Effen

If your QDRO is a "separate interest" QDRO, the death of your ex-husband should have no impact on your monthly payments.

If you have a SSN, an address search would cost less than $20. Seems like the least the PA could do is ask the participant for the ex-spouse's SSN and do a quick search. If he won't give you her SSN, that is probably a pretty good indication he doesn't want to find her.

You need to talk to the plan's actuary.

Crickets .... hmm? I thought Ray J wanted to have a dialogue?

Well, at least I doesn't haft to call you Johnson ? I agree that it would be good dialogue to hear the reason's why one-participant small business owners do these. We are all ears...

Well, first, a cash balance plan is typically an "ERISA qualified defined benefit", so that isn't an issue. Secondly, a cash balance plan still has an underlying annuity value. It might not be expressed that way on benefit statements and illustrations, but the cash balance benefit has an underlying annuity value. When you say, does the AP have a right to take a "separate interest allocation" do you mean can I split the CB benefit like it is a DC plan and assign a portion to each person, or do you mean can I use a standard "separate interest QDRO" where the APs benefit is independent of the participant? I don't see any problem with either, as long as there is an actuarial adjustment for age differences. That said, depending upon the CB formula, the AP should determine if they are better off taking a % of the current cash balance, or if the more traditional "ultimate benefit times coverture fraction" would be better. Since the actual rate of accrual, expressed as an annuity, typically declines with age under most cash balance plans, the AP might be better just taking a piece of the current benefit.

You can pay the "High 25" a lump sum in connection with the plan termination, but not before. Also, logically, if you have enough to pay them a lump sum, then the plan will be more than 110% funded since the lump sum will likely be more than 110% of the funding target. If they are going to terminate the plan, do everything in connection with termination. No need to do any "windows" if the plan is being terminated.

I agree with David and add that offering a lump sum to a retiree creates a new Annuity Starting Date. That means they should be given all plan options, not just the ability to convert their current annuity into a lump sum. This mean fresh spousal consent and new J&S options with current spouse if remarried. This will create adverse selection concerns as retirees adjust their new payment form to fit with their current health. Also, insurance companies will price the annuities differently if they know lump sums have been offered and declined. Maybe not enough to offset the savings on those who took lump sums, but it is something else to consider.

If they were truly employee contributions (that is deductions from his paycheck), then he would be entitled to that money back, with interest. That is always the case, even in a plan that has no employer provided death benefit. It is not uncommon to have a pension plan that provides no death benefits for non-married participants. These are "retirement" plans by definition and only pay spousal benefits because Congress makes them. Was this a union plan? I ask that because sometimes union contribution rates are expressed as a $/hour contribution and negotiated. The members often think of this as their money and their contributions, but technically, they are employer contributions and therefore could be forfeit on death. The SPD likely contains the answer to all of your questions. If there are employee contributions, there would be a section in the SPD related to them.

It means just that. The sponsor is guaranteeing the EE contribution will earn 3.75% per year. The sponsor is bearing the investment risk and is guaranteeing the rate of return. Normally, the EE contribution goes into the value of the total benefit. If the EE terminates before becoming vested, they would get their EE contributions, plus interest back. Sometimes, there is a similar provision related to death where they are guaranteed at least a return of contributions. In other words, in most situations, the value of the EE contributions isn't really relevant since it just gets swallowed up into the overall benefit. The sum of the EE contribs would impact the taxation of the ultimate benefit, assuming they are post tax contributions. Typically the employee contribution rate is below 5%, so your example of $10,000 is very high, but not impossible for a highly paid person. Also, a typical calculation might assume monthly/weekly contributions and therefore, often 50% of the rate is credited in the first year. Therefore, it might be something like (10000 * (1.035)^.5) * 1.035. (Looking at your OP) Lots of variations and not a common provision outside of governmental plans.

Are you are participant in this plan? Is this a cash balance plan?

This same question was recently posted on the ACOPA Board. On that board people commented that if the last day worked rule only applied to HCEs, it might be ok.

I agree with Jpod. My understanding is the MRC must be cash, but any amount over that can be in-kind, but I would definitely get the sign-off of an ERISA attorney.

I think your best option is to address this in the amendment that changes the eligibility provisions to bring him into the plan. Make sure that amendment clearly defines if you want to count his past service, or if you want him to only accrue benefits from his date of entry. I don't think there is any "rule", but you need to follow the plan provisions. Is this person an HCE? If so, I would recommend that you only count future service. Otherwise you could have some non-discrimination issues.

What non-discrimination test failure are you looking to correct with an "11(g) amendment"? I don't think you can amended the plan now (in April), to increase benefits for 2018 and recognize it in your 2018 funding valuation. I think -11g is only used to correct a failed non-discrimination test. Am I misunderstanding something?

I think anything that you can demonstrate is non-discriminatory under the applicable regulations (410(b), 401(a)(4), etc.) would be acceptable.

I am not sure, but i found this old thread that says you can't. https://benefitslink.com/boards/index.php?/topic/36446-eliminating-actuarial-increase/

As long as the accrued benefit payable at 62 is protected, there is no problem setting an older age for new accruals. You may also consider simply changing your actuarial assumption to 65 for valuation purposes. That would avoid the need to change the plan document. You will need to also make an assumption regarding suspension of benefits notices (if your plan document calls for them.) In other words, for a one life plan you have a lot of flexibility. You can either actuarially increase the benefit from 62 to age 65 in your funding, or, if permitted, issue a Suspension of Benefits Notice at age 62 and ignore the actuarial increase - assuming they are still active.

I am sure someone else will chime in, but are you permitted to change eligibility for current employees? In other words, the requirement was 21/1 when you hired them. Are you permitted to change that to 21/2 after they have been hired? That feels wrong, but that doesn't mean it is.

No, there was no new guidance issued that I am aware of. 2018 expected compensation should be a reasonable expectation. Generally, that would be 2017 w/ a salary scale adjustment, or pro-rata adjustment if they worked less than a year. What is the basis of your question? What would you like to use?

Be careful of the disability provisions and make sure it really is a J&75 currently. If the P is younger than NRD and is receiving a "disability" benefit, this might be an ancillary benefit and not part of the "retirement" benefit. It is common that the disability benefit is paid until NRD, at which time the participant makes an election of their retirement option. Participants rarely understand this, so make sure you are reviewing the plan document. Make sure the QDRO addresses both benefits. If he is beyond NRD, the only option is to have a portion of the benefit previously elected to be directed to the AP. My opinion is that you can't change the form of payment once the payment has commenced.

What Larry described is not the way I typically see it. Most of the firms in our area, and the local ERISA attorneys, still charge on an "as needed" basis. That means there is a fee to restate the document, or amend the document, whenever a restatement or amendment is required. The advantage is that you are only paying for the service when necessary. The disadvantage is that you have a relatively large legal bill every 5 to 6 years. Larry - under your structure, what if the client leaves you after 5 years of advanced payments? Do they get that back, or is that considered "support"?

Maybe i misunderstood. Generally, in a "contributory DB" plan, the employee contributions are paying for a portion of the DB accrual. There is normally no need for separate accounting, except if the person terminated non-vested - in which case they receive the value of the EE contribs, with interest determined at a stated rate. I have also seen a minimum "return of ee contribs" for death benefits, but again, no need for separate accounting since the benefit is determined based on a stated interest rate. Also, a word of caution if you aren't familiar with multi-employers - because the contributions are negotiated, and sometimes considered part of the "total package", union members think of them as "employee contributions" when in fact, they are "employer contributions". In your situation, how are the "separate accounts" considered in the determination of the participant's benefit?

I don't really know, but I think #3 deserves more thought. I don't think you can convert the DB Plan into a DC plan, but you should be able to spin off the EE paid portion of the DB benefit into a new DB plan, then terminate that DB plan. You can also talk to the PBGC and see if they have any ideas. I have found them to be helpful when you are just considering options.

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