Effen

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.

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