david rigby

Published as a proposed reg on 12/02/2005: http://a257.g.akamaitech.net/7/257/2422/01...pdf/E5-6742.pdf In the table, two of the columns have superscripts: 7 or 8. No footnote number 7 opr 8. Anyone know if this is a typo, or something omitted?

This myth persists.While it can be common for an employee to have 5 jobs in his/her twenties, it is flawed logic (not to mention foolishly ignoring simple observations) to assume that pattern will continue in his/her thirties, forties, fifties, etc. Do you know anyone who has had 4-5 jobs in his/her fifties? I don't. It is flawed logic to say a DB plan is not beneficial. It is flawed logic to say every employee is savvy enough to do their own investing, or wants to. Enough!

Hmmm. If the TPA "resists", I might be able to suggest a new TPA.

Hey Andy, good point. Do you think the IRS will ever finalize the proposed 412 regs? 24 years old!

October 31, 2006 MOODY'S DAILY LONG-TERM CORPORATE BOND YIELD AVERAGES Utilities Industrial Corporate Aaa NA* 5.39 5.39 Aa 5.64 5.55 5.60 A 5.84 5.76 5.80 Baa 6.09 6.40 6.25 Avg 5.86 5.78 5.82 MOODY'S DAILY TREASURY YIELD AVERAGES Short-Term (3-5 yrs): 4.54 Medium-Term (5-10 yrs): 4.58 Long-Term (10+ yrs): 4.77 MOODY'S DAILY PUBLIC UTILITY COMMON STOCK YIELD AVERAGES Price: 321.2 Yield: 3.45 New Dividend: 11.10

As far as I know, they seem to be sticking to that position. This is from the Gray Book: GRAY BOOK QUESTION 2006-14 Deductible Limit: Adjustment to Unfunded Current Liability for Deduction for Small Plan IRC §404(a)(1)(D)(ii) provides that in the case of a plan having 100 or fewer participants for a plan year, unfunded current liability does not include the liability attributable to benefit increases for highly compensated employees (HCEs) resulting from a plan amendment which is made or becomes effective within the last 2 years. a) A new calendar year DB plan is started effective 1/1/2006 and grants past service for benefit accrual purposes. For purposes of § 404(a)(1)(D)(ii), is the new plan considered an amendment subject to the two-year restriction or may the full UCL be deducted? b) Section 404(a)(7)(A) limits deductions when there is a combination of DB and DC plans, generally to 25% of payroll. However, if §404(a)(1)(D) applies, the maximum deduction “shall not be less than the unfunded current liability.” Does the §404(a)(1)(D)(ii) requirement to exclude HCE liability apply for this purpose? RESPONSE a) Adoption of a new plan is considered to be an amendment for this purpose. b) Yes. Copyright © 2006, 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.

Not exactly on point, but it may illustrate the IRS perspective: GRAY BOOK QUESTION 2002-24 Section 415: Effect of Plan Amendment on Adjustment for Participation Less than 10 Years A calendar plan year defined benefit pension plan is amended in July of 2001 to liberalize eligibility effective January 1, 2000. 1) For purposes of the reduction of the §415-dollar limitation for participation less than 10 years under IRC §415(b)(5), does a participant who enters the plan in 2000 on account of this amendment receive a year of participation for 2000? 2) Does the answer change if the amendment was executed before March 15, 2001 to satisfy IRC §412©(8)? RESPONSE 1) While a grant of past service is permissible, it is not possible to amend a plan to start participation after the year has closed. A plan may adopt a corrective amendment pursuant to §1.401(a)(4)-11(g) in order to expand participation to satisfy nondiscrimination, minimum coverage or minimum participation failures. However, participation is recognized retroactively only for these limited purposes, and not for purposes of §415. 2) No. Copyright © 2002, 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.

Perhaps I misunderstand, but it seems you have a lump sum option in the QDRO procedures, but not in the plan document. Is that correct? Can QDRO procedures amend the plan? What do you mean by "... other than a cash out..."? (What else is a lump sum distribution?) Does this refer to "under $5000", or does every terminating participant get a lump sum option?

Plus an audit?

Other than Effen's suggestion to unfreeze, the other way to use up surplus is to cover someone else. (I'm available.)

Don't forget the most famous piece of advice: What does the plan say?

May I watch?

In this case, it appears that the plan intends any and all "excess amounts" to be allocated to participants. That means all dollars, no matter what day it occurs. Caution, many plans that have this or similar language will specify which participants. Be sure to follow the plan specifications.

Run?

You probably already have language in the plan that uses "shall". If it currently states "shall revert to the employer", then you can amend it to "shall be allocated to participants". Probably best to do so before you receive the IRS letter.

There could be other issues, such as whether one or more of the plans has any "clouds" hanging over it (prohibited transactions, for example). If so, a merger may not be the best action. But PIP and Bird are correct that a merger is much simpler and cheaper than a termination. Also, merging the plans will maintain a larger asset base, which could provide investment flexibility.

Are you suggesting something "trumps" the 415 limit?

Merging can be the best action in some circumstances. Terminating can be the best action in certain circumstances. But you have not described any of the circumstances.

you may wish to include 100% vesting upon death. or not.

Try a Search, using various words, such as embezzle, embezzlement, etc.

Is this different from a terminated vested participant who chooses to leave his/her account balance invested in the Plan? If the balance exceeds $5K, isn't it the participant/beneficiary who gets to decide when to take it? In other words, "What does the plan say?"

My condolences on the loss of your brother. Please note that the Plan in which he participated is a legal document, and the plan sponsor is obliged to follow its written terms. One of those terms is the ability to designate (and change) a beneficiary. If your brother designated someone else (such as a spouse), it is possible that a divorce will not automatically invalidate that designation. If he did not change the designation, then it would (likely) still be in effect. It may be prudent to use written correspondence with the plan sponsor and/or Fidelity. If you have not already done so, perhaps you could restate the facts (you are his only living relative, etc.), and ask them to identify who is the designated beneficiary. (Most plans have a process to assign a beneficiary if there is no valid designation.) Request a written response. Good luck.

Can you provide immediate vesting for all current participants, and a new schedule tomorrow? Yes, but would this be subject to BRF testing? Don't forget, on the day after the sale, the seller is no longer in charge.

"...since it is made under a cash or deferred arrangement..." Where is the cash option? BTW, what does the plan say?

Limits for 2007: http://www.irs.gov/retirement/article/0,,id=96461,00.html