Effen

The only reason I knew the answer was someone pointed it out to me after I had done a few wrong. We all learn from our mistakes.... except Blinky, who never makes any

I jumping in late with this long thread, but if the plan says the death benefit is 100X, then the death benefit is 100X, regardless if the plan insured it or not. Now, if the plan says the death ben is "up to" 100X, but limited to the amount of insurance issued, doesn't that create a fairly significant discrimination in practice issue if the policy is not issued immediately? Seems ripe for a law suit if the HCE is all nicely insured, but the plan just didn't get the NHCE's policy issued before he died. I know of lots of attorney's who would love this one.

Generally, if the plan granted no past service for benefits then on the first day of the first plan year the liability is $0. If the liability is $0, then the premium is $0, but the plan still must file a PBGC form. If you use the effective date, 12/22/04, the liability won't be $0, since the plan would have at least one year's accrual. Therefore, the premium would not be $0, but it could be prorated. I haven't seen the 04 PBGC form, but I think this is explained on Pg. 27 (?) on the 03 PBGC instructions.

Hugh? Can you elaborate on that, especially considering FASB current stance on cash balance plans? Your don't work for the WSJ do you?

I agree, we are beating a dead horse, but... 417(f)(2)(A) IN GENERAL. --The term "annuity starting date" means -- 417(f)(2)(A)(ii) in the case of a benefit not payable in the form of an annuity, the first day on which all events have occurred which entitle the participant to such benefit. Again, it's not MY definition. What do you have to back up your position? Personally, I feel that if the lump sum is not paid before the end of the stability period, it needs to be recalculated due to the interest rate change. This is where it gets a little gray.... If the PA caused the payment delay, I generally recommend that the participant receives the greater of the two amounts (old rate, new rate). If the participant caused the delay, generally the new rate should be used, regardless of whether it would be an increase or decrease in the lump sum amount.

Yes, but the immediate annuity is generally not the "underlying annuity". The lump sum is generally the present value of a deferred annuity. The immediate annuity may or may not have anything to do with the lump sum. That was part of the reason behind the relative value regulations.

it is not "my" definition, I just quoted the Regs. & Gray Book This can't possibly be true since most lump sums are simply the present value of some deferred annuity. The annuity isn't payable until some date in the future. I think the Regs are fairly clear that the ASD for a lump sum is the date which all events have occurred which entitle the participant to the benefit. This must be very close to the actual payment date. The RASD Regs cover the exceptions, they are not the general rule.

I definitely agree with pmacduff. Too many jobs is a definite negative. Don't get all "worked up" about your past experience. It is what it is and you can't change it. If you started off in a bad shop and moved on, then good for you. If you are in a good place and stayed a long time, then good for you. Generally people who move around a lot (inside the same geographic area) are either chasing the $$ or aren't very good at what they do. Switching jobs during your first 5 years is very common. Switching too many times after that (without a decent reason) might raises a flag.

You will be waiting a long time if your just waiting for YOUR phone to ring.... You gotta get out and make their's ring!

As an interviewer, I would much rather see "bad" experience than "no" experience. The "unspoken truth" would definitely raise some huge flags about you, if & when I found out. Although you may not realize it yet, the actuarial/benefits field is relatively small community. Therefore, I would most likely know more about you, than you know about me when you walk in the door. I would eventually find out about your past experience and then you would need to explain it. You may or may not get fired for it, but it would be a mark against you. I would definitely list the prior "bad" experience even if it were raised as an issue. Since it was your first job, no one should hold it against you, unless you try to be deceptive about it. Most of us worked at one place or another that wasn't the best. That is what makes experience valuable.

I think I might argue one point.... the annuity starting date for a lump sum is the date "which all events have occurred which entitle the participant to the payment". Therefore, if they didn't turn their paper work in before the end of the year, all events haven't occurred and the "annuity starting date" could not be in 2004. 417(f)(2)(A) IN GENERAL. --The term "annuity starting date" means -- 417(f)(2)(A)(i) the first day of the first period for which an amount is payable as an annuity, or 417(f)(2)(A)(ii) in the case of a benefit not payable in the form of an annuity, the first day on which all events have occurred which entitle the participant to such benefit. Also, Gray Book - Response to Q/A 96-29 (Q dealt w/ 401(k) plan) RESPONSE .... IRC 417(f)(2) provides that in the case of a benefit not payable in the form of an annuity, the ASD is the first day on which all events have occurred which entitle the participant to the benefit. It is reasonable to include paperwork as one of these events.

Do the owners need to be licensed or certified in any way to do what they do? If not, you are most likely subject to PBGC premiums. If the individuals are married, you probably aren't subject to PBGC since it's treated like a on-life plan. If they adopt the plan on 12/31/04, you have 90 days to file your 2004 PBGC premium. Act Sec. 4021.©(2) For purposes of this paragraph and for purposes of subsection (b)(13) -- (A) the term "professional service employer" means any proprietorship, partnership, corporation, or other association or organization (i) owned or controlled by professional individuals or by executors or administrators of professional individuals, (ii) the principal business of which is the performance of professional services, and (B) the term "professional individuals" includes[,] but is not limited to, physicians, dentists, chiropractors, osteopaths, optometrists, other licensed practitioners of the healing arts, attorneys at law, public accountants, public engineers, architects, draftsmen, actuaries, psychologists, social or physical scientists, and performing artists. (3) In the case of a plan established and maintained by more than one professional service employer, the plan shall not be treated as a plan described in subsection (b)(13) if, at any time after the date of enactment of this Act the plan has more than 25 active participants.

I'm a little bothered by something that might not be an issue: Are you saying that everyone else signed the paperwork and had their lump sums paid prior to the rate change? Everyone except for the one of the HCE's who just happened to drag his feet and now the interest rate might be lower and now he gets a bigger lump sum? Maybe all completely innocent, but it smells a little fishy to me. Did the HCE gamble the rates would be lower and his lump sum would be higher? If so, did he give all of the NHCE's the same opportunity? Did he tell them that if they waited, their lump sum might be higher? Did he make them aware of the basis of the rate? Are there excess assets that would have been re-allocated to the NHCEs? Again, maybe fine, but I thing you should tread lightly. It could be a "discrimination in practice" issue.

I am starting to wonder if Gary's handle is being used by someone other than Gary. A few of his last questions have been a little "non-Gary'ish"?

I do not believe the "pure subsidy" disability benefit is subject to the spousal consent since it has no impact on the spouses benefit. The biggest problem we see is that the Plan Administrator sometimes forgets to get the disabled participant's "retirement" election at the time the benefit switches from a disabilty benefit to a retirement benefit.

The Plan should NEVER draft the DRO! As SoCal points out, you are just asking for trouble. Also, I think it needs to be pointed out that Field Assistance Bulletin 2003-3 only applies to DC plans.

We have one (1000+ actives) that went to 0 accrual and they still may not make it. I have another (400 actives) that is looking at a combined 1/3 reduction of multiplier and 10%/yr increase in contribution rate over the next 5 years. That still may not be enough, but it's a start. You probably need to run some projections and see what it will take to save the fund. I find the Trustees are usually hesitant to implement any reduction, but once you or the attorney explains the consequences of not doing it, they will. If you can, I strongly recommend Paul Angelo's "Multiemployer Plans Workshop" at the 2005 EA meeting. This session is not taped so you have to be there, but it is usually a good source for this type of information.

.... and if you find one, depending on the size of your group, it will probably cost the plan more than the lump sum would have. PAX is right, it depends on what the Plan says, but you can always amend it to allow for lump sums at the time of Plan termination. If your plan contains a lump sum provision, the ins. co. will assume everyone will take it, so you will probably be further ahead to just pay the lump sums to the active participants. Why give the money to the ins. co.? The employees will appreciate it more and it probably will cost the Plan less.

Has someone hijacked your handle or is this a trick question, like who is buried in Grant's tomb? One employer, one 415 limit. The actuarial equivalent of the benefit paid at 55 would generally completely offset any future db benefits from that employer. This ignores the impact of changes in the 415 limit due to Congressional action.

Was the person fired for cause or did you tell them that they just weren't needed because you didn't have the work? If you fire a person for cause, what makes you think you need to wait? Maybe an employment attorney can chime in. This probably isn't the best forum for employment practice advice. You should probably ask your corporate counsel. You pay them to keep you out of trouble.

I'm a little confused. How can he be "in-pay status for a number of years" and now be electing a lump sum? Are you giving him a 2nd election? Are the annuity payments MRDs? Assuming they are MRDs, he needs to receive a certain amount in 2004 and a certain amount in 2005. You can't shift one years payments to the next. If they are not MRD's, does the Plan document allow for annual payments? Does the Plan document allow him to switch from monthly to annual? What did his election form say?

Who/what would require you to wait?

Katherine I agree. What I was trying to say was that maybe the agent was using the same argument with the term "cashier". "Casual", "temporary", "cashier" are just words used by employers to describe groups of employees. The problem with our group, that was called "casual", was the IRS felt it was a de facto service requirement, as you stated. If the ER would have changed the group's label from "casual" to "cashier", I don't think the IRS would have changed their position.

Mike, You IRS issue might have more to do with "cashier" classification. They may feel that you are in essence excluding based on hours, which the IRS doesn't like. We had a similar situation where we excluded "casual" employees (a designation used by the employer). Since some of the "casuals" worked more than 1000 hours, the IRS forced the Plan to change the definition to include any "casual" who worked more than 1000 hours. You might be focussing your resistance in the wrong place.

That is not how I understood the rule. I believe the employer must make a contribution to the profit sharing plan and the defined benefit plan for the same individuals in order for the deduction limit to kick in. In addition, 401(k) deferrals do not trigger the limit 404(a)(7)(A) IN GENERAL. --If amounts are deductible under the foregoing paragraphs of this subsection (other than paragraph (5)) in connection with 1 or more defined contribution plans and 1 or more defined benefit plans or in connection with trusts or plans described in 2 or more of such paragraphs, the total amount deductible in a taxable year under such plans shall not exceed the greater of -- 404(a)(7)(A)(i) 25 percent of the compensation otherwise paid or accrued during the taxable year to the beneficiaries under such plans, or 404(a)(7)(A)(ii) the amount of contributions made to or under the defined benefit plans to the extent such contributions do not exceed the amount of employer contributions necessary to satisfy the minimum funding standard provided by section 412 with respect to any such defined benefit plans for the plan year which ends with or within such taxable year (or for any prior plan year). A defined contribution plan which is a pension plan shall not be treated as failing to provide definitely determinable benefits merely by limited employer contributions to amounts deductible under this section. For purposes of clause (ii), if paragraph (1)(D) applies to a defined benefit plan for any plan year, the amount necessary to satisfy the minimum funding standard provided by section 412 with respect to such plan for such plan year shall not be less than the unfunded current liability of such plan under section 412(l).