Effen

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

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!