Effen

I had a girl friend tell me that once All I'm trying to say is if they really had a need, it won't take months to figure out if they can afford to hire you. They would just fill it. It is possible, that they are trying to find a place for you. Trying to free up money to grab a well qualified person. It's really hard to tell. I once had a "great" employer string me along for months. I finally couldn't wait any longer and took another job that worked out very well. The "great" employer took another two months to hire someone who only lasted about 2 months. Big companies can be notorious for lack of direction or quick directional changes.

FWIW, I tend to lean more towards GBurns' scenario, but I think Lame Duck offers the best advice. Tell them you're interested, but you can't wait around for ever. I would also begin to wonder about this great company that can't seem to make a decision. The decision process is critical in any organization and if they can't get a simple hiring done, how will they treat other issues? Maybe you should ask some of the "great people" who work there if this is a typical process. Be careful what you wish for.... Your rose colored glasses my be shading your vision.

Andy makes very good points.

Part of the actuary’s professional responsibility is to define "reasonable" for the given situation. Other actuaries my have other opinions, but the signing actuary bears the responsibility. Also, unless you are the owner and/or plan sponsor, the actuary is probably not going to change the assumptions based on your suggestion no matter how much ammunition you provide. Hopefully the employer understands what and why the actuary is doing what he/she is doing. It would similar to asking the auditor to change a statement in the financial report because it might impact the stock price. The actuary is supposed to be independent. Do I think 4.5% could be reasonable? Sure, it could be. What do you think a reasonable rate of return for the mutual funds? (What kind of mutual funds are they? Blue chip? Long term, short term, value, balanced, growth, etc..) Lets just say we expect them to earn 7%. Now, is 4% reasonable for the bonds? How about 2% for the cash. Put all that together and you get 4.7% (.50*.07+.1*.04+.4*.02) Again, oversimplified, but I think you get the idea.

Your problem is that you (or someone) tied your compensation to the plan's normal cost. The plan's normal cost is based on the funding method and the actuarial assumptions used. It is for plan funding and NOT benefit payments. The ultimate benefit you receive may have little relationship to your historical normal costs. Even using individual aggregate funding methods, the normal cost is still calculated in the "aggregate". Your ultimate benefit will be based on the plan document. If your plan provides a lump sum, the lump sum will be based on the document provisions at the time of payment. By using 5.5% for funding the actuary is trying to anticipate the rates that will be in effect when it will be paid. Congress may change the law in the next few years or interest rates may rise or fall. Lets say 4 years from now you terminate and lump sum rates are at 6.5%. The fact the normal cost was based on 5.5% is meaningless. You will get the 6.5% lump sum which will be less than the 5.5% lump sum. The reverse is also true if lump sum rates stay below 5.5%. You could end up with more than the 5.5% lump sum. This is also a huge oversimplification. There are many other factors that need to be considered, but the lesson is that the accumulation of normal cost can be dramatically different from the value of the actual benefit paid.

PAX, now that you are back, did you pick up anything of interest? (Information that is. It probably wouldn't be appropriate to discuss your personal life in this forum. )

I may not have the exact answer, but this should help. I encountered a similar situation a few years ago and the attorney explained that since it is a non-profit and it was a profit sharing plan, deductions and funding requirements are none issues. Therefore the 8 1/2 month rule doesn't really apply. They looked to the filing of the 990 which is due 5.5 months after the year end, but can be extended for 5 (?) additional months. Therefore, the "due date" for allocation purposes is 10.5 months after the plan year end. So they could make a contribution on 5/15/05 and allocate it to the 6/30/04 plan year. I may be off on my months, but you get the idea.

AAhh, the clouds have parted and it all becomes clear.... Thanks for jumping in "K".

My thought is that if he is paid on a 1099 then he is self-employed. If he is self employed, then he is not an employee of the guild. (since you said he only receives 1099 income.) If he is not an employee of the guild, how is he covered in their plan? Kind of like covering your accountant in your company's pension plan because you paid him a consulting fee and issued a 1099. If he was an employee, he would get a W-2, not a 1099. Again, I'm probably the confused one, so I will wait for others who got more learn'n

If he wasn't getting a benefit from the guild, based on this income, I would have said "no problem". I doesn't seem right that he can get two benefits, based on the same income. If you could, why wouldn't all the doctors do it? I don't really know how it is possible for him to get a benefit from the guild, based on 1099 (self employement) income? Hopefully, someone else will jump in.

So he is already getting a db benefit from the guild based on his 1099 income?

Why not explain your position to the client and let them choose. Don't put yourself at risk for something you don't believe is correct. If they choose the attorney's recommendation, let the attorney prepare the 1099s, or at the very least make sure you put a big caveat in the cover letter if you do them. If they choose your recommendation, all is well for you. Don't "bless" the transaction by issuing a 1099 that you believe is incorrect.

Probably not the right type of question for this forum. This message board is used generally by people who work in the 401(k) and retirement benefits area, but not necessarily with the investment products. In general, people who frequent this forum perform the "back room" functions related to compliance with government regulation, tracking participant accounts and processing transactions. Your question is more appropriate for a financial advisor. Also, if any financial advisors are on the board, they are probably leery of providing direct financial advice in this forum. good luck

What about actuarial increases? If they were not given a suspension notice, shouldn't the ultimate benefit paid also include actuarial increases from the participant's NRD? crosseyedtester: Those "googly eyes" are really distracting. I find it difficult to read your posts because my googly eyes are drawn to yours.

Political debate aside, I think the rollover option is a lot easier for the employer. They just transfer the $ and let the financial institution worry about tracking and paying the participant. That is a lot better than keeping track of $1,100 for the next 40 years. I agree, it may not be better for the participant. I was just a little surprised by Fidelity's position and wondered if others encountered the same thing.

A client just informed me that their Fidelity rep. recommended against the automatic rollover, implying that Congress may change the rule? They recommend that the client reduce the maximum to $1,000 and not pay automatic rollover. This seems to be counter to what I'm seeing with the other larger financial institutions. Most seem to be embracing the rollover concept and making it very easy for the plans. Has anyone else encountered this from Fidelity? Any idea why they would say this?

I think the PBGC directions are fairly clear that you need to illustrate both annuities commencing immediately (assuming lump sums are offered) and annuities commencing at NRD. And any other day that might be relevant. And speaking of relevant.... the new relative value regs may cause a lot more people to take the annuity, especially if there are any subsidized early retirement benefits not being included in the lump sum.

Could you be more specific? What do you mean by "transitional period due to acquisition of a retirement plan?" What needs to take place from whose perspective? Who acquired the plan? What kind of plan is it? What type of "outsourced vendor"?

ILICISCOMK - I Laughed, I Cried, I Spat Coffee On My Keyboard P.S. maybe since it's pension related, Harwood won't mind if we use FYIFV more.

http://www.netlingo.com/emailsh.cfm SWHT???

ESPN did a funny bit before the Yankees/Sox exhibition game last night, and again this morning on Sports Center. Interviewing 3-yr olds who have never seen their team win the world series. Actually I hoping the go Sox 155-9 and the Yankees 154-10. Maybe then people might see the problem. But, probably not because the Red's will end up beating them in the World Series and they will say "See, a small market team won again!". I hope Harwood doesn't mind, but I'm glad for the baseball chat.

FWIW, we have Plans that count "severance" as service for benefits. If a person terminates July 1, with severance through 12/31, they consider him "active" on 12/31 for benefits. This is they way the document is worded. Maybe, like most things, it comes down to the document. A well-drafted plan will address these issues; a poorly drafted plan creates problems. There are many acceptable answers and practices, but constancy and defensibility is key. On a side note, I think some “TPA’s” can take too much responsibility for these types of decisions. Make sure whatever you do is ultimately the Plan Administrators decision and should involve legal counsel. You don’t want to be getting sued later if the DOL rules against a decision “you” made. CYA!

That is the point, maybe they should. I think Bird said it best, if they are entitled to payment, then they are probably still employed.

For those of us with out all the learn'n tsu·ris also tzu·ris ( P ) Pronunciation Key (tsrs, tsûr-) n. Informal Trouble; aggravation. den·i·zen ( P ) Pronunciation Key (dn-zn)n. An inhabitant; a resident: denizens of Monte Carlo. One that frequents a particular place: a bar and its denizens. Ecology. An animal or a plant naturalized in a region. Chiefly British. A foreigner who is granted rights of residence and sometimes of citizenship. That dang fish must have spit Quint out in Monte Carlo. Hope he's enjoying the scenery I appoligize for the fact that this post has nothing to do with benefits, Benefitlink or anything related to Retirement Plans in General. It is intended for the sole pleasure of the reading audience.

Websters: predecessor - n : one who precedes you in time 1.411(a)-5(b)(3)(v)(B) Definition of predecessor plan. --For purposes of this section, if -- (1) An employer establishes a retirement plan (within the meaning of section 7476(d)) qualified under subchapter D of chapter 1 of the Code within the 5-year period immediately preceding or following the date another such plan terminates, and (2) The other plan is terminated during a plan year to which this section applies, the terminated plan is a predecessor plan with respect to such other plan. I'll be honest, I've been doing this for 20+ years and I have never heard this interpretation. I agree the Regs define predecessor as a terminated plan, but quite frankly that makes no sense. (I know, many Regs aren't logical.) That said, since two others agree with you, I need to re-examine this position. Since the Regs say 5-year period immediately preceding or FOLLOWING couldn't the existing PS plan become a prececessor plan if it terminates in the next five years? So under your theory, why not periodically adopt new plans every year or so and continually restart the vesting schedules? That should work as long as I don't terminate them.