Effen

Be careful about sales tax. I know WV has come after some TPA firms claiming that they were not providing "professional" service and therefore were subject to sales tax.

You can base it on how many sticks they can carry if you want, as long as it is in your document, is non-discriminatory, and doesn't exceed the 415 limit.

The increased caused by an amendment is not tested under the 133% rule. You test the benefit accrual as if the amendment had always been in effect.

So question is: "can that amount just be paid out and comply with 401a9" - I think I would say generally "no", unless it is the Normal Form. The exception would be if your document allows for in-service distributions where the participant elects the form of payment before actual retirement. Most documents I work do not allow for in-service distributions other than those required under 401a9. If that was the case, I think the only option is to commence the accrued benefit, in the Normal Form - i.e.: $1,000/month. If the document permits participants to elect the form of retirement benefit while in-service, then "1) does an election for such a form need to be made" - obviously yes "2) does plan doc have to allow for such a payment form" - obviously yes 3) Would the participant get to make a new election upon separation from service - probably not. They would be stuck with the 27 year certain.

I generally look at MRDs as a completely seperate calculation. It is a required distribution, not the commencement of retirement benefits. Therefore, I would argue that no participant elections are necessary. You simply pay the benefit in accordance with the plan document. They elect their form of payment and obtain spousal consents at the time of termination. If they die while active, the standard death benefit would be payable. I'm not sure I answered your question, but I think the answer to your question is in the plan document. Most DBs simply call for the commencent of the accrued benefit. In fact, I'm not sure if there are any options anymore. If the document is not clear, ask the attorney who drafted it.

One thing that is bothering me is the "not more than $1,000 a month". Assuming the AB is greater than $1,000, how does this impact the final benefit? When will the real retirement benefit commence? Are you getting spousal consents? How/when do you determine the ultimate benefit? Is this definitely determinable? How do you handle relative value disclosures? What if the participant dies while receiving the $1,000? What if the spouse dies - can the participant change their election before the real retirement benefit starts? What is the form of payment? Just a few things bouncing in my head.

You might be able to do it using a "one-time" election, but you would need to general test the ultimate result. You could create groups of participants that receive different PS allocations based on a one-time election. New hires would be given the election upon hire. Once they are in a group, they would not be allowed to change (at least not very often). I have seen plans that use this methodology and permit changes every 5 years or so. Something they should talk with their ERISA attorney about. Seems to me it could work, but you would have to be careful about discrim testing and potential CODA issues.

Are you asking about 415 limits on lump sum distributions...in a multi-employer plan? Could you provide a little more detail?

I assume you are refering to non-qualifying investments in the trust that would trigger the audit requirements? Obviously you can only consult on things you are aware of, so what did you know and when did you know it. Seems to me as soon as you know an audit will be required, you should tell your client. What excuse would you have to not tell them?

Definitely possible, lots of ways it could happen. The most obvious would be simply due to favorable investment performance during the year. In general, the required contribution is based on beginning of year assets. At the beginning of the year, the assets may be insufficient and create a required contribution. If investment performance is favorable during the year, the assets could exceed the value of the benefits by the end of the year, however a contribution would still be required. There are also scenarios involving prefunding/carryover balances that can produce strange results. There isn't a complete "disconnect" between funding liabilities and 415 maximums, but it is a pretty week rope, and if the actuary isn’t paying attention, they can easily come up with disconnected results. I believe you should recognize 415 limits in your funding, however I'm sure others can read PPA differently. Can you give us some specifics?

Ok, I'll bite. Yes, people with accrued benefits are "participants". Am I missing something here?

Assuming the plan document calls for excess assets to revert the the employer.

What does the document say about the allocation of excess assets upon termination?

I think if you are doing a general test, you would need to count those subsidized benefits if they are currently eligible, but not if they were not. This makes sense to me based on the intent of the rule, but I'm not positive and hope for other responses.

Generally not, unless it is a 401(k) plan. That said, often times people who don't want to participate are excluded from eligiblity by the terms of the document, but you need to be very careful that they are not waiving benefits in return for higher compensation. If it can be proven that they traded benefits for compensation, the IRS will rule it to be a CODA and apply the 401(k) rules, which isn't pretty if it is a db plan. Lots of other legal issues, so generally, no, you really shouldn't do it.

I would agree that it is "odd" and most likely should have been reported. My experience is that it is a "no harm/no foul". Just report it now and everything should be fine. That said, I read in a recent Ft. Williams statement that, "the IRS has informally indicated a desire to enforce the statement and collect penalties to help offset the cost of the new electronic Form 8955-SSA filing option". So, although in the past they tended not to bother you, maybe the future won't be so bright. Seems like a strange concept that the IRS creates something, then expects to pay for it by collecting fines for non-compliance. I guess it must be part of the new jobs bill.

I don't understand what you mean by the plan "has not distributed it's assets as of yet but because the plan has still been active". If it was terminated in 2008, what does "still been active" mean? How much of the termination was completed? Did they file with the IRS? Did they file with the PBGC? Did they notify participants? Seems like the plan might not really have been terminated.

How far back did you look? I'm sure you know that no one has filed SSAs since 2008. The new 8955-SSA replaces the old SSA requirements and is first due in January 2012.

I think it is a pretty risky stand to not issue the notice. Based on people I talk to, at all size firms, most are just putting a blurb into the SAR/AFN as Andy said. I don't know anyone who isn't doing it.

Defined Benefit Answer Book - McGhie,Q 28:54,Must employees be informed when an employer fails to meet minimum funding standards? Last Updated: 11/2010 Yes. When an employer fails to make any payment required to meet the minimum funding standards before the 60th day following the due date of the payment, the employer must notify each participant and beneficiary (including an alternative payee) of the failure. [ ERISA §101(d) ] There is no prescribed format for this notice. No notice is required if a request for waiver of the funding standard is pending. If the waiver is denied, however, the notice must be provided within 60 days after the denial. [ ERISA §101(d)(2) ]

As far as I know there is no defined methodology, in fact the regs still reference "current liability" which no longer exists. I think the critical thing is that the plan is (or is expected to be) at least 110% funded after the distribution. The safest thing would be to estimate the EOY FT and EOY assets, both after the payout, and make sure the projected assets are 110% of the projected FT, but I don't think that is the only valid test. It would probably be safest if the ER committed to making sure the plan was actually 110% at the EOY, but I don't think that is required either. In other words, if your current "reasonable, good faith" projection shows the plan will be 110% funded after the payout, but when the EOY actually comes it is only 105% funded, I don't think that is necessarily a problem, however if the ER makes a contribution to bring it up to 110%, then it would obviously be fine. I assume it is a typo, but shouldn't the last term of your equation be "Assets - (PVAB of Participant)", not +.

FWIW, after consulting with the plan's attorney as well as several other actuaries and IRS types, we decided that it was ok to make the retroactive payments because the disabilty benefit is fully subsidized and the participant has not reached their Annuity Starting Date. The retroactive payments are corrective.

We are just showing cash balance account and vested cash balance account. No monthly accrued benefits.

Added by PPA.

Just because I was doing the valuation anyway I decided to look at one of my plans with AFTAP < 80% and restricted lump sums. Of the 7 bifrucated benefits elected last year I have 3 J&100, 3 J& 75, 1 Life only. Nice game by the Cards last night, although it wasn't exactly baseball weather.