Effen

Good point Andy, although I think we can all agree that if all of the teams spent money like the Yankees and Red Sox, the league would quickly collapse. I hoping the hockey owners stick to their guns and come up with a workable arrangement. Maybe letting that Boston group buy the whole league isn't such a wacky idea.

Are you suggesting that the currently active PS plan is not considered a "predecessor plan" and that a person could be 100% vested in the old ongoing PS plan, but 0% vested in the new DB plan?

The fact that they currently have a PS plan eliminates the ability to use the DB plan's effective date for vesting. You need to count service from DOH (or effective date of PS plan) for vesting service.

Gee Boston wins, what a shocker. I glad those of you in Boston and NY can still get excited about Baseball. I suppose you enjoyed watching the first "dream team" play basketball also. For those of us in the small markets, the exhibition season lasts all year!

Probably not big enough. I think it can be paid if it is < 1% of the Plan's total liability.

412(l)(7) current liability should be used, and it must be 110% AFTER the distribution. Therefore, I think you need to look at each distribution seperately anyway. Treas Reg § 1.401(a)(4)-5(b)(3)(iv)©; (A) After taking into account payment to or on behalf of the restricted employee of all benefits payable to or on behalf of that restricted employee under the plan, the value of plan assets must equal or exceed 110 percent of the value of current liabilities, as defined in section 412(1)(7). There are other exceptions if it is a big plan. Also, this should all be stated in your Plan Document.

The books are generally excellent, however Aspen (aka:Panel) are EXTREMELY aggressive marketers. When you order a book, they consider it a subscription and they will keep sending you more books without any prompting. They call, and call, and call again to try and sell you more books. Just be careful when you order. The books are also available on-line through a CCH subscription.

I am frankly SHOCKED that there may be insurance involved. You mean to tell me that an insurance agent may have created this scheme? WOW, unbelievable! Thanks Lori and PAX for the references. Apparently, the specific benefit does not need to be specifically bargained. 1.410(b)-6(d): (d) Collectively bargained employees (1) General rule. --A collectively bargained employee is an excludable employee with respect to a plan that benefits solely noncollectively bargained employees.... (2) Definition of collectively bargained employee (i) In general. --A collectively bargained employee is an employee who is included in a unit of employees covered by an agreement that the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers, provided that there is evidence that retirement benefits were the subject of good faith bargaining between employee representatives and the employer or employers. .... and Kirk's response to PAX's post: Treasury Regulation Section 1.410(b)-1©(1) provides as follows: Under section 410(b)(2)(A) and this paragraph, there may be excluded from consideration employees not included in the plan who are included in a unit of employees covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers, if the Internal Revenue Service finds that retirement benefits were the subject of good faith bargaining between such employee representatives and such employer or employers. For purposes of determining whether such bargaining occurred, it is not material that such employees are not covered by another plan or that the plan was not considered in such bargaining. The emphasized phrase is often overlooked. -------------------- Kirk Maldonado

Only if benefits are subject to good faith bargaining. I don't think just belonging to a union, allows the ER to autmatically exclude them from coverage.

They may not have been involved when he gave it too them, but I would expect them to be involved when he tries to take it away. That said, I find it hard to believe that he just "gave" his unionized workers something without asking for something in return. I suppose it's possible... just not probable. Maybe a labor lawyer can chime in here.

Was this merger and subsequent union exclusion negotiated with the union? If not, you are most likely violating the contract.

I feel it is unprofessional because you are sharing personal information about a participant with an outside party without the participant’s knowledge or consent. How would you feel if you took a home equity loan from your bank and then immediately started getting phone calls from builders that your banker tipped off? If it were an individual account plan w/ individual investment direction, the FA would know the person took a lump sum because they can see the money was paid. No tip off necessary. If it's a pooled DC plan or a DB plan, the FA works for the Plan as a whole and not the individuals. If I were the participant, I would be very upset with the employer for leaking my decision. If I were the employer, I would most likely fire the TPA for leaking it.

There may not be anything legally wrong with it, but I think it is very unprofessional. If I was the plan sponsor, I would tell you to stop, simply out of privacy concerns. Do you also tip off funeral directors when someone dies? How about head hunters when someone terminates? As a consultant I recommend to the plan sponsors that they be very careful about recommending anyone to a participant for personal investing. The last thing you want is for a participant to sue you because the person you recommended lost all their money. Generally I tell them to stay out of the discussion. I once had a client who told participants who took lump sum to contact a "family friend" once they had their check. The "family friend" would then sell them an annuity for LESS than the amount the participant just rejected when it took the lump sum. The plan took a loss when it paid the lump sum, participant ended up with less when he bought the annuity and the "friend" made a nice profit, but "everyone was ok with it". The "Vanguards and Fidelities" are keeping it in house. They aren't tipping off an outside vendor. I think that is very different and a little slimy.

Was he speaking about a literal "brown envelope" or any scheme that is too good to be true? Was he refering to something specific?

Everyone is entitled to his or her opinion. The client needs to decide if it’s worth the risk. You are telling him the risk is low, but his consultant thinks the risk is high. The "memo" is probably not the basis of his objection, but it does slant things in his favor. Many people think cross testing is just wrong for many reasons. Do I see any risk in a cross-tested design? Not really, but you never know what will happen in Congress or the public. There is always risk. IBM taught us that no designs are "safe". I'm sure many of their consultants told them they were well within the rules (and they were). But things change and now cash balance is a dirty word for reasons that have little to do with Regulations. The point is hybrid plans should not be "sold". If the client thinks they are too aggressive, then they are. Some people are happy in their Lincoln and don't really want a Viper. I have taken over and redesigned many cases that the client feels they were "sold" an aggressive design that they really weren't comfortable with. No matter what, they still have to be able to sleep .

That's fine, but she is "entitled" to some portion of his current check. She can agree not to claim it or trade it for the car if she wants. That said, he is "entitled" to some portion of her assets as well. P.S. "friendly divorce" is an oxymoron

If "future" means after he is dead, then I agree, no QDRO is necessary. I don't even think a subsequent spouse would impact this, since she was the spouse at the time the annuity commenced. That said, PAX is correct and errors do happen. If "future" means his next monthly payment, then I think she needs a QDRO. Without a QDRO, he will continue to receive 100% of the annuity until he dies, then she will get 50% of whatever he was getting. If she dies first, she never sees a penny of his pension. If she wants 50% of his pension check, she will need a QDRO. The Plan will not allow the QDRO to change the form of payment, but it should allow the current payment to be split. This does not add any liability to the Plan.

Thank you, You said that "Because without that rule, it would be a violation for plans subject to 409A", does the problem come from 409A(a)(2)(A)(iv), 409A(a)(4)©(i) or somewhere else?

I know the newer version has a network option that would allow all employees to input the time directly into the system. We never looked into using it. Although it's not something that I generally get involved with, I know it can show you the time spent on any particular billing code (i.e.: testing, valuation, 5500, whatever). Obviously time spent isn't timed billed. We generally only bill once or twice per year so it isn't a problem for us. I think it could easily show you the time spent for a given category, assuming you didn't clear it out when you billed it. Did you try calling Timeslips or a consultant? I know there are lots of features we don't use that may be helpful. I guess I'm not much help. Good Luck

Did this discussion stop because my follow-up was so stupid that it didn't justify a response or because no one knows the answer?

Stevena, We use "Timeslips". It works pretty well. Everyone prepares their timesheets using an Excel spread sheet. This data is then dumped into Timeslips. We only use it to track the time. We write our own invoices, but Timeslips has the ability to prepare invoices as well.

I'm sorry, but I still don't see it. It seems to say that this is NOT a violation of 409A. Q-23 Under what circumstances will payments be permitted based upon elections under a qualified plan for periods ending on or before December 31, 2005. A-23 For periods ending on or before December 31, 2005, an election as to the timing and form of a payment under a nonqualified deferred compensation plan that is controlled by a payment election made by the participant under a qualified plan will not violate §409A, provided that the determination of the timing and form of the payment is made in accordance with the terms of the nonqualified deferred compensation plan as of October 3, 2004 that govern payments. For purposes of this paragraph, a qualified plan means a retirement plan qualified under §401(a). For example, where a nonqualified deferred compensation plan provides as of October 3, 2004 that the time and form of payment to a participant will be the same time and form of payment elected by the participant under a related qualified plan, it will not be a violation of §409A for the plan administrator to make or commence payments under the nonqualified deferred compensation plan on or after January 1, 2005 and on or before December 31, 2005 pursuant to the payment election under the related qualified plan. Notwithstanding the foregoing, other provisions of the Code and common law tax doctrines continue to apply to any election as to the timing and form of a payment under a nonqualified deferred compensation plan.

I admit that I know very little about Non-Qualified Plans, but I didn't see anything in 409A or 05-1 that disallowed this type of arrangement. I am having trouble figuring all this out and I have a client w/ a "top hat" type SERP. They have qualified db plan and a SERP that provides additional benefits based on comp over the comp limit. The plan ties everything back to the qualified plan's election. What ever form of payment and beneficiary they elect in the qualified plan is automatically applied in the non-qualified plan. The SERP also permits a lump sum if the Board permits it. (This is not at the participant's election and the qualified plan does not contain a lump sum provision.) I understand that the lump sum may be an issue, but I didn't think the tie-in to the qualified plan was. Can you give me some guidance where you found this?

SoCalActuary, as an actuary I'm just more familiar with "sorted" details than "sordid" ones. Funny typo... if you’re an actuary. GBurns - I like your perspectives - don't let those school yard bullies kick you around. You don't need to apologize to anyone.

Maybe I should forward this to John Grisham. Seems like the kind of sorted conspiracy that he could turn into another best seller. Good insurance guys, bad insurance guys, corrupt actuaries and attorneys, greedy plan administrators and the poor secretaries mother who just wants to bury her daughter...I'm getting all tingly just thinking about it