Effen

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.

I agree w/ PAX, not sure what the question is. You need to do what ever the QDRO says and if the QDRO doesn't say, maybe it isn't a QDRO. I've seen lots of results in lots of different QDROs.

They are "kinder gentler" if you correct mistakes when you find them. They have lots of programs for self-correction. The more chances you have to self-correct, the harsher they will be when the catch you.

The Plan Administrator always bears the ultimate responsibility for everything related to the Plan. That said, PA's generally don't file any form unless someone tells them to file it. I fail to see how why you think that just because you don't need to file a 5500 means that all the PA's advisors will ignore other requirements. You still need to do all the same work you did before, you just don't need to file the form anymore. If you have a deficiency, the PA needs to file the 5330 and pay the excise tax. This has nothing to do with the 5500.

What protection will filing the form provide? What makes you think the IRS will even record the receipt of an unnecessary filing? Has the IRS said what they would do with these unrequired forms? We seem to be ok with not filing the EZ if assets are less than 100K, why aren't you not willing to take the same approach if the assets are greater than 100K? Besides, its the PA's choice to file our not. I suppose you can prepare the forms and send them to the PA with a letter detailing both options, but I'm still not sure what advantages there are in filing when you don't need to. If the IRS isn't asking, why should I should be telling (at least as it relates to a 5500).

I am appalled that you would suggest that an actuary would do such a thing. I agree that it is ripe for abuse, but in order to accomplish what you suggest, you would need to back date the signatures on the Sch. Bs, which would be a clear violation of our Standards. Just because the Sch. B's are not going to be submitted, doesn't mean that I won't have a signed copy, with attachments, in my files. If the amounts are worthwhile for the IRS, there are lots of ways to determine if something was done timely and the fact that you don't need to actually file a Sch. B, won't provide any additional incentive for a "good" actuary to take that job from the TPA. Plenty of bad actuaries out there already who will sign anything if the price is right. P.S. The IRS got hammered pretty hard on this at the EA meetings, for just the reason you suggested. Maybe they realize they will need a revenue generator 5 years from now so they are setting up their ducks for a large scale audit program once they start seeing some abuse.

Its not the first year of the plan. How do the "first year" instructions help me?

Thank you Janet, but my question really had to do with Page 8 of the instruction booklet related specifically to multiemployer plans. It seems to imply that there is no room for an estimated premium. It seems to say that the total premium is due on the first filing date, which seems incredibly unreasonable. Since I'm sure many others have been dealing with this issue, I was wondering when/how other multiemployers are filings their PBGC premiums.

I agree with Andy, Holland said you need to re-file if a deficiency is involved, but if not, change CB on the next B and attach an explaination. He also very clearly stated once again, you CAN NOT change any assumptions from what was STATED on the B.

What is the due date for PBGC premiums for a multi-employer plan? We generally do prepare the filings for our multiemployers since they don't require an actuarial certification, but one of our clients asked us to prepare the premium forms. Page 8 of the instructions states that "For mulitemployer plans... the entire premium is due by the First Filing Due Date". Does that mean that there is no room for estimates using an ES-1? The plans generally don't have the census data for two months, are they expected to have a final participant count in 2 months? How do others handle this?