david rigby

Yes, that's the part about "not relevant". I just want to point out that a partial termination could be relevant if some of the 15 layoffs are not vested.

Although not relevant to the question of "frozen", this plan may have experienced a partial termination.

The Gray Book is a creation of the Enrolled Actuaries Meeting. - Each year, a few months prior to the meeting, questions are gathered and presented to IRS actuaries and attorneys. Generally, these questions focus on situations that are ambiguous (at least to the questioner). - The IRS responds, verbally never in writing, and the answers are paraphrased by an EA committee. These Q&A's are assembled, printed, and distributed to those who attend the EA meeting each spring. It’s been issued every year since 1990, and is called “Gray Book” merely because the cover page is gray stock. I spell it "gray", but some people use "grey". As far as I know, no edition is in the public domain. The recent editions carry a copyright notice like this: Copyright © 2008, 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 diskette 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. Most of the recent editions also include this important footnote on every page: 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.

Hmmm. When you value the funding target at next valdate, how do you calculate the PV of this retiree? The prescribed mortality table and interest rates differ for funding compared to LS. Or is that significant? Would your plan provision have to state that the 80% trigger is after the payment of LS?

Not so fast. Read IRC 4980©(1)(A) carefully. The sponsor must have been, at all times, exempt from taxation under Title A. That is not exactly the same as "I'm a non-profit." It's my understanding that the IRS is very strict on this point. For example, from the 1999 Gray Book: Of course, the sponsor will want an opinion from legal counsel.

I go back to first principles. Use assumptions that are reasonable, and apply to the particular population. If that means a select and ultimate salary scale, so be it. I don't think it makes sense to use one scale for TNC and an entirely different scale for the cushion (and I doubt the IRS would approve). Also, there is nothing wrong with using a 1% scale for plan X becuase it is in a depressed industry, but 5% for another sponsor. When setting salary scales, I don't have to apply "national inflation" if it does not affect the plan sponsor at the same time, or same rate, as the national average. But I'm interested in other opinions also.

GMK's suggestions seem very logical. But it may be prudent to get legal counsel involved first. (Presumably, that is the PA's counsel, not necessarily the plan's counsel.) (Hmmm. Would legal fee be a settlor expense?)

Is Fuiro related to Guido?

Yeah, is there a bond (of significance), without regard to whether it's required?

Does bonding play any role?

See page 6 of the instructions: http://www.dol.gov/ebsa/pdf/2007-5500inst.pdf

Thanks for the background, Don. IMHO, this is more proof that the PBGC's existence (as well as stucture) is counterproductive to its (alleged) purpose.

Would it be easier (and perhaps "cleaner") if you deal with this in the defnition in the plan?

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.