Effen

It would need to be a 2023 plan termination, but not sure how you would do the 2023 valuation unless he puts the assets back, so that might not work. But, maybe he has a board resolution or something from 2022 where he terminated the plan and just forgot to tell you. Sometimes clients find things in their drawer. I think it would be ok to amend the plan in 2023, assuming he can demonstrate action in 2022. The amendment is just codification of the action. This is where an ERISA attorney might be more helpful. I am curious about the 1099. Was the distribution reported?

You could ask him to return the money to the trust. Since it was always held in a qualified account, he could just put it back. No, not perfect, but would be easiest solution. Maybe treat is as an party-in-interest loan, or just an improper transfer. Did anyone issue a 1099? How did they classify the distribution? Surprised the IRA custodian took the money as a rollover without proper distribution paperwork? You could also inform the IRA custodian that the distribution was not qualified. That usually perks them up. Don't know why you don't want to get an ERISA attorney involved - don't make your client's problems your problems. Recommend he hires an attorney if he want to clean it up. There may be creative ways to handle this. Terminating the plan and getting proper consents now isn't a horrible idea, just be clear with him that it is not a "solution". He still may be in trouble for taking an improper distribution, and the IRA could be disqualified. If he doesn't care to clean it up, then just walk away. Send him a letter laying out the issues and remind him that the IRS will likely come knocking once the 5500 is due.

Sorry, I was misunderstanding what you meant, I agree that the ratio of the (immediate factor at NRA) / (Deferred factor from NRA to AA) is the same as an Nx(nra)/Nx(aa). I was thinking you were saying the( Immediate at AA)/(deferred from NRA to AA) - which reduces to Dx/Dx which is not correct when adjusting monthly annuities. Thanks for pushing back. Just wanted to make sure it was clear for future readers.

Sorry, but I am old, and I want to clarify something related to the statement that you are "using the ratio of immediate to deferred factors" to determine the rolled up amount. The ratio of the immediate to deferred factors only gives you the change in value of the annuity. It is not the same ratio as the change the the amount of the annuity. I assume what you are doing is taking the annuity, then determining the lump sum value of it, then doing your ratio of immediate to deferred factors, then dividing back by the current immediate value to arrive at the newly rolled up month amount. I just wanted to clarify that the change in the monthly amount will be greater than the "ratio of immediate to deferred factors".

Which of the 3 segment rates would you use for adjustment? I guess you could argue the 1st segment since you are really determining the value of payments missed within that year. I like the year by year approach with a new rate/table each year, as Lou stated.

Why was an owner only plan doing FASB accounting? Just seems really odd. Typically you only do FASB for companies that do GAP accounting. The FASB accounting entries generally impact the value of the company. FASB expense is only an accounting expense and not real cash. The tax impact is generally based on cash contributions which are determined independently from the FASB expenses.

You should probably take a look at 1.401(a)(9)-6. If they are taking a lump sum, they have some options.

Doesn't really matter how it sounds. What matters is how it impacts the group. Are you generally restricting the compensation of HCEs, or NHCEs. You would need to annually demonstrate that the definition is non-discriminatory.

I moved this to the healthcare board. It might be better responses on that board. Not really a "multiemployer" question, which are a specific type of pension plan for collectively bargained groups.

I have seen them. They do exist. If you are worried about fluctuating compensation, consider basing the cash balance allocation on a bonus and not the total compensation. The entity must control the amount of the bonus, so they need Board justification to pay the bonus, and the participant can't control the amount, but often the Board and the participant are the same individual who is wearing two different hats. Yes, it can be problematic, but it does solve the problem.

Thank you. Getting specific, if the letter says, "We intend to honor the court's former spouse's survivor annuity award. The current former spouses monthly benefit payable is $X.", then the AP can expect to receive $X if the participant predeceases, even though X is greater than the amount they are currently receiving. They should not expect that X would be adjusted in any way. Is that correct? That was the only mention about the FSSA in the letter from OPM. It was a 2 sentence paragraph. I didn't see anything in the COAP/QDRO about it.

Coming back to this, we did find a letter from the Office of Personnel Management that talks about the marital share and the amount of the "former spouse's retirement benefit". That part is all good and matches what is actually being paid. However, the next sentence says, "We intend to honor the court's former spouse's survivor annuity award. The current former spouses monthly benefit payable is $X." The strange thing (from my perspective) is X does not equal the former spouse's gross annuity or the portion being paid to the former spouse. It is smaller than the gross benefit, but more than 2 times larger than the AP's portion. Does this mean that if the former spouse predeceases the AP, that the AP's benefit will increase? Or, would the same coverture fraction be applied to the "former spouse's survivor annuity award"? What is a "former spouse's survivor annuity" and how is it different than the "retirement benefit"?

What are the other options? You could do a consolidated notice, but it would need to disclose the individual impacts, which would probably require them to disclose that everyone has different benefits. How did you handle the SPD?

Roger that!

We have had luck using Midland for small cash balance accounts. You can contact them directly (on behalf of the plan administrator) or use a broker. If you prefer a broker, PM me and I will supply contact information.

I appreciate what you are saying, but this one uses the words "Domestic Relations Order", and "This Order is intended to meet the requirements of a qualified domestic relations order ...". I don't think any of that really matters since the AP is receiving payments, so they have honored it, regardless of what is was called. I will suggest the AP contact the PA and confirm the death benefit payable to the AP, if any. Thanks for your responses.

I did find this in the Q/A's under the CRRS site" "A married federal employee who retires under either CSRS or FERS automatically receives a joint and survivor annuity unless both the employee and the spouse decline it in writing, in which case the worker will receive a single-life annuity" Would that mean that unless the AP signed off on a SLA, that J&S coverage should be in effect?

Anyone work with Civil Service Retirement System (Postal worker)? I am looking at a QDRO for a friend and wondering how something might be interpreted. This is an older QDRO (2003) and is very short. It splits the benefit according to the Majauskas formula, then is says, "The alternate payee shall be treated as a surviving spouse for the purposes of a joint and survivor annuity and pre-retirement survivor annuity purposes". Thats about it - it is only 4 paragraphs long. The participant has retired and the AP is getting benefits, but the question is, what happens if the participant dies. There was nothing in the QDRO about required form of payment, but I am wondering if the Normal Form in the Civil Service Plan is a J&S and therefore, saying that that the AP is treated as the spouse for the J&S annuity means they will continue to receive a survivor's portion if the participant predeceases the AP. Any thoughts? I assume the only way to know for sure would be to ask the PA, but I wondered if anyone had any thoughts before we did that.

Sorry, I posted my response before I saw your follow-up, but yes, I agree the 3,800/mo would be acceptable EOY1

Lets ignore averages and COLAs and assume the comp limit is $300,000 and the $ limit at 65 is 245,000. Therefore, the $ limit at 74 is around $494,000. Also assume the employees has 10 YOS, but 0 YOP at BOY. Max DB accrual at EOY 1 = 49,500 (min 300000/10*10, 495,000/10) EOY 6 = 297,000 (min 300000/10*10, 495000/10*6) EOY 7 = 300000 EOY 8 = 300000 At least I think this is right. Does anyone think I would need to limit Yr1 accrual to 30,000?

The IRS takes the position that the actuarially increased $ limit for post 65 retirements cannot exceed the 401(a)(17) maximum compensation. Therefore, for 2023, the maximum DB dollar limit is effectively capped at $330,000 for ages > 68 or so. This wasn't always true, but recent (10+ years) IRS guidance has followed this thinking. That isn't exactly what you were asking, but it might be what you are thinking about. I am not sure if you can use a higher $ limit (based on AE), as long as the end result isn't higher than the comp limit / YOS. Hopefully someone else will confirm that.

You have it right. The percentage is being indexed for COLA. No, it doesn't make any sense, but that is how Congress did it. It is also more maddening that the PBGC continues to tell Congress they don't need the money and they are currently showing large surpluses, but because the premiums are considered "general revenue", and can be counted against general spending, Congress won't reduce them.

Insane! Tell all your sponsors to write their Congressman about this. $748/participant max cap. Borrow to fund getting more and more economically sound.

OK, that makes more sense, but unfortunately, I don't know the answer to your question. Hopefully someone on the board has a better response.

I don't understand the question? What kind of "policy change" would require a participant to return pension payments? Are you talking about a qualified pension plan or some sort of non-qualified insurance product? Sometimes errors are made and excess pension payments need to be returned, but I don't understand the reference to a "policy change"?