Effen

Even if it is submitted, the PA should inform all parties that it will not be considered. Just because it is submitted, doesn't mean they have to read it. The QDRO procedures should probably outline the process. It is not the role of the PA to interpret the divorce decree. Two lawyers and a judge already approved the DRO before the PA gets it. I know there are sometimes inconsistencies, but the PA should stay out of the fight. What they don't know can't hurt them in this case.

I have never seen a divorce decree used as a QDRO. I'm not saying it isn't possible, but I have never seen it. Maybe you meant the divorce decree can be drafted to serve a dual purpose? We, and most attorneys we deal with, recommend to our clients that they don't even look at the divorce decree. They should only review the QDRO. It isn't the plan administrator’s responsibility to make sure the QDRO matches the divorce decree. The last thing you want to do is get involved in that type of dispute. All that said, if the AP tells you she is in the process of obtaining a QDRO, then you would be within your rights to hold the participant’s distribution for a period of time. Otherwise, if you don't have a QDRO, the plan has no authority to hold up the participant's distribution. Check your plan document for QDRO procedures.

One issue off the top is the union. Are they three seperate agreements? Are they three seperate unions? Doesn't he need union approval to merge the plans? Negotiations could become more complex if the union wants to know how well funded status of "their" plan. How is the employer going to negotiate if they don't really know how much a particular benefit formula and employee group is costing them? You may find yourself doing seperate valuations anyway, even though they are all one plan. Also, since they will have a right to the valuation report, I hope all the benefits are all comparable, otherwise he will start hearing a lot more about what the other guys are getting. The potential head aches can go a long way in offsetting any potential admin savings. If I remember right, you don't really need to do the list, you just need to maintain the data necessary to prepare the lists if the plan should terminate during the next X years. I would hope they maintain this type of data anyway.

Andy, she has 25 yrs at NRD, but only 4 currently. Based on what you wrote, "A Participant's Accrued benefit is based on a retirement benefit formula ... computed to the nearest five hundred (500) dollars" seems like the AB is rounded to nearest $500. Therefore, 7200 / 12 * .03 * 4 = 72, rounds to $0, but may get TH min if doc provides. That said, this has got to be one of the stupidest formulas I have ever heard of! What reason would you have to round to the nearest $500, other than restricting the bens for lower paid people. Sounds like a discrimination issue. A $20K ee would need 5 years of service just to accrue a benefit, then they would have to work 10 more to get an increase. How does it pass 401(a)(4) and/or 410(b) when all the short service NHCE gets $0?

No, I think you are comparing apples (lump sum @ 417(e) rate) to oranges (QJSA @ plan rate). The comparison needs to be on the same basis, otherwise it isn't valid. I'm not 100% sure, but I believe the Regs state the QJSA needs to be compared to the lump sum using 417(e) rates.

Since no one is responding, I will give it a shot. I think the only logical answer is #2. In #1 you aren't really comparing anything to the value of the QJSA. You are just comparing one lump sum to another, and only one of which is actually payable. It’s a meaningless comparison. You need to compare the value of the lump sum to the value of the QJSA using the same factors.

Do you really want to cause all that HR turmoil if the BOD ultimately decides not to do it? They could always announce the freeze, then un-freeze it if the BOD decides against it.

Thanks for the site. I agree it c/b exempt.

Can't be a Key if his comp is only $60K. I not aware of that "exemption" for 401(a)(26), do you have a site?

You will probably get several different responses, but this is what I would do (assuming the document agrees): 1) Determine age/service benefit at 12/31/2006 2) Determine the 415 limit at 12/31/206 (ignore previous distribution) 3) Determine the actuarial equivalent of the ben paid on 12/31/2005, rolled up to 12/31/2006. (I would ignore the fact it was a lump sum and deal specifically with the monthly AB) 4) Min(1,2) minus 3 - this could easily be $0. If he really took the 415 max and if he had 10+ YOP, he probably won't be eligible for any additional benefits since he already was paid the max. I don't think that he should get more, just because the lump sum rates are lower in 06. Make sure to check your plan document first to see what it says.

You can not be deemed an HCE. If no ownership and comp < limit in prior year, you are not an HCE. However, your design will fail 401(a)26 unless it covers at least 40% of the eligible populatiion. Since 1 out of 3 is only 33%, they will need to cover at least 2. You could set the 2nd persons benefit much lower than the 1st, but the plan would need to benefit at least 2 of the 3.

I agree with PAX. You work for the client and have a responsibility to report to him any problems you discover. Also, how do you expect the client to fill this out? Since the bar code is the only thing the scanners scan, if you don't do it, than it isn't in the bar code. I don't see how having the client complete it is a viable an option. I learned a little saying long ago that has helped me a great deal... "don't make your clients problems, your problems" Lay out the facts and ask them how they would like you to proceed. If you don't like the option they select, decline the work.

Does anyone have any insight on what is happening in DC? If they don't pick up the pension bill, does anyone foresee any RPA interest rate relief?

Andy, you should edit your message to add an , otherwise people might actually think you were serious.

I also agree with Harry & mwyatt. Calc the AB at 62, roll it up to 65 and use that as the basis of your comparisons. However, keep in mind that any of the Sellers EEs who want the ben to commence at 62 need to be given that right. They may be eligible for this even if they are still working for the buyer, depending on the language in the Sellers plan. The buyer can not change any of the sellers 411 protected benefit or options on benefits that have been accrued. That would include retirement age, optional forms of payment, early retirement subsidies, etc...

CCH-EXP, PENSION-PLAN-GUIDE ¶1565, Unrelated Benefits Do Not Count Unrelated Benefits Do Not Count For purposes of the actuarial adjustment required when a plan pays a benefit in a form other than a straight life annuity (see ¶1561), the value of benefits that are not directly related to retirement benefits are not taken into account (.05 ). For example, no adjustment is required for the value of such ancillary benefits as pre-retirement disability and death benefits and post-retirement medical benefits. Thus, pre-retirement disability benefits are not directly subject to the limits imposed by Code Sec. 415 (.07 ). However, because a qualified disability benefit may not, under Code Sec. 411(a)(9), exceed a participant's normal retirement benefit (see ¶2565), a qualified disability benefit may not exceed the benefit that would be allowed under Code Sec. 415 in the event that the participant separated from service at normal retirement age. In addition, disability benefits provided under a defined benefit plan that exceeded the early retirement benefit and the benefit provided on separation from service at normal retirement age are not ancillary benefits that could be disregarded in applying the Code Sec. 415 benefit limits (.10 ). Cost-of-living adjustments. A plan may provide for benefits that reflect post-retirement cost-of-living increases. This feature is not taken into account to the extent that the benefits comply with the limits, as adjusted for cost-of-living increases (.15 ). .05 IRS Reg. §1.415-3©(2)(ii). .07 IRS Letter Ruling 9852044, 9-29-98, at ¶17,401K. .10 IRS Letter Ruling 9237042, 6-18-92. .15 IRS Reg. §1.415-3©(2)(iii).

Maybe that gets back to what mjb was asking (although I didn't understand it the time). If Bill had died instead of getting divorced, at what age would his spouses benefit be calculated from? Would the plan calc her benefit from 62 if he died at 58/27, how 'bout 60/30? Do you think that is relevant?

Thanks for the reply, although I'm not so sure I agree with your example. If Bill quit before completing the 30, his NRD would be 65. It might be a case where she is reduced from 65 until he completes 30. Then her benefit is recalculated to reflect the lower retirement age.

I assume the assets exceed the max 415 lump sum, otherwise you could just terminate it. I think it could be difficult to explain to the IRS why you paid a benefit to a disabled participant that exceeded the maximum benefit payable to a heathly participant.

I realize that there are lots of issues related to the QDRO including the death benefit and whose lifetime is the benefit payable. However, I am only trying to resolve a specific question related to the retirement benefitt payable to the X. Lets assume that the X is not entitled to any subsidy, unless the participant receives it. Lets assume the participant and spouse are both age 60. Lets also say that X wants her benefit today, and the plan & QDRO both said she could have it. Lets assume the plan uses staight actuarial equivelants for early retirement reductions. If NRD under the plan was simply 65/5, I would calculate the participants benefit payable at age 65 and actuarially reduce it to age 60. If the NRD was 62/5 I would calc the benefit payable at 62 and reduce it to age 60. If the NRD was 65/5 w/ an un-reduced early available at 62/30, I would calculate the participants benefit payable at age 65 and actuarially reduce it to age 60. If the spouse subsequently retired, and took the unreduced at 62/30, I would recalculate X's benefit to reflect the subsidy. Now, if the Plan's Normal Retirement Date is the lesser of 62/30 or 65/5 and if the participant has the 30 years, I think I would apply the reductions from age 62 since that is NRD. The unreduced benefit at 62/30 is not a subsidied early retirmenet benefit, but it is the Normal Retirement Benefit and therefore the X is entitled to it even if the participant doesn't take it. Does any agree/disagree?

I have never heard of a disability benefit that is payable as a lump sum. What would you do if he recovered, ask for the money back? I have no idea about your question. My only exposure is was with a plan termination. In that case the participant was offered an annuity (the annuity he was receiving) or the lump sum value of his acc ben commencing at NRD. The disability benefit is completely ancillary and can be taken away. I would think if it was not subject to 415 you would find a lot of "disabled" doctors.

Yes, the AP can elect to commence her benefits now since the participant is eligible for Early Retirement (55/10). What does the Plan say about what? The QDRO states that she can have an actuarially reduced benefit commencing on the earliest retirement date even though the participant isn't retired. My question is, when I apply the actuarial reductions, should they be applied from 62 or 65? Because the Plan states that Normal Retirement is at 62/30, and he has the 30, I think I should reduce from 62, but I was interested in other opinions. Typically the 62/30 is an Early Retirement benefit and therefore ignored unless the participant actually retires, but in this case, it is the Normal Retirement Date, so I think she get it, even if he doesn't take it.

Bill is age 58 w/ 30 years of service The Plan's Normal Retirement Date is defined as the earlier of age 62 w/ 30 YOS or 65 w/ 5YOS Bill's X would like to commence her benefits under the QDRO now, at Bill's age 58. In determining her benefit, would the reduction be from his age 62 or 65?

Are you sure the PA didn't receive it timely and just forgot or lost it? Heck, I can hardly remember what I reviewed last week let alone 7 years ago.

You NEED competent ERISA counsel. Don't try to do this stuff yourself or try to find some "off the shelf" document that you think might work. Although I am sure you are trying to be the most efficient for your client, I think you may be doing a disservice by letting the tail wag the dog. The sponsor should tell the attorney what they want so the plan can be drafted. If they choose to use a “vendor” as the attorney, you are stuck with whatever their plan contains (round peg/square hole). Also, you will be taking on the liability for document and its provisions. Since I assume you are not an attorney, good luck in court if something blows up! Tell the client that if they want to do this, they may need to pay a few extra $ up front to get it done right and hire an attorney who knows what they are doing. "Vendors" are just commodity driven, lowest price providers. Generally, not very good quality for anything that may be outside the simplest box.