Effen

It is pretty straight forward. See Q/A E-1 of Notice 2011-3 Q E-1: How is an election made to use an alternative amortization schedule for a plan year? A E-1: An election made on or after January 1, 2011, must be made by the plan sponsor, by providing written notification of such election to both the plan's enrolled actuary and the plan administrator. Such election must be signed and dated by the plan sponsor and must include all of the following information: (1) The name of the plan; (2) The plan number; (3) The name of the plan sponsor; (4) The plan sponsor's mailing address; (5) The plan sponsor's employer identification number; (6) Which of the two alternative amortization schedules is being elected; (7) The plan year for which the election is being made; (8) Whether an alternative amortization schedule has been elected for another year, and, if so, a statement that the same alternative amortization schedule is being elected; and (9) A statement that the plan sponsor will notify the PBGC and plan participants and beneficiaries pursuant to § 430©(2)(D)(vi) of the Code and ERISA section 303©(2)(D)(vi).

Because I was almost caught off guard, I thought someone else out there might appreciate a reminder that if any of your clients elected funding relief for plan years ending in 2009 or 2010 you need to have their formal elections in hand, and the PBGC notified on or before 1/31/2011. This includes 2010 EOY vals that you may not even have data for - gotta love the IRS.

I think you probably need to go back and make sure the prior distributions were correct. How far? I would say the only right answer is "to the beginning". That said this is obviously something the attorney needs to provide guidance. You shouldn't be giving any recommendations related to something you know is wrong.

Oh, that is significantly different. Unfortunately I know very little about multiple-employer plans. Hopefully someone else will pick up the thread.

I'm sorry, but I still don't really understand what you would like them to audit? In a multiemployer fund, there isn't really anything to audit other than confirming that they are properly crediting your contributions. A multiemployer fund is not like a bunch of single employer funds. Everything is comingled into one pot - you can't really seperate one employer from the others. Maybe a better question is what are they concerned with? Why do they think they want an audit performed? Are you sure you aren't in a multiple employer plan?

What do you mean an audit of their participation? Are you looking to confirm the amounts you are sending are being properly credited by the fund, or are you looking for something different, like an estimate of your withdrawal liability? The fund would have an outside auditor who should be auditing selected employers periodically. You may be able to ask them to move your company to the top of their list. If you don't trust them, you should be able to ask you auditors to confirm the information with the fund. If you are looking for an estimate of your withdrawal liability, you can ask the fund for an estimate, or hire an actuary to estimate it for you.

Why would you use the 2009 form? I'm certain the 2010 forms will be ready long before the 7/31 due date.

Any recommendations?

Someone called me today and wanted to set up a self-directed IRA so they could loan a relative money from the IRA. Without getting into that issue, where does a person go to set up a self-directed IRA. I never heard of a "self-directed IRA" until a few minutes ago. I was told they need an attorney to draft a document. Is that correct? What makes a self-directed IRA different than a normal IRA? Would any bank be able to offer them, or are they something different?

My understanding is that it is first come, first served. You look at each transaction independently. Your starting point for the 2nd payout, should be the ending point after the first.

Some of our clients have had success using this firm. I think they will also give you a one free search, and sometimes one is all you need. http://www.berwyngroup.com/

The IRS has been very clear that an election to forgo benefits cannot be recognized for funding purposes. This stand is based on the fact that 411(d)(6) states that you can never reduce accrued benefits, therefore why would they allow you to recognize an illegal reduction for funding purposes? The only exception is after the plan's termination when you are allocating assets. In fact, if the assets are short, you really don't need a waiver if you are going to allocate the remaining assets using the priority categories. Waivers are used if/when the owner agrees to accept less and pays everyone else what they are entitled to. Also, sometimes the PBGC requires waivers, but they are used so an underfunded plan can terminate under a standard termination. Either way, they do not impact the funding requirements. The EA in your example 2 was definitely wrong.

Double post -see Retirement Plans General for the open topic.

The plan ends at the termination date (6/30). I vote for prorated amort payment, but there is little/no guidance post PPA. It is never reasonable to reduce accrued benefits, in fact it is generally illegal. Benefits can never be reduced to avoid funding deficiencies. They can only be reduced at the instant of distribution if the assets are not sufficient. They can never be reduced to impact any funding related numbers.

Also, apparently Citigroup changed their methodology. The new methodology seems to be producing discount rates that are slightly lower than the old methodology. I'm seeing the method changes could result in decreases of 5 - 10 bps. I other words, using the old methodology I might end up with a rate of 5.45% and 5.40% on the new method. I tend to use the Citigroup curve and I'm seeing discount rates close to 5.50% for plans that don't pay lump sums. For plans where the expected payout is a lump sum, I'm getting something around 5.0% or less.

I would make sure that it is not discriminatory, otherwise I don't really see a problem. However, why would you want to do that? If the plan has excess assets, just follow the current plan language and allocate them in a non-discriminatory manner (assuming the plan calls for this). You will need to check the final distribution against the 415 limit at each participants age anyway. So, if you are amending the early retirement age as a way to push more of the excess to an HCE, its most likely going to be a discriminatory amendment and therefore not allowed.

Thank you for the feedback and I agree with all of it. Maybe the cheap qdro calculation company was just a legend, like Keyser Soze, but I swear I heard it really exists. Then again, maybe they went under since they weren't charging enough.

Often when I talk to attorneys about QDROs and present value calculations they talk about someplace that they can get the value of an annuity calculated for around $100. After I explain that they generally get what they pay for, they opt for the cheap calc. So now I am wondering, is there realy a company who specilizes in present value calculations for defined benefit QDRO situations and will do them for around $100? If so, what is their name?

Is the plan covered by the PBGC? If so, it is probably a reportable event.

No, she is not a participant in the plan, other than the fact she is the beneficiary.

Why don't you just ask the actuary for a copy of the non-discrimination test?

I would agree that on the surface it doesn't look promising. Do they possibly have a profit sharing plan as well?

Plan documents not withstanding, can a beneficiary roll a distribution into a participant's 401(k) plan? For example: An employer maintains a db and a dc plan. Joe is a participant in both plans. Joe dies and Alice is the sole beneficiary of both plans. Can Alice roll Joe's db benefit into Joe's dc plan?

There is nothing "improper" about front loading. It is only back loading they don't like. Besides, this isn't front loading since the benefit is accruing evenly over 10 years. The IRS shouldn't have a problem with the plan term.

Cash balance or traditional, the result is the same if you are funding the 415 max. After 10 years the primary person is fully accrued and hopefully funded so there is no reason to continue the plan. This is one place where it pays to have a good consultant who will see this approaching so the plan can be terminated at the correct time.