david rigby

The original post uses the pronoun "we", but does not indicate what that means. John's answer appears to assume the questioner is the plan administrator (or perhaps, a consultant). Maybe. In addition to the lack of a question, it's not clear what perspective is being addressed.

IRC 4972 refers to "nondeductible contributions". Does not refer to "nondeducted".

The IRS has a letter forwarding program. Free if 49 or fewer. Expensive if 50 or more. http://benefitslink.com/boards/index.php?showtopic=40445

Pardon my ignorance: if this worked, then it would mean the participant could effectively defer a required distribution by omitting a withholding form. Isn't there a default election?BTW, doesn't the custodian have a copy of the plan?

Simplified tax form: 1. How much did you make last year? 2. How much do you have left? 3. Send it.

Amen and amen.

IMHO, it matters not what the spread is. It matters only that lump sums are valued at market rates. You may have legitimate complaints that the IRS rates are not real market rates (for example, there are no real market rates for the long durations in the yield curve), but (it should be clear) that the old basis was not a real market rate.

There may be a penalty for being tardy, but no reason to let it get any worse.

(Apparently, copy and paste requires an interim temporary document.) Gray Book Q&A 2009-1 Funding: PPA: Ordering Rules for Contributions Under pre-PPA rules, contributions made within 8½ months after the end of a plan year were permitted to be designated as made for the current plan year or the prior plan year. Proposed regulation §54.4971©-1©(1) states that an unpaid minimum required contribution (UMRC) is any contribution for a plan year that is not paid by the due date under §430(j)(1) - which is 8½ months after the end of the plan year. The ordering rule under §4971©(4)(B) and prop. reg. §54.4971©-1(d)(2)(ii) provides that a contribution will first be attributed to any earlier plan year for which there is any UMRC. There is also an ordering rule in §430(j)(3)(b)(iii) and prop. reg. §1.430(j)-1©(2)(ii) for quarterly installments. This rule specifies that contributions are first credited against the earliest unpaid quarterly installments. Consider the following example. A calendar year plan with a January 1 valuation date is subject to quarterly contributions during 2009 but was not subject to the quarterly contribution requirement for 2008. The 2009 required annual payment for determining the quarterly payment is $4 million, so that the amount of each 2009 required installment is $1 million. As of the beginning of 2009, $3 million of the 2008 minimum required contribution has not yet been paid. The effective interest rate (EIR) for 2008 is 6%. a) As of April 15, 2009, $3 million of the 2008 minimum required contribution remains outstanding. The sponsor makes a $1 million contribution on April 15, 2009. May the sponsor designate this contribution as either a 2008 plan year contribution or a 2009 plan year contribution and, if so, how and when must this designation be made? b) The sponsor elects to designate the April 15, 2009 contribution as a 2008 plan year payment. As a result, as of July 15, 2009, the sponsor has not yet paid the April 15, 2009 quarterly payment. The sponsor makes a $1 million contribution on this date and designates it for the 2009 plan year. How is this contribution treated for purposes of calculating the late quarterly interest charge? c) The sponsor did not make the full 2008 minimum required payment. As of October 15, 2009, the 2008 unpaid minimum required contribution (UMRC) is $2,072,501 million ($3 million less the $1 million paid on April 15, 2009, discounted back to January 1, 2008). The sponsor makes a $1 million contribution on this date. How is this contribution applied? d) If a plan that is subject to quarterly installments has not yet satisfied the minimum required contribution for the prior plan year, and no specific designation has been received as of the filing of the applicable Schedule SB, is it reasonable to credit contributions in the following order (for a calendar plan year)? 1) any unpaid minimum contribution for years prior to the immediately preceding year 2) any unpaid quarterly installments for the immediately preceding plan year 3) the first quarterly installment (4/15) for the current plan year 4) the second quarterly installment (7/15) for the current plan year 5) the remaining (if any) required contribution for the prior plan year (9/15) – this item would take precedence over items 3 and 4 for contributions made on or after 9/15 6) the third quarterly installment (10/15) 7) the final quarterly installment (1/15 of the next year) 8) the remaining (if any) required contribution for the plan year (9/15 of the next year) RESPONSE a) Yes. Because the relevant contribution is not yet an UMRC, the sponsor may designate the plan year to which a contribution is applied for minimum funding purposes by notification to the enrolled actuary in order for the actuary to report the designation as part of the filing of Schedule SB for the applicable year. b) The July 15, 2009 contribution is applied to the April 15, 2009 required quarterly payment as this is the earliest quarterly payment date for which a required installment has not yet been paid. The late interest calculation for this payment ceases, while a late interest calculation for the July 15, 2009 quarterly begins. c) After September 15, 2009, the plan has a 2008 UMRC. All contributions after this date must first be applied against this UMRC until it is fully satisfied. The $1 million payment is discounted back to January 1, 2008 at the 2008 EIR, reducing the 2008 UMRC to $1,171,635. d) This is a reasonable method for ordering contributions, but whether it is the only reasonable method for ordering depends on the actual contribution dates. The above Response is a summary, prepared by representatives of the Program Committee, of the oral responses to the question posed to certain staff members of the Treasury and IRS, which represent only personal views of the individuals who provided them. Accordingly, the Response does not necessarily represent the positions of the Treasury or the IRS and cannot be relied upon by any taxpayer for any purpose. Copyright © 2009, Enrolled Actuaries Meeting All rights reserved by Enrolled Actuaries Meeting. Permission is granted to print or otherwise reproduce a limited number of copies of the material on the CD-ROM for personal, internal, classroom, or other instructional use, on the condition that the foregoing copyright notice is used so as to give reasonable notice of the copyright of the Enrolled Actuaries Meeting. This consent for free limited copying without prior consent of the Enrolled Actuaries Meeting does not extend to making copies for general distribution, for advertising or promotional purposes, for inclusion in new collective works, or for sale or resale.

Only "guidance" I've seen is 2009 Gray Book, Q&A 1.

If you have not already done so, try the Search, using the word "orphan".

Indeed there is. See Q&A 2006-32.

There may be a couple of other issues to consider: - Is there a collective bargaining agreement? For example, a CBA could have language that requires the ER to provide all information to the EA in a timely manner so that a AFTAP can be certified by October 1. - There was considerable discussion at this year's EA meeting (as well as on this discussion boards) along the lines of Andy's first post (ie, the EA should not certify anything until the PA requests the certification). Suppose the EA has all the information needed to do a certification, but does not do so because the PA has not requested it. Could that, in any manner, imply the EA has "failed" to do his/her duty on behalf of the plan participants? (Litigation, anyone?)

"current or former"? Does not matter. It refers to a QDRO.

See Gray Book Q&A 2003-25. "The high-25 restriction applies to the combination of the benefit paid to the participant and the spouse." (sorry, my copy does not allow me to copy and paste)

IMHO, this situation will attract calls of "abuse", and may attract legislation. However, it appears to conform with the actual words of the statutes; I believe it does not violate either PPA or 411.

Best source for confirmation is the instructions on PBGC website. I don't think the valdate is relevant.

http://www.dol.gov/ebsa/compliance_assistance.html#section5a Scheduled for plan years beginning 1/1/09 or later. But it could change.

... but the plan's FTAP might be so low that PPA-required restrictions may apply. Tread carefully.

Session 103 discussed participant disclosures. (Sorry, I did not attend that session.)

2008 instructions here: http://www.pbgc.gov/docs/2008comprehensivebooklet.pdf I think you want page 16.

Thanks for your thoughts Mike. Pretty much what I was thinking. Here it is. Public domain. Use it as you will, or not. The spreadsheet contains appropriate comments and caveats; the important ones are: - transactions tracked on monthly basis; - no accrued transactions; - 12-month plan year. MV_Yield_Calc.xls

Isn't there a statement from IRS: if an amendment changes the vesting schedule and all current participants (pr perhaps those with 3 YOVS) are automatically provided the better percent, then no election is needed?

IRC 436(f)(8) states Comment by Mr. Holland at 2009 EA Meeting (as nearly as I remember the quote): "I don't think you want more than you already have." So, it appears we won't have IRS regulation on this. IMHO, that is a good result; Mr. Holland is correct. Issue I have a spreadsheet to perform this calculation. I'm willing to post it, for public domain. Is this a good idea? If so, should it be protected? Any other comments? Anyone (actuary, attorney, etc.) see any problems with this?

I realize the employee counts in (1) of original post are approximate, but are you sure about your 65% ratio? The numbers posted may lead to a different conclusion.