Effen

I was using "Top Heavy mins" to mean both benefits and vesting. That said, I just gave a quick read to 1.416 and didn't find anywhere that the top heavy vesting can only be applied to Non-Keys. Since I have a plan where the attorney said this was "ok", I will need to dig a little deeper. I assume you are stating that Top Heavy vesting would apply to everyone?

Blinky, Top Heavy mins only apply to Non Key's. The owner would be Key and therefore would not have to receive the mins.

Thanks mbozek, I'm with you now.

Are you asking about a potential merger of three plans? Yes, trustees have a fiduciary liability to do what is best for the participants of the plan.

What was the "event" that is triggering the distribution? Are they still your employees? If so, I don't think "going union" generally meets the requirements, but you need to look in the plan document.

Maybe this does it: Sec. 4318. Employee pension benefit plans (A) ... (B) In the case of benefits under the Thrift Savings Plan, the rights of a person reemployed under this chapter shall be those rights provided in section 8432b of title 5. 8432b. Contributions of persons who perform military service... ... (e) Effective Date; Applicability.--This section and the amendments made by this section-- (1) shall take effect on the date of enactment of this Act; and (2) shall apply to any employee whose release from military service, discharge from hospitalization, or other similar event making the individual eligible to seek restoration or reemployment under chapter 43 of title 38, United States Code, occurs on or after August 2, 1990. So apparently it was "retroactive" back to 1990, but not 1967.

I "think" I agree, but I have searched the Act and can't find anything that says pre'94 military service does not need to be counted. In addition, the participant contacted the local veteran’s assoc. rep who said that although USERRA was established in 1994 it did not exclude any prior military time and that participant should be credited for his time. Does any one have any sites confirming either opinion?

At first I thought this was an easy "no" answer, but the more I looked the more I questioned it.... Does USERRA apply to ALL military service? ie: hired in 1960 drafted in 1965, discharged and returned to work in 1967 and worked straight through to 2004. Does USERRA, or anything else, require the Plan to credit service for 65-67?

I believe the assumption is that the QPSA is a J&50, therefore, since the participant died prior to a benefit election, the QPSA kicks in and she gets 50% of the J&50. 100% of the J&100 may have been available if the participant had actually elected it, but he died prior to the election.

Winklevoss WinTech Sales: (203) 861-5514 Note: ask to speak with Joe Gilbert Pricing is comparabile to Lynchval last time I looked, maybe a little less. Do they have monthly minimum fees? they bill you each month based on how many keys you have and what type of keys your using (pension, medical, data, etc...) What initial fees and training expenses are involved? You will need to ask them but I found them to be VERY fair Do they charge multi-user licenses? Not sure I understand the question, but they charge you per user. If you only have one license, than only one person can use it at a time. Everyone can have access through the network, but the "key" restricts the number of users. They also have physical keys if you aren't networked. How do they handle software security to assure compliance with their licensing agreement, such as hardawre locks, monthly codes, license disks, etc. ? better ask them.

Andy, I'm not sure about UAL, but I believe most of the airline plans are collectively bargained single employer plans.

Proval (and I assume Lynchval and other iterative systems) expects three mortality tables (healthy actives, healthy retirees & disabled participants). The concept that someone can't die while active "does not compute". The idea of pre/post retirement comes out of simplified programs and small plans where the probability of death at younger ages isn't material. You can work around it, but why? Proval is designed to handle plans with tens of thousands of lives. Yes it can do a one life plan also, but getting Proval to replace Datair is kind of like replacing your Civic with a Hummer. You will have a lot more power and capabilities and it may take a while to figure out just how to use it. If your db practice is growing and your getting bigger plans you will absolutely need a system more sophisticated than Datair. It's just not designed to handle the bigger plans.

Proval has very good import/export capabilities into Excel. We generally reconcile the data in Excel, dump it into Proval for the runs and dump the output back into Excel to create our reports/statements. Proval is a very good "valuation" program. It is not really designed to do produce valuation reports, benefit statements, participant listings and/or benefit calculations (although it will do all of these things). Most of the users take the output and create their own customized reports. It also isn't the best for "small" plans. It's fully iterative and handles mult-decrements so telling it you just want to do something without pre-retirement mortality can tend to confuse it. Also, it still can not do an end-of-year valuation correctly. I think it's a great system, but it really isn't designed to replace Datair. We still do most of our small tax-shelter stuff in Excel or Datair, even though we have Proval for the "real" retirement plans.

We use Proval, which is a Wintech system. It is a very good system w/ good support from Wintech. It's fully iterative and gives you the ability to do projections w/ ease. It is quite a jump in cost from Datair, but you get what you pay for.

FWIW, we have terminated several plans where the Plan only provided full vesting for those who didn't have a ONE year break. We disclosed all this on the 5310 and sometimes the IRS asks a question and sometimes they dont, but I don't recall them ever making the Plan provide full vesting to those who incured a at least of one year break.

I don't see why they person should be treated as 100% vested just because he wasn't paid out 2 years ago. He clearly had a break-in-service and his termination was not related to the plan's termination. Many plans that don't pay lump sums have lots of partially vested terminated participants. Just because you terminate the plan doesn't make them all 100% vested. From TREATISE, PENSION-ANSWER-BOOK, Q 25:4 What is the effect of a plan termination on a participant's accrued benefit? ... Generally, a participant who is partially vested need not become 100 percent vested upon termination of the plan if the participant separates from service and is paid the vested accrued benefit prior to the date of termination. However, a partially vested participant who terminates service, is not paid the vested accrued benefit, and does not incur a one-year break in service (see Q 5:10) prior to the date of termination must become 100 percent vested upon termination of the plan. Some IRS district offices have interpreted the above rule to require that all nonvested former participants with breaks in service of less than five years who have not been paid their vested accrued benefits be fully vested (see Q 9:16). [iRC §§ 411(a)(6)(B), 411(a)(6)©; Penn v Howe-Baker Eng'rs, Inc, No. 89-2257 (5th Cir 1990); GCM 39310 (Nov 29, 1984)]

This is really a document issue. There are a number or ways this can be done. Some plans credit all service (past and future) in the purchasers plan and then offset the benefit with the old accrued benefit in the sellers plan. Some freeze the old accrued and treat them as new hires. Some freeze the service under the old plan, but let the old benefit increase as the participant's compensation increases. These are just a few. The document should define how the ultimate benefit is calculated. Did the plan's merge? It is also likely that it was discusses at the time of the sale. You should probably ask someone involved in the sale to see if there was some agreement related to transferred participants.

I was just faxed a page from the document that was in effect when the participant terminated and when the DRO became a QDRO. Actuarial Equivalent:... Until and unless the Plan is amended to change such assumptions, the mortaltiy rates used shall be those of the 1971 Group Annuity Mortality Table as specified for males in the case of Participants and for females in the case of any eligible Spouse, Beneficiary, or contingent annuitant. ..." At least this tells me why they did what they did.

MGB - "her benefit" is simply 50% of his accrued benefit - they were married the entire time of his participation. Also, the DRO became a QDRO before I was ever involved. I had no control over the language. The prior actuary used a sex distinct mortality table to calculate a previous estimate. The participant is now asking for another estimate and my initial thought was that sex distinct mortality should not have been used. (I have never used it on any other QDRO's in the past, but that certainly doesn't mean anything.) Obviously if I use sex neutral mortality for her, I will get a much higher benefit than she was illustrated before. I was just looking to find out if anyone uses sex distinct mortality to convert a benefit payable on "his" life, to a benefit payable on "her" life. I recognize to be true actuarial equivalents you should, but I assumed that since it was a "benefit calculation", sex neutral mortality should be used otherwise females would get lower benefits than males

I guess the fact that neither of you immediately said it was improper tells me that it is not as bad as I might have thought. From the QDRO: "Form of Payment to the Alternate Payee: The Alternate Payee shall receive her benefit as a separate entitlement, payable for her lifetime. The Alternate Payee will be paid a monthly amount actuarially adjusted for the Alternate Payee's life expectancy and the form of benefit under which she elects to receive payments. ... However, the foregoing shall not be construed to require the Plan to provide any type or form of benefit nor any option that is not available under the Plan." "Actuarial Calculations: Actuarial calculations made pursuant to this Order shall be performed by or on behalf of the Plan Administrator in accordance with the actuarial assumptions and methods used for similar calculations under the Plan. " If you think it is ok to use sex distinct mortality, how do you get around the fact that you would get a different answer if the genders were reversed.

A participant with a QDRO recently came forward to request a benefit illustration. He is the participant; she is the alternate payee. The QDRO calls for her portion of the benefit to be converted to a benefit payable over her lifetime. The previous actuary did an illustration for them 4 years ago and used sex-distinct mortality. In other words, the participant is 65 at his NRD. When he is 65, she would be 63. The previous actuary (large national firm) multiplied his benefit by a male factor at 65 and divided by a female factor at 63. Is it appropriate to use sex distinct mortality for this conversion? I guess if the document said you always used male mortality for the participant and female mortality for the survivor, then it may be ok, but this document is silent regarding actuarial equivalents. It just lists the factors used to convert benefits, but never defines the underlying assumptions.

Harry, when you say "the IRS did its usual job of mucking up a good concept by issuing unworkable regs" are you refering to 1.417(e)-1? I assume you are, but I just wanted to make sure there wasn't something else out there "mucking" more things up.

Are you implying that the actuary is to blame for UA's pension problems, like Arthur Anderson was responsible for Enron?

Would you answer be different if the persons received the lump sum equivalent of the dollar limit from the prior plan? It wasn't clear from eebens post what his benefit was from the original plan. What if the individual’s high 3 comp was 140,000 in 1994 and he was paid a lump sum of the pv of $120,000. Assuming his high 3 hasn’t increased, I guess he could now start a new plan and fund the remaining 20K. I think I agree with that because the 415 limit has been increased. But what if the 415 limit had not increased. Would you still argue that he could fund the extra 20K because the 415 limit at 70 would be greater than 140K? (AE of 120K commencing at 65 w/b > 140K by age 70). Wouldn’t you need to offset by the value of the benefits already received?

I would have picked #3. I think you should roll-up the prior distribution to the new anticipated retirement age and then offset. David, is there any authority that says you don't need to roll it up? eeben- if you search prior topics you will find a number of different answers to this question.