david rigby

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?

Seems appropriate to ask the (extremely) common question: What does the plan say? 1. "Union doesn't want the money in Plan CB...." So what? The governing documents (plan and CBA) should state whether any distribution is permitted or required. 2. "... and transfers his or her pre-tax contributions to Plan M." Again, is this permitted by the plain terms of both documents? If permitted, is it required? Who gets to decide? Finally, don't forget that sometimes state or local statute may be relevant, even if not incorporated into the terms of the plan document.

Difficult to tell without more details. For example, it might be relevant how far back, magnitude of the "mistake", etc. There might be some debate (between you and the prior actuary) whether it was really a mistake. Amending a B might have a bearing on the 412 minimum contribution and/or the actual 404 deduction, or on intervening 5500's, with possbile corollary impact(s) on other issues. Therefore, analysis should not be done in a vacuum. Also, be aware that changing assumptions is generally not permitted once the B has been filed.

Well..... some of us are glad to help clients understand the nuances of plan design and administration. If you decide to resign (you can't fire a client), please let me know so I can offer to help the plan sponsor.

I agree with Effen. However, the orginal post used the words "terminated" and "merged". That is technically possible, but unlikely. Before communicating further (with anyone), it may be prudent to identify the correct sequence of events. BTW, this is not necessarily correct with respect to DB plan terminations, depending on plan provisions:

The original post is unclear. First paragraph implies earnings allocations twice a year. Fourth paragraph implies daily valuation. As advised above, make sure the correct answer is clear in any communication.

Another site: http://www.benefitscounsel.com/archives/001783.html The first item on this site is the text of the statute. IMHO, it is easier to read than the version provided in both the IRS and EBSA references.

http://www.irs.ustreas.gov/retirement/arti...=165131,00.html http://www.dol.gov/ebsa/pensionreform.html

Data as of 31-MAR-08 Moody's Daily Long-term Corporate Bond Yield Averages Utilities Industrial Corporate Aaa NA 5.48 5.48 Aa 5.94 5.76 5.85 A 6.20 6.23 6.22 Baa 6.74 7.06 6.90 Avg 6.29 6.13 6.21 Moody's Daily Treasury Yield Averages Short-Term (3-5 yrs) 1.99 Medium-Term (5-10 yrs) 2.97 Long-Term (10+ yrs) 4.13

Some prior discussion about the concept of "un-terminating" a plan. http://benefitslink.com/boards/index.php?showtopic=8785

... and is contrasted to the language used by actuaries: mumbo-jumbo.

Uhhhh.... terminated or transferred? If assets are sold (and then distributed), all gains/losses are realized. If transferred, perhaps not all realized. Could this have been a merger, rather than a termination?

Hewitt does a periodic update of pending legislation. Current version, it appears no inclusion of this issue. http://www.hewittassociates.com/_MetaBasic..._ret_031208.pdf

From http://dictionary.law.com per stirpes(purr stir-peas) adj. Latin for "by roots," by representation. The term is commonly used in wills and trusts to describe the distribution when a beneficiary dies before the person whose estate is being divided. Example: "I leave $100,000 to my daughter, Eleanor, and if she shall predecease me, to her children, per stirpes." Thus, if Eleanor dies before her parent, then the $100,000 will be divided among her children equally. A way to make this more clear is to substitute for per stirpes: "…to her children, by right of representation, share and share alike," which is clear to the non-lawyer. If there is no provision for distribution to children of a predeceased child, then the gift will become part of the residue (what is left after specific gifts), and then the grandchildren may not share if there are surviving children of the giver.

There could be. The most obvious circumstance is IF there are any other contributions between now and then. Perhaps someone could suggest that the DRO be clarified on this point?