david rigby

Sound like a good reason to require a plan document to be in writing.

Whether or not you are successful convincing the sponsor that some action is needed, the previous advice to resign as EA is the best approach. As SoCal correctly points out, this sponsor will probably object to any of your services that cost him/her money, anytime in the future, no matter how competitive your pricing may be. Alternatively, get paid first.

Are you sure? Catch-up contributions don't exist until elective deferrals have reached one of the limits: a plan-imposed limit, the 402g limit, or the ADP limit.

When you went to dinner, did you cut your pizza into 6, 4, or 3 slices?

Way too much time on your hands.

This caveat cannot be emphasized too much.

The only thing to add to Mike's comment is to make sure you are really in compliance with the funding standards. That is, if quarterlies were due in the past, but ignored, there is an interest penalty added to the required contribution. If the actual contribution was insufficient to cover that interest penalty, then the plan may have a funding deficiency, possibly over multiple years. Although the dollar amount of an interest penalty is usually small, the consequence of an ignored funding deficiency are not pleasant. The plan's Enrolled Actuary will know how to check this.

Perhaps a football coach?

By reference, certain sections of 401(a) are not relevant to governmental plans, unless required by state law. For example, 401(a)(3) references compliance with 410, but 410© exempts governmental plans. Another example, 401(a)(29) references compliance with 412 / 436, but 412(e) exempts governmental plans. Note that the ERISA exemption for governmental plans generally requires compliance with the IRC as it existed the day before ERISA was enacted. IMHO, the IRS wants nothing to do with policing plans of state and local governments.

BenefitsLink is supported by advertising; primarily job listings. http://employeebenefitsjobs.com/jobs/post_help_wanted.html

Isn't 410 a qualification requirement? This "opportunity" might smell.

Please post your inquiry here: http://employeebenefitsjobs.com/jobs/post_help_wanted.html

Not unlike certain government agencies that employ "actuaries" with no such professional designation?

It's possible that AtA's comment has a second meaning: why terminate? That is, he may have meant to max out the plan for benefit, not for distribution, to the extent affordable and permissible. Based on your second comment, it appears someone is recommending this action based on estimates of about future tax rates, and administrative expenses are not a significant focus. Just a guess.

A few unrelated thoughts: - Implied in the original question is that this is a one-participant plan. Correct? Does he think that he will have increased investment flexibility in the IRA? I think it is pretty much the same. Perhaps there is some "odd" tax situation encouraging the use of a Roth IRA? - Watch out for some "odd" advisor making this suggestion, especially if that advisor has in interest in the transaction. - Don't forget that the creditor protections of a qualified plan are stronger than on an IRA.

Does it fail 410(b)?

Link from White House, apparently posted 02/21/2010: http://www.whitehouse.gov/health-care-meet...-healthcare-tax "Title IX. Revenue Provisions Broadened Medicare Hospital Insurance (HI) Tax Base for High-Income Taxpayers Under current law, workers who earn a salary pay a flat tax of 1.45 percent of their wages to support the Medicare Hospital Insurance (HI) trust fund, but those who have substantial unearned income do not, raising issues of fairness. The Act will include an additional 0.9 percentage point Hospital Insurance tax for households with incomes exceeding $200,000 for singles and $250,000 for married couples filing jointly. In addition, it would add a 2.9 percent tax for such high-income households to unearned income including interest, dividends, annuities, royalties and rents (excluding income from active participation in S corporations)." The current bill (HR 3962), aka "Affordable Health Care for America Act" (hahahahahaha), does not include reference to such taxation, or modify the definition of wages to include such unearned income under IRC section 3121. Caveat Emptor.

Maybe. Some of us believe it should be 3/14/15. 3.14159265...

Normally, discussing fees on these Message Boards is discouraged, since we don't want to be accused of anything remotely related to "price-fixing". Your question may be answered by soliciting bids from other IA providers. Be sure to document what each provider includes, so that you are able to compare "apples to apples".

Is this a conflict of interest?

Are you the TPA? Does the plan permit such an expense? Does your service agreement with the plan sponsor describe what you charge for? Does your service agreement describe what level of interaction you will have (or not have) with participants?

Many actuaries deal with this all the time. IMHO, your (intentionally brief) description is valid. However, selecting u%, v%, w%, y%, etc is a choice of the plan sponsor, usually in consultation with the plan's investment advisor. Practically, it does not always happen that way, but (as AtA correctly points out), the actuary should be careful to avoid this role, especially since choosing u, v, w, y etc may differ now from just a couple of years ago.

I agree with SoCal. If these EEs are in "special leave", they do not have a separation of employment. If so, the ER may have other problems: treating them as terminated for one purpose and not terminated for other purposes. Any possible discrimination in favor of HCEs? Is this "policy" dictated by a CBA?

Try the downloads from Microsoft? http://office.microsoft.com/en-us/templates/default.aspx