david rigby

Never mind. I posted an answer to the wrong question. Oops.

Are you saying a decrease would be applied as long as it never drops below the base period? (Thats' not my view; I'm just asking yours.)

Just my opinion: assuming the TPA is not a party to the plan in any way, or the trustee, don't do it. Make sure you have clear audit trail of every payment, every direction.

Tom, both 401(a)(17) and 415(d) state that adjsutments will be applied "for increases in the cost-of-living". One could interpret that to mean that decrease are ignored. Opinion?

Not sure if you would call this "comprehensive" but it is a summary: http://www.jct.gov/x-85-08.pdf

IRS proposed reg. 1.430 (august 31, 2007) described the requirements for waiving, and documenting, a credit balance. I saw nothing in the recent legisation (Worker, Reitree, and Employer Recovery Act of 2008) that would impact the possible waiver and documentation. Anyone agree or disagree?

Yes. Th Senate passed it Thursday (12/11/08). Original bill is HR7327. You can look it up at Thomas As far as I can tell, it has not yet been signed by the President. Unlikely to be vetoed.

Were you expecting intelligent legislation?

Columbia Management had 2 plans (PS and money purchase). Both were merged into the Fleet plan during 2003. Both plans used an outside consultant (TPA?) to assist: DPA, Inc. I don't know if this company still exists. You can search for yourself at FreeERISA.com. You will need your own (free) login ID.

If you refer to the cushion amount in IRC 404(o)(3), it appears this section is not modified.

Could this issue go away if X's lawyer reads this, and elects to use correct procedures? http://www.dol.gov/ebsa/Publications/qdros.html

Don't forget about direct rollover provisions, under $5K.

"Transfers?" Perhaps you've already researched this, but is there any possible distributable event? Such as eligible for NRA?

Is this a data correction? If so, the only thing to do going forward is to use the correct data. I'm not going to ask if the DOB "error" was intentional.

In general, mechanics and reasoning looks OK. However, I think the first concern is the AFTAP below 60%. IRC 436(f)(3) indicates a mandatory waiver of Carryover Balance and Prefunding Balance to raise the AFTAP to exactly 60% (unless burning all of such balance is not sufficient to reach 60%). The other possible actions must follow this. For zimbo's Q, I'm not aware of a requirement to burn/waive any COB or PB where the AFTAP is between 60% and 80%. Do you have a cite otherwise?

Oversimplified: Standard termination means you pay all benefits accrued up till the freeze date. The plan will purchase annuities and/or make lump sum distributions. If plan assets are not currently sufficient, the sponsor agrees to fully fund any "shortfall". Read the instructions on the PBGC website. Scheduling is important. Distress termination means the plan does not have sufficient assets, and the sponsor is unable to fund the shortfall. The instructions for a distress termination will use the word "bankruptcy" several times, so that you probably can't have a DT without also having a bankruptcy (I told you this was oversimplified). I've had a couple of DT's, but the financial circumstances of the sponsor was so bad, that the PBGC did an "involuntary termination", the result of which is similar to a DT.

Pardon my ignorance, but isn't there regulatory clarification that you can amend the plan to utilize the $5,000 cash-out minimum?

Just to be sure: Before proceeding with the details, is this participant required to take a distribution at 70-1/2? - 5% owner? - Already terminated employment? - What does the plan say?

Data as of 28-NOV-08 Moody's Daily Long-term Corporate Bond Yield Averages Utilities Industrial Corporate Aaa NA 5.60 5.60 Aa 6.35 6.22 6.29 A 7.18 7.43 7.31 Baa 8.72 9.34 9.03 Avg 7.42 7.15 7.29 Moody's Daily Treasury Yield Averages Short-Term (3-5 yrs) 0.97 Medium-Term (5-10 yrs) 2.55 Long-Term (10+ yrs) 3.66

This seems like a serious violation of PBGC termination regulations. Neither the plan nor the employer has any authority to escheat to the state. That's why the PBGC missing participant program was created. From the Standard Termination Instructions (page 15): "The plan administrator must distribute the plan benefits of the Missing Participant either by purchasing an annuity contract from an insurance company or paying the value of the Missing Participant’s benefit to PBGC." Likely, you will not be the first to ask them this question. Just my hunch, they won't be happy. IMHO, you may wish to prepare the client for the possibility of having to follow the MP requirements, also.

I think there is a charge, depending on the time of the actual contribution. If the actual contribution is after the end of the plan year, there is no offsetting credit for the time between EOY and actual contrib date.

Please don't put your entire question in the title of your post. If you are asking what requires you to have a plan document, the answer is ERISA sec. 402. Also found as 29 USC 1102.

Proposed IRS Reg. 1.412©(5)-1. IRS approval required for a change in PY. IMHO, they won't approve it. However, assuming such change is approved, this seems to be a perfect way to confuse participants (who already don't appreciate a DB plan for its real value). If the approval is conditioned on a second short year, rather than rescinding the prior amendment, the result will be faster vesting, more confusion over crediting of hours, confusion over compensation averaging. The participants will like the first, and dislike the other two; the employer will dislike all three. If this is a TH plan, ouch! Could be confusion over 404(a)(7), if that applies.

1.401(a)(4)-5

This appears to be, first, "what does the plan say?", and second, "what amendment is permitted?" You've answered the first question. For the second, see Q&A1 (including example 8) in IRS Reg. 1.411(d)-(4): http://ecfr.gpoaccess.gov/cgi/t/text/text-...229&idno=26