maybe there is an exemption for "in-service". Possible, but not logical.

First - what BG said Second - generally, your marital portion is based on the value of the benefit earned during the time of marriage. Third - If he already commenced payments, your only option will probably be a shared interest QDRO, however, you said "which appear to end when either of us dies". Are you saying he elected a joint and survivor annuity with you as beneficiary? Shared interest - you are paid a portion of the benefit he is receiving, which is based on his lifetime. You are simply receiving a portion of the benefit that is payable to him. If he dies, you may or may not receive death benefits depending on what option he selected. When you die, generally the piece you were receiving reverts to him. Separate interest - the portion of his benefit that is payable to you is converted to a benefit payable over your lifetime. If he dies, no change in your benefit. If you die, not change to his benefit.

All prior responses are good. Yes, contact the academy assistance group, yes speak to a financial advisor. The fact that she is well over 70.5 means a significant portion of that distribution would NOT be eligible for rollover due to the Minimum Required Distribution rules. She might be ok because she was still "active" due to worker's comp, but i don't know. If she was not exempt from the rule, she could be facing a significant tax penalty, which you would be within your rights to ask the plan administrator to cover - assuming your mother hasn't been hard to locate, or ignoring past correspondence. This is where you need a financial advisor, and you need to see the plan document, and you might need a lawyer. The Academy advocate may be able to help as well. The Plan Sponsor might get more responsive if you ask if your mother is subject to any tax penalties, or ask if their are any issues with the Minimum Required Distribution rules. Or, just sign the form, give your mom the money, report the distribution on the 1040, and move on. Even if you could roll some of it into an IRA, at her age, she would just need to pull it out fairly quickly due to the MRDs, so there isn't a lot of tax savings. There may be other ways to spread out the tax hit, I think you are allowed to spread it over 5 years, but that is where the FA will help.

There is much here that I don't understand without actually seeing the benefit election form. (NO I don't really want to see it). My point is, you should address these questions to the plan administrator. If you are the plan administrator, they should be addressed to the actuary who put the election package together. Are you sure she isn't entitled to both the retroactive payments and the lump sum? That would make more sense as the lump sum represents the present value of the future payments, and the retroactive amount would be the value of the past payments she did not receive. How old is she currently? What is the plan's Normal Retirement Age? When you say "CB" plan, I assume you mean "cash balance"? For David and CuseFan - Maybe what happened is she was entitled to retirement payments and the actuarial increase was greater than the 415 benefit, so they are retroactively paying the the 415 max since they can't legally give the rollup? However, JD said she was "active". So, the plan would also need an in-service distribution provision as well as a retroactive provision. This definitely feels like some sort of corrective action.

No. Receiving a lump sum equal to 100% of the maximum benefit uses up the maximum benefit. There is nothing left in the maximum to be paid as an annuity.

I don't think so. It really relates to how the bonus is determined. In the Examples in the IRS memo, the final phrase is, "However, if the plan terms do not afford the employer any discretion to allocate a participant’s compensation between salary and bonus, the plan benefit formula would be definitely determinable." Therefore, the key is clearly defining who has discretion and keeping that discretion outside of the plan document.

I hadn't really thought of that, but I think I would argue the only comp I am considering for benefit purposes is the bonus. Therefore the actual total comp is only relevant for Non-discrim testing.

Yes. I did go back and look at one of the documents to refresh my memory and they way it is done is that the cash balance credit is a multiple of a bonus. The board pays the bonus, which then drives the cash balance allocation. You need to make sure the BOD is specifying the amount of the bonus through an annual resolution. I was very leery of this design for many years, but an attorney walked me through the arguments and showed me the correspondence with the IRS. We then implemented the plan for one of our clients and the IRS issued the determination letter.

My understanding is the IRS has backed off the argument that annual changes are a "cash or deferred arrangement". They have been allowing sponsors to use very creative allocation methods that produce the same result and have backed off. For example, you can have a plan that has a variable contribution formula set by an annual BOD resolution. As long is is a BOD decision, and not a participant decision, it is ok. Yes, the BOD can be the participant, but they need to have their BOD hat on when they decide to make the contribution. If the BOD can pay different bonuses to different individuals, and that bonus impacts the cash balance allocation, then the BOD is directly impacting the allocation. Obviously you need to do what you are comfortable recommending, and not all attorneys agree, but there are lots of plans out there with recent IRS approval letters that allow complete annual discretionary benefits, as long as it is a Board decision and not a participant decision.

I would say NRD since the participant wasn't entitled to any retirement benefits as of their MRD.

If you were married, I find it hard to believe you don't have her SSN somewhere. Did you file joint tax returns?

I agree with both prior comments - "special termination program benefits" can be significant, or as David said - they might be nothing, but you should not simply give them away without knowing more.

The prior EA exams are available on the Joint Board website. They also provide answers, but not solutions. Best option would be to download the last few exams and see how you do. That would be the best determine on how to study for the next one. You mentioned Actuarial Outpost - Is that site back up? I was down for months for some unknown reason.

It looks like it is only an IRA thing, 408(d)(8) (B)Qualified charitable distribution: For purposes of this paragraph, the term “qualified charitable distribution” means any distribution from an individual retirement plan (other than a plan described in subsection (k) or (p))—

Thanks Dave - I made the correction. P.S. Hope the PC Police don't attack you over that emoji. I have my own Chief Wahoo jacket that I will need to move to the back of my closet. I just hope at some point the English don't start protesting or I will need to move my Pirates jacket there as well.

Draper - I was going to ignore your response, but I am curious what you are referring to? The OP was about the time necessary to prepare 5500. How are sample lives relevant to the 5500 prep? I would consider sample life review to be a necessary part of the valuation process, but would not consider it as part of the 5500 process. Are you are suggesting there are actuaries who just blindly sign SBs without actually reviewing the work? To clarify my initial response - I was NOT considering the work to prep/review the valuation as part of the cost of the 5500.

I think that is what is says. You need to allocate within 7 years. If you can't allocate within 7 years due to 415 limits, then you bring in all other participants. If you still can't allocate it, then you allocate the 415 max until the plan terminates, then it becomes a reversion. I have never really thought about this before, but I think that is what is says. It would have been helpful if they would have added the phrase, "even if beyond the initial 7-yr period" to (d)(2)(C)(ii)(II), but not sure how else you can interpret it. Keep in mind these are not deductible contributions so you can allocate 100% of comp (or the $ limit) in every year. If any other participants come into the plan, I think they would also need to receive the 415 max.

Diggin' Up Bones here (any Randy Travis fans out there? ) Anyway, I was having a discussion with a colleague about the notification requirement for missed quarterlies. I maintained the position stated in this old thread that basically says if a contribution is more than 60 days late, the participants must be notified within a reasonable period of time. He countered with this IRS website https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-notices that includes the statement: "Notice must be given before the 60th day following the due date of the quarterly or other required contribution." I have searched for any regulations or notice that states this and couldn't find anything. I found lots of publications, including a DOL guideline for participant notification published in 2020, as well as guidelines from Buck and Feranczy Law - all staying with the "as soon as practical". Is this just an example of where the IRS website is wrong, or has there been an official change?

I agree with "the other admin". I see no reason to do a short plan year - it just complicates the process. However, to answer your initial question, yes, having a short plan year can significantly reduce the amount of the DB contribution in year one. I would argue needlessly, because as the other amin said, "there is generally no compelling reason to have a short plan year".

We use PensionPro and find it very workable. Fairly steep learning curve in all of these systems, but once you get them set up, thing go smoothly. They really make you think through all the steps in your process. I would caution you about having too many steps since after a while people just check the box and don't really read the task, so it looses some of it's value over time. PensionPro has a lot of really great features - it is much more than a workflow tool. It is really a data base that can hold all information on a client, including contacts, documents, communications. If you buy the whole package, you can automate a great deal of your processes. It is really powerful, but with every upgrade comes a pricing jump, and the more of them you use, the more you are committed to them for the long term. That said, our firm was acquired by a larger firm about 2 years ago and the larger firm reviewed several options and selected WorkFront to use as a pure workflow tracker. Workfront is more of a marketing tool for tracking sales, but we are pounding the round peg into the square hole, and it seems to be working ok. I am letting another office work out the kinks before we adopt it company wide. WorkFront was just purchased by Adobe, so we are hoping for some improvements. It doesn't have any of the database function that PensionPro has, but if you just want to track work inside the company, you might want to check it out. Make sure you pay attention to the licensing fees. Some charge per user, others per plan - it can make a big difference in the pricing.

I have never heard of anything like that. That wouldn't make any sense at all. Why would have to assume someone who is working less that 1000 hours in the current year would work more than 1000 in the next? Expected hours is an "assumption", and therefore needs to be reasonable - that is you as the actuary. Also, keep in mind in the end it doesn't matter what you assumed, it matters what actually happened. If you assume <1000, but he works more than 1000, the NC that you didn't recognize gets shifted to liability in the next year and he still has to pay for the benefit. Maybe amend the plan to freeze the benefit before he earns 1000 hours. Tell him to send you a letter stating he worked less than 1000, the implement a freeze. That way the liability is on him, not you. Also, make sure the plan has a 1000 hour rule. Many of our one-life plans have a 1 hour rule, not a 1000 hour rule.

You can do whatever you want, as long as it is non-discriminatory. The allocation of the excess assets is the same as an amendment to increase the benefit. You can use any mechanism you want, assuming it complies with the applicable non-discrimination regulations. If the plan has been frozen for a long time, you could have unintended consequences when trying to allocate the excess. For example, you might need to benefit current employees/participants who have no accrued benefit in order to comply with 401(a)(26), 401(a)(4), and/or 410(b). In other words, you can't just ignore all the current employees with $0 benefit because the plan was frozen before they were hired. If the plan has been overfunded for several years, you may already have a 401(a)(26) problem because the exemption for frozen plans only applies to underfunded frozen plans. (Oops - you said this was a non-PBGC plan, so that exemption doesn't apply anyway.)

You can change the allocation language, but I think there is a 5 year delayed effective date. IOW, you can change it today, it it will be effective in 5 years. DVs don't necessarily need to share in the excess. It depends on how long they have been gone and what the document says. If they have been gone 5+ years, it wouldn't worry. If less than 5 breaks, you might want to consider sharing with them. Need to check the document and let the plan attorney make the call.

Thing have been "afoot" for some time between the Academy and the CCA, as well as ASPPA. Academy likes the view from their ivory tower.