Effen

Thanks Lois, but I think those are just the updated 430 tables. I don't believe the 417(e) table has been released yet.

Generally, 99.9% of the time, once the participant commences payment, nothing can be changed related to the form of payment. Sometimes the payment of the benefit is split via QDRO, but the form remains unchanged. The spouse that he was married to at the time of benefit commencement is still the beneficiary.

Nothing yet.

That is odd that they have concerns. That is a standard provision in almost every plan (except the 80 is typically 40). No idea why they would have a problem with it, but also no problem if you want to remove it. Now that the plan is terminated, I don't know why the sponsor would care anymore about retirees returning to work, but if it is a union shop, the union might have a concern.

Our understanding is different. The example seems to indicate that you can always change to full yield curve, although I admit, it doesn't mention the lookback Example 1 – Plan liabilities are valued using the corporate bond yield curve for the 2016 plan year, the segment rates for the 2017 plan year, and the corporate bond yield curve for the 2018 plan year. The change from interest rates under the corporate bond yield curve for the 2016 plan year to the segment rates for the 2017 plan year is made through a revocation of an election to use the corporate bond yield curve, which requires the approval of the IRS, in accordance with § 430(h)(2)(D)(ii) and § 1.430(h)(2)-1(e). The change from segment rates to the corporate bond yield curve for the 2018 plan year is an election to use the corporate bond yield curve, which does not require the approval of the IRS, in accordance with § 430(h)(2)(D)(ii) and § 1.430(h)(2)-1(e).

I don't think a 204(h) notice would be required. They all terminated employment, so no plan change to report.

If all of the active employees terminated as a result of the sale, it is obviously a partial plan termination and every impacted participant would be 100% vested.

$3.4 M @ 62 w/ 10 Years of Participation and Ave Comp > $265K (2023 limits) Lots of variables as you said.

"Finnegan" - but yes, he will be missed. Great actuary and a great giver to the profession.

I will jump in on the side that the $15,000 does not need to be adjusted. At the time it was paid, it represented a lifetime annuity of $15,000 per month. The fact that interest rates have changed and mortality tables have changed, and the individual lived another 15 years, doesn't change that. Then again, I stayed at a Hilton last night.

I assume you meant 285K as the 1st comp in your average as it produces $24,444.44. Part of the problem with your example, is the $ limit is not $30,000K/month, which would make it higher than the comp limit, so not a reasonable "what if". You are also talking about a person who is well over 65, so you are permitted to Actuarially Increase the $ limit, but not beyond the comp limit, so 24,444 becomes a hard max regardless of age. Therefore, "1" is definitely at least the start of your answer, although the question you aren't asking is what is the value of the offset. Is it just $15,000, or do you need to actuarially adjust that? These may be the things CB was referring to. Many actuaries believe no adjustment is necessary for 415 purposes and therefore Item #1 is correct as stated, but others would argue some adjustment is required. IRS has never said, so do something reasonable.

Lessons learned on this one. FWIW, we very rarely send the 5500 before the invoice is paid. Once they have the 5500, they have no real incentive to pay you. You can warn the new TPA to that they didn't pay you, and definitely don't provide any data to them without pre-payment. If you have been providing 5500s before being paid for a long time, and this is the first time you were unpaid, consider yourself blessed.

Are you asking if it is ok for the fund office to give the union office a mailing list of all of the pension participants so they can send them a non-pension related mailing? Those participants would be all union members, right? I guess there could be non-union people in the plan, but wouldn't the union have access to this information anyway? I don't know if this is common practice or not, but most funds I work with keep the union business separated from the fund business.

Did the sale already happen? If not, they might consider structuring the agreement as a 4204 sale in order to avoid the withdrawal. In a 4204 sale the buyer essentially accepts the seller's history. The Seller is still partially on the hook for 5 years if the buyer withdraws during that period. The fund would also need to accept it.

Everything you are saying is correct, but "good / bad" is all in the sponsors perspective. Larger plans see rising interest rates as "good" and are taking advantage of them by offering lump sum windows and buying annuities in an effort to de-risk the plans and shed liability. Annuity purchases and lump sum windows were at all time highs during 2022 and are still trending up in 2023. Smaller plans may see rising rates as bad for the reasons you suggest, but as David pointed out, the sponsor are not required to use 417(e) rates for lump sums and many small plans only use them for a floor. Part of the problem may be caused by the way the benefit has been explained to them. If they have been shown their 417(e) based PVAB every year, it needs to come with an explanation of how that can fluctuate. We typically never show the PVAB on benefit statements for just this reason. It is also the reason why cash balance plans have become so popular because they are insulated from this issue. This is one of those good "consulting opportunities". Sponsors should understand how their plans work, and if they don't like it, they generally have the opportunity to change it.

A few quick Google searches will provide a significant amount of information about 401(h) accounts. Also, whoever is going to administer the plan for you should be able to provide this information. I don't think there are very many people on this board who work closely with 401(h) accounts. There are some believers out there, but I think most practitioners are treading carefully. Sorry I couldn't be more helpful. Good luck.

To further expound on Truphao's comments - yes, the plan can pay the PBGC premiums, HOWEVER, they just get added back into the next year's Target Normal Cost, so there really isn't any advantage - other than sliding cash due from one year to the next. In other words, if you are in a cash crunch, you can use plan assets, but its "pay me now or pay me later". Many plans doing lump sum windows and annuity purchase as a way to reduce PBGC premiums - especially if you are at the cap. Cost to process lump sums is far less than the cost of the premium, so ignoring the impact to funded status - it is an effective way to reduce premiums.

Some plan documents do not contain the proper language regarding how to determine the immediate annuity or what forms of payment are offered, and therefore, if you are amending the plan to offer lump sums upon termination, you will also need to address how to determine the immediate annuity. Many times early retirement factors only go to the earliest retirement age (typically age 55). If you are paying a LS to someone younger than the earliest retirement age, your amendment should also address how that annuity benefit will be determined, and what optional forms of payment will be offered. You at least need to provide the QJSA and QOSA.

You just need to be able to demonstrate that it is non-discriminatory. What you described doesn't seem like it would be a problem, but might require multiple NDT to prove it. If you were requiring NHCEs to work more hours, then I think that would be a problem. Regarding document - you can pound your round peg into a square hole, or just hire an ERISA attorney to write it for you. Personal experience - you get what you pay for with prototypes. ERISA attorneys are often reasonably priced and can easily handle what you describe.

You would still need earned income to base the allocation of excess assets. I would be hesitant if the only survivors of the initial company were HCEs, and you then allocated the excess assets only to them. But again, they would need to generate earned income or you wouldn't be able to allocate the excess. From what you described, I don't think a QRP is a viable option. If it is only $50k-$100K, just allocate the XS to the existing participants. You can use any non-discriminatory method you choose, so you can be creative.

I don't believe so because it is not an election. There are no choices or options. I have worked with attorneys who suggest the plan just pays it directly to the executor, but I would confirm with the at attorney first.

Read the plan document. It should describe what should happen in this situation. Refer it to ERISA counsel. Typically the document says the benefit will be paid "per stirpes", then to the estate.

Our firm has a specialty niche in this area. We have over 50 variable plan clients in various market segments. I sent you a PM if you would like more information.

You don't need to accept it, but I strongly recommend that you work through your attorney.

I assume the closed db plan passes 401(a)(26)?