Effen

Why doesn't it make sense to put the accrued benefit? Is this a traditional plan, or a cash balance plan? We do a lot of total rewards statements and usually we put the accrued benefit payable at NRD. Some clients want to see an estimated LS value, but that can be dangerous due to changing interest rates. Sometimes we use a more stable interest rate for a low estimate. Really depends on what the sponsor wants to show. Projected benefits can also be tricky due to salary scale assumptions. Often we would show projected benefit assuming no increase in comp - again, just to be conservative, but sometimes we include a modest salary increase assumption.

If they haven't had a break-in-service, then I would say they should definitely be included. The IRS rules call for a 5-year look back, but they don't really enforce it. The allocation of excess assets is really a plan amendment, so you should also be concerned about the timing of the amendment being discriminatory. I think the safest thing would be to include the other participant.

The plan can simply commence her benefit payments in the normal form if she is beyond NRD - they could do this by mailing her a check that she won't cash. If they delay until RMD, there should be an actuarial increase, or a retro payment to make up for the time from NRD to RMD. So, she could get a big check at RMD. There would be a tax penalty on the participant for not receiving RMDs. If it turns out she is vested, she could face a large tax bill for not receiving RMDs. Problem is, she is not permitted to waive her benefit. She doesn't think she is vested, but the fund office does so DOL/IRS require them to find her and pay the distribution. She can try to prove to them that she isn't vested, or she can just accept the money. The fund may start sending her checks, but it is up to her to cash them. Fund is required to pay, she isn't required to accept until RMD. At that point, the tax man could become a problem for her. Why does she think she isn't vested?

Also, because she mentioned he worked for a "fire department", it is very possible that he made employee contributions. To the OP's question, "How can they just keep his pension funds?", they can't, if you are referring to money he contributed towards the cost of his pension. Those will need to be paid to someone. As David said, You need a lawyer who is very familiar with QDROs., but I would add that having one who is also familiar with the plan involved is also important, if you can find one.

Sorry, but I wanted to come back to this older post. Not debating anything said previously, but I did have a follow-up question. A-15 of Notice 2005-05 says, "a plan administrator will not be treated as failing to satisfy this notice requirement or section 402(f) with respect to an eligible rollover distribution merely because the notice is returned as undeliverable by the United States Postal Service after having been mailed to the participant using the participant’s most recent mailing address in the records of the employer and plan administrator." Therefore, it is ok to force a distribution when the sponsor doesn't have a good address as long as they comply with the above rule. But, once the plan starts the PBGC termination process, then those unpaid participants go to the missing participant program and they can no longer force the distribution. Are there any rules or guidance related to the timing of the forced IRA rollover? IOW, if a participant terminated in 2015 with a $1,500 PVAB, and the sponsor is contemplating a plan termination in 2024, can they force the 2015 termination into an IRA (assuming PVAB is < 7,000) before they start the plan termination process? Let's further complicate this and assume the sponsor is pretty sure the "last known address" is no longer valid.

I vote for $100K. Since he had "activity" in 2021 I think it counts in the average. Are you counting that as a Year of Service for 415 purposes? What justification would there be to exclude it?

I believe the relatively new (last few years) PBGC instructions require you to submit ANYONE that you cannot locate, or who doesn't respond, to the missing participant program. Once you have started the process, you cannot force them into IRAs. There may be an exception if < $200, but I would need to double check the rules. So, I agree with Hojo's initial post - you need to submit them to the missing participant program.

No

Closing thread due to duplication.

The last phrase is a little confusing, but lets say your accrued benefit at the time of retirement was $!000. Let say you were hired on 1/1/1980 and your last day worked was 12/31/2019. Number of months from 8/23/82 to 11/11/2009 - let's call this 328 (could be 326 or 327 depending on interpretation) Number of months from 1/1/80 to 12/31/2019 - 480 The AP's portion would be 1000 * .50 * 328 / 480 = 341.67

I don't know if there is anything special about the military's QDROs, but generally a QDRO would contain language related to future COLA's. In my experience, COLA's are typically provided to the AP, but not always.

To clarify my OP, I assume in Bob's case the lump sum calculation he was given expires on June 30th and he was told that if he waits until after June 30th, the new value will be based on an updated mortality table, and I assume likely a new set of interest rates. The 2024 table was released last fall, and we know it will result in a slight decrease in the lump sum value. As fmsinc notes, we don't know when the 2025 table will be released, or if it will result in an increase or decrease. Generally, the new tables are released in the fall. I do not expect to see any new mortality tables released in June of 2024.

Bad actuarial work? Bad accounting work? I have seen it as well, but that doesn't mean it is correct. We recently took over a plan where contribution exceeded the Net Schedule C, which at best means comp = $0. Makes for a very low 415 max. Also, just to be clear, there is also a required adjustment for self-employment taxes that needs to be accounted for.

Likely 2 things are changing for your calculation. One maybe the mortality table - generally speaking the update mortality table will result in a slightly lower lump sum. Read your information carefully as they may also mention a change in the interest rates used to determine the lump sum. Depending what rates they are using for the basis, the change in interest rates could be going either direction - up or down. Generally, higher rates means lower lump sum. If the interest rate is changing along with the mortality table in June, the change in interest rates could have a significant impact.

Interesting, but seems to me they had "many years" to change the primary beneficiary if they wanted to. You say the beneficiary designation was not valid, but I disagree.. I guess that is your fight, but I assume you will be suing the ex-spouse, not the TPA. I don't see how the TPA did anything wrong. They have a signed beneficiary designation and they paid the death benefit based on that.

Just jumping in because I am curious, what this an insured death benefit? I assume it was something over and above the QPRSA which should not have been paid to the ex spouse since they weren't married at the time of death and assumingly they didn't have a QDRO. If it was an ancillary death benefit, was the ex-spouse the named beneficiary? I assume you are involved because someone else thinks they should have been paid the death benefit?

Do I know you? Looking at almost this exact same scenario. From my research, if the plan contains a loan provision, the participant can take a $50K loan from the plan (they will need to make payments on this). They can then loan that money to the plan sponsor (company/same person). The company can then use that cash to make the required contribution. On the surface, I don't see anything "wrong" with that, but it feels like there should be since the same $ are being deducted twice. My understanding is that the taxation might get ugly, especially if this is a pass-through or S-corp or something. Owner giving money to the corporation creates corp equity. The contribution is deductible. If paid within 5 years, no deemed distribution and no taxation on the loan to the participant owner. The Plan cannot loan the corporation money to make the MRC. In this case, the Plan is loaning the participant, who is loaning the company, who is making the contribution. My understanding is that if it's a pass-through entity, then there's no difference between owner and company, so this could be a problem depending on the structure.

FYI, Jim Holland is still very active on the ACOPA Board. He is working for Cheiron and his email is likely on the SOA site. You could just email him and see if he has a copy.

You need to check your QDRO. I assume we are talking about a defined benefit plan? QDROs often contain language requiring the AP to commence payment when the participant commences their benefit. I also suggest that you contact the Plan Administrator and ask them for your options.

Correct - there is a circular function to split the total earned income between ER Contribution and plan compensation. Assuming you need some amount of compensation to produce the benefit that is creating the contribution requirement, it w/b rare that the entire Sch C amount goes to deduction, but it is certainly possible if the high 3 is already established, or if you have a fixed dollar formula in a cash balance plan. This could easily create a 415 limit problem. There is also a special adjustment for 1/2 of the SE tax, and you have comp limits that can also come into play, so be careful.

Talked to Cleveland based lawyer friend, he suggested Gary Shulman and QDRO Consultants, Inc.

"With respect to an employer of a participant, a former entity that antedates the employer is a predecessor employer with respect to the participant if, under the facts and circumstances, the employer constitutes a continuation of all or a portion of the trade or business of the former entity. This will occur, for example, where formation of the employer constitutes a mere formal or technical change in the employment relationship and continuity otherwise exists in the substance and administration of the business operations of the former entity and the employer." This is an interesting question. I generally looked at these from as controlled group issue, but if she is really owned 50% and they both "ate what they killed", and didn't combine revenue, if she is keeping her clients and just dropping his name from the firm name, it would be hard to argue that she isn't employed by the same employer. However, if she is leaving and starting fresh, or just taking a few, you could argue she gets to reset her 415 limit.

IRC section 415(h) provides that for purposes of applying IRC sections 414(b) and (c), the phrase "more than 50 percent" shall be substituted for the phrase "at least 80 percent" each place it appears in IRC section 1563(a)(1). I was thinking the rule was "50", but it is actually "more than 50 percent" rule. I don't know the answer, but maybe it isn't a cut and dry as previously assumed.

Why?

Announced this morning at EA Meeting that Joint Board will eliminate physical presence requirement for continuing education retro to beginning of this cycle. https://www.federalregister.gov/public-inspection/2024-05240/regulations-for-continuing-professional-education-requirements-of-the-joint-board-for-the-enrollment