david rigby

IRC 411(e): Perhaps my interpretation is flawed, but I interpret 411(e) as saying a govt. plan is exempt from all of IRC 411, if it complies with 401(a)(4) and 401(a)(7) as in effect immediately prior to ERISA. Neither of those pre-ERISA sections contain anything like the language in current 411(d)(6).

To the best of my recollection, govt. plans are specifically exempt from all of IRC section 411. But I'll have to reread it tomorrow morning back at the office. State laws would likely apply in the case of the WV plan.

Huh?

IRM is here: http://www.irs.gov/irm/index.html No luck with the TAM. (BNA goes back to only 1999.)

Not an answer to your question, but have you considered, and does the plan permit, settling all plan obligations via group annuity purchase? I'm not saying it is cheaper than 417e lump sums, just that there is no harm in checking.

The relationship of the original poster to the plan/sponsor is unclear. If not legal counsel, I suggest two things: - read interesting comments above, and - get thee (plan administrator) to a competent ERISA counsel.

Sounds like an opportunity to improve the plan's definition of "termination". Decide/negotiate what is desired, and put it in the document.

It may also be nice to see improved grammar and/or punctuation. But most plans struggle with that.

Data as of 30-APR-08 Moody's Daily Long-term Corporate Bond Yield Averages Utilities Industrial Corporate Aaa NA 5.51 5.51 Aa 5.92 5.84 5.88 A 6.22 6.27 6.25 Baa 6.74 7.00 6.87 Avg 6.29 6.16 6.23 Moody's Daily Treasury Yield Averages Short-Term (3-5 yrs) 2.60 Medium-Term (5-10 yrs) 3.41 Long-Term (10+ yrs) 4.36

Why would anyone take direction w/r/t plan design from the broker?

As Grumpy notes (in a backhand sort of way), NC did not exempt "ERISA work" from any UPL claim. Rather, the NC Bar noted that certain qualifications entitle individuals to "practice" before the IRS (and DOL and PBGC) on ERISA-related matters. If you are a TPA without a CPA, EA, attorney, or Enrolled Agent, then you don't get any exemption in NC; in addition, having such qualified individuals will not automatically provide any exemption, unless the work is supervised or reviewed by such qualified individual.

Minor enhancement to Effen's advice: Generally, plans will define NRA as the time at which 100% vesting occurs (as is done in IRC 411), while NRD is the date on which this benefit commences. Although not advisable, some plans have NRA = age 65, and NRD = later of age 65 and fifth anniversary of participation. Thus, this EE could be 100% vested, but still have to wait for commencement date. But, as stated, check the plan definitions.

I would go with (2). The existence of the plan is more than the question of assets. Very likely, participants earned some vesting service during the plan year.

No doubt you are aware that an amicus brief is not necessarily the final word; just cause ASPA said it, does not make it so. The NC State Bar website has a page on "Preventing the Unauthorized Practice of Law". Excerpt from Q&A:

Here are a couple of prior discussions on this topic (there may be others): http://benefitslink.com/boards/index.php?showtopic=31654 http://benefitslink.com/boards/index.php?showtopic=17031

Possibilities: - He might think he is contributing 5%, but the "payroll dept" thinks he is contributing 10%. - The suggestion in original post w/r/t deducting the actual match. Not the first company that tried to get away with that. But you won't know until you ask someone else, either another employee or in the payroll dept.

If the last 5500 included a Schedule H (large plans), that schedule has separate lines for "benefits paid directly to participants" and "paid to insurance companies on behalf of participants". See Line 2e. Alternatively for small plans, the Schedule I does not make such distinction. So, back to "digging thru the files". Thus, size matters.

Since merger and termination are vastly different animals, the suggestion to go "digging thru the files" is essential. Very important to identify the big picture first: merger or termination. Then, if a termination, what type of payments: annuity purchase or cash distributions (either is possible with a merger, but less likely). If no distribution or annuity purchase, don't forget to check the files for evidence of outstanding QDROs.

To support SoCal's comment, from the GrayBook: 99-20 Nondiscrimination: Grouping by Names Plan A is a money purchase pension plan with the following formula: • Participant B is allocated $30,000/yr. • Participant C is allocated $25,000/yr. • All other employees who have attained age 21 and who have at least one year of service are allocated 5.0% of pay each year. Plan A complies with the nondiscrimination requirements of IRC 401(a)(4) by cross testing. Is the above design permitted? RESPONSE Yes. IRC 410(b), and the regulations thereunder, prohibit the use of individual names as part of the reasonable classification portion of the average benefits test to denote who participates in the plan, and who does not. In the above situation, all eligible employees participate, so that the use of individual names is not an issue. General tested plans use the average benefit percentage portion of the average benefits test for purposes of seeing if the plan can be tested using the midpoint between the safe and unsafe harbors in rate group testing. Since the “no names” rule is part of the reasonable classification test, and for purposes of rate group testing, the plan is considered as having passed this test, it is permissible to use names as part of the plan formula and in the testing process. Copyright © 1999, 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.

I may misunderstand the facts, but it appears the participant wants to bear the taxation burden of the QDRO amount. However, IRC 402: appears to assign that responsiblity to the Alternate Payee. Note the word "shall".

Others will know better than I. IRC 2518 is part of Subtitle B of the Internal Revenue Code, and begins "For purposes of this subtitle..." Does that mean it does not apply to anything under Subtitle A, including IRC 401(etc.)?

I like Blinky's phrasing. I recall a discussion in one session at the EA meeting that proposed (almost) exactly what JAY21 decribes, and the panel responded with "Yep". BTW, does the individual have a fiscal year other than the CY?

A - Most LTD plans/policies have offset provisions, almost always including any pension being received, but also sometimes including any pension for which the EE is eligible. B - Agree with Andy. It may be possible to amend the plan to add an "undo" provision, but (as you know) tread carefully.

OK, "being told" by whom? Ask for cites, or proof. Since this is governmental, and it appears all parties agree on the desired outcome, the plan sponsor(s) have significant flexibility. (Possible that the advice is coming from someone who is mistakenly applying full ERISA coverage to the plans?)

410(b) 401(a)(4) dual audit requirements?