Effen

The DRO could not have been a QDRO unless the Plan Administrator said it was "qualified". Do you have anything that states the DRO is actually a QDRO? It sounds like you have copies of the DRO and you are trying to prove it is a QDRO. Is that correct?

What if you get a new spousal consent? Would that work or do you think you still have a problem due to the fairly technical annuity starting date issue? I have seen this reasoning also applied to restricted distributions. Once the restricted person commences benefits based on the annuity form, they can not change there election to a lump sum when the plan becomes better funded and the annuity is no longer restricted. I'm not saying I necessarily agree with this logic, but I concede it has merit. There are some good old “mgb” discussions about this.

good answer!

Andy, although I never like to disagree with you because I have learned you are usually right, but what would stop a plan from being amended to give the participants a second bite at the apple? Just because the plan offered a lump sum when they retired and they elected an annuity shouldn't preclude the plan from offering a lump sum again at the time of plan termination. I agree they are not required to offer it, and the participant can't be forced to accept it, but why would simply making the offer be a problem?

This may be a stupid question, but why doesn't your wife or her attorney have a copy of the approved QDRO? If neither of them do, is it possible the although the DRO was discussed, it was never "qualified" by the Plan Administrator? Typically the DRO is signed by both attornies and the judge, then forwarded to the PA for approval. The PA generally sends a letter to both attornies either stating that the DRO is "qualified" or stating that it is not and provides the reasoning. Is it possible that the DRO was sent to the PA, but the PA never responded? Was her ex husband receiving a benefit when he died? Was he receiving benefits at the time of their divorce? Did she ever request her payments to commence under the terms of the QDRO she thought was in effect?

No, it will eventually fail either 410(b) or 401(a)(26) or both.

I think you have some real issues because you are trying to do this with a cash balance type formula in a DB plan. SoCal is right that paying someone out after being gone for 3 months in the multiemployer situation creates in-service distribution issues when the guy goes back to work 1 month later. I have a client that has a "subpay" plan to handle short term layoffs. They also have a DC plan that allows for hardships if the person is in real financial straights. They also changed their DC distribution rule to "no hours in the last 3 months" when things got real bad, but it only applied to the DC plan. Although they didn't like doing it, it was useful in allowing some of the men to keep their house.

http://benefitslink.com/boards/index.php?showtopic=34656

Is this a DB, DC plan or "Subpay" plan? If DB, how do you determine the value of the "cash benefit account"? Is the amount of the monthly annuity adjusted depending on if/when they take it or is it like the participant has a cash balance plan on the side?

Although I know you all know this.... the discount rate should be based on the yield curve for your particular plan's demographics. Therefore, if the auditor's "push you" on your discount rate, you need to be prepared to say something other than "that’s what they said on Benefitslink". If you are concerned, do a quick yield curve analysis and see where it comes out. If you want a simplified approach, and if your auditors buy into it, the Moody's AA rate on January 1, 2007 is 31 bpt higher than is was on January 1, 2006, therefore moving your discount rate up 25-31 bts should be acceptable. However, keep in mind, FASB is very clear that simply looking at the Moody's rate is not sufficient.

I doubt it. The 3 cents per hour is probably just the way it determines the accrued benefit. For example, if you worked 1000 hours, you accrue a benefit of $30 per month. This is not uncommon in the multiemployer world. All that said, the plan document will tell you the answer.

I'm not sure about the "tremendous boon" but it may be useful for a company who has a lot of cash and wants to drop it into the plan. Keep in mind, they didn't change the onerous excise tax on reversions. Once the plan is deposited into the plan, it is in the plan and can not be removed without paying a heavy tax. So if the company is going to purposely overfund its plan, it needs to do it with eyes open that the money can not be recovered. There are also special rules related to HCEs if you are dealing with a small plan. As far as a summary, just Google PPA 06 or go to benefitslink.com and search recent articles for PPA 06 Summary.

"some speculation"? There is no speculation... the maximum was increased effective in 2006. Read any summary of the Act and it will explain how it is determined.

You might want to consider having the IRS disqualify the plan. Since he never made a contribution, I assume he never took a deduction, so the impact of disqualification would be minimal. IRA rollover is most likely improper so he will need to pay tax on that, but he might be able to wiggle his way out of some of that as well. Definitely... hire a good ERISA attorney.

question deleted

Interesting... where and with who (whom?) are these plans popular? What unions/trades are using them and in what part of the country?

There is lots of good stuff written about replacement ratios if you do a few internet searches. I believe the SOA has a few studies available on their web site and you might want to check the web sites of some of the big boys (Buck, Wyatt, Towers, etc.) There are also lots or articles written in the financial trades. There was a session at last year's EA meeting that might be helpful if you can get the handouts or tape of the session. It wasn't the best, but it might help you in your thinking. Basically, the necessary replacement ratio changes based on the person’s income. Lower paid employees will require a higher replacement ratio than higher paid. Also, you need to consider the impact of inflation over time. A 100% replacement at 65 might only be worth 70% at 80.

You ask an actuary to do it. Can you be a little more specific?

himt4 - No one can give you a definitive answer, because no one knows until the IRS tells us. As a consultant, you need to explain to your client that any combination above 25% involves some risk.

I have the same situation, but the 1996 Grey Book appears to say "NO", unless you actually have a Full Funding Credit on the Schedule B, which is something flosfur didn't state. Is there something else that makes you guys say "Yes"? QUESTION #4 Funding - RPA: Full Funding Limit -- Elimination of FSA Bases Which full funding limit (and associated full funding credit) determines when the FSA amortization bases are eliminated? That is, are the FSA bases eliminated when funding reaches 100% of the actuarial accrued liability, or only when it reaches the greater of that number or the RPA'94 override of 90% of current liability? The instructions to the 1995 Schedule B seem to imply that the full funding credit based solely on the ERISA full funding limit of 100% of the actuarial accrued liability will not be calculated. RESPONSE In general, FSA bases are eliminated when the Schedule B actually shows a full funding credit on line 9(l)(4) (i.e., when funding reaches the greater of 100% of the actuarial accrued liability and the RPA '94 override of 90% of current liability).

We use CCH's WEB-based "Pension Plan Guide", which comes with access to several "answer books" on-line. I like the service, but I have always preferred CCH to RIA. I like to have the code/Regs accessible so that I can read things for myself. I tend to use the answer books and ERISA outline only as a guide. Without the Code/Regs, their answers can sometimes be a bit incomplete. CCH on-line is pricey, but it is nice to have access to the code from anywhere (office, home, etc). That way if you are doing work from home, you don’t need to have all those reference books around. Its all just a click away.

We have filed Form 500 prior to the termination date without any problems.

Carol, strange as it may sound, I believe the predecessor plan rules only apply if the plan terminated. Since the PS is still ongoing, I don't believe they apply, unless it terminates in the near future (5 years, I think).

Does the term cost = $0? Just because benefits are no longer accruing, doesn't mean the cost of the insurance is $0. You may still have a NC, even though the plan is frozen. Think of it as an expense. If you have an explicit expense assumption, it doesn't go away just because the benefits were frozen.

Maybe you are referring to the new requirements that the db election forms state the "consequences of failing to defer" your pension benefit. In other words, what bad things can happen if you take a lump sum now. Ive been wondering what others are doing about this myself.