david rigby

Although possible, most plans are not worded to require spousal consent when the retiree elects a J&S greater than 50%. Review plan language carefully. You may still have concerns about documenting the election. w/r/t the original question about overpayment, you will need extraordinarily precise documentation that the wrong conversion factor was used, and what the correct factor should have been. Careful review of the plan as in effect at the date of retirement. BTW, why was it wrong? Incorrect spouse DOB perhaps? If so, plan administrative provisions may already include information about how/if/when to make adjustment. An error of this magnitude would cause me to be suspicious about every facet of the original benefit calculation.

IMHO, existing bases should continue, and you should establish a new base at 2004 if applicable. This is the only thing in the Gray Book: Gray Book Q&A 2004-1 Funding: Maintenance of OBRA Full Funding Bases With the repeal of the OBRA full funding limit, are there any special rules for handling the amortization of any existing OBRA full funding limit amortization bases in the 2004 valuation, or should they simply continue to be amortized over the remaining period(s)? RESPONSE There are no special rules. They should continue to be amortized over the remaining period(s) until they are fully amortized or wiped out by a full funding credit, whichever happens sooner. Copyright © 2004, 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 think the answer is the last sentence in Frank's response above.

You could be correct, but how it "seems" to you may have nothing to do with the law.

The Gray Book has two questions related to this issue: 1995-11 Funding -- Amortization Periods for Changes in 415 and 401(a)(17) Limits Apparently, the reduction in actuarial liability due to reduction in compensation limit to $150,000 should result in a separate 30-year amortization base (i.e., as a plan amendment). Similarly, future changes in Section 415 limits and compensation limits due to indexing apparently should also be treated as if plan amendments rather than as experience losses. Will the IRS consider allowing any of these changes to be treated as if they were actuarial gains/losses in order to simplify actuarial valuations? RESPONSE: The current position is that all changes in actuarial liabilities due to the section 401(a)(17) and 415 limits are to be treated as plan amendments, even the increases that automatically occur under a plan’s terms. Regarding the possibility of providing relief for prior practice, it was indicated that if any such relief were to be granted it would be covered in future regulations. ____________________________________________________________________________ Gray Book 2004-38 Other DB Plan Issues: Form 5500-Schedule R Amendment Line 8 of Form 5500 Schedule R asks “If this is a defined benefit pension plan, were any amendments adopted during this plan year that increased the value of benefits?” How should this box be completed if there were no amendments but the IRC 401(a)(17) limit and/or IRC 415 limit, which are incorporated in the plan by reference, increased? RESPONSE Line 8 should be checked “yes.” In effect, the plan was amended automatically by the increase in the limits. Copyright © 1995 and 2004, 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. ____________________________________________________________________________ It is likely many actuaries ignore one or both of these statements, reasoning that the amount is not worth the bother of a separate amendment base. A procedural comment: any amendment base, if any, will be a change in the unfunded AL. I doubt the resolution to this question differs among EA, PUC, FIL, UC, etc. However, from the GrayBook statements above, it seems unlikely the IRS would consider it a "reasonable method" to state that "no such base would be created." My guess at the IRS' opinion has nothing to do with whether other actuaries would consider it "reasonable."

If the company shuts down (goes out of business, not just loses the contract), then the plan will be automatically be deemed terminated (unless a successor sponsor exists).

You probably can have such investment and asssumption. However, since this is a DB plan, all assets are always available to pay any benefits of the plan. If you really need separate accounts, then you will need separate plans.

Perhaps this is behind the curve, but some states do not define "legally separated" and a couple can become legally separated merely by starting to live apart, without regard to a court or other agreement. Anyone?

More information needed. A standard termination may be possible if the majority owner(s) waive receipt of sufficient benefit to make it fully funded. For example, see this thread: http://benefitslink.com/boards/index.php?showtopic=16104

I know of no requirement that the same turnover table, or salary scale, or retirement rates, etc. must apply identically to all participants. You may have a perfect example where it is reasonable to vary one or more of these. After all, actuarial assumptions must be reasonable to that specific plan and participant group.

When rehired, was the benefit suspended?

The answer is found in IRC 416. There is an explicit statement in section 416©(2)(B) referring to the maximum DC allocation to Key EEs. There is no parallel reference in 416©(1) for DB plans.

No, that would be considered "integrated" or "permitted disparity". Your example fails the safe harbor for permitted disparity, so it could then be tested under the General Test, on a benefits on contribution basis.

IMHO, the contributions on Schedules B and I (or H) need not agree, but should be reconciled. In this case, it appears you want to record an accrued contribution on the I but not on the B. Is that correct? All my experience is with the opposite situation. To dig deeper, perhaps there is value in review of the instructions for the I/H. There may be practical reasons why a sponsor will take the position that they will record a contribution for the current year even if it could be recorded for the prior year.

An earlier discussion on this topic: http://benefitslink.com/boards/index.php?showtopic=29366

So what? There may have been a curtailment at the time of the freeze (not necessarily), but that does not appear to be relevant to your initial question.

Hmmm. No hours but a W-2. If I had any of the other 62%, I might wonder why the company is paying FICA tax on consulting work, which does not appear to be "wages" subject to FICA. Is this "employee" an eligible participant?

FAS88! No way. Did they explain why?

Perhaps. If the facts presented are all accurate, then Effen is correct. (There may be other facts not yet in evidence.) The suggestion to discuss with your client is important, because only the client (not the new actuary) has a "beef" with the prior actuary. However, the new actuary may see an ABCD issue. In such case, it is essential that you bring this to the attention of the prior actuary, quickly. You can adopt a version of the Aggregate (or IA) method, and the problem goes away, prospectively, but does not deal with prior problems. It may not be in your best interest to adopt the Aggregate method, since that starts your 5-year clock. BTW, you state a "4 year clock". Rev. Proc. 2000-40 indicates 5 consecutive plan years.

Likely the "old plan" will state that vesting is determined under the terms of the plan as of the event date (death, retirement, disability, severance, etc.). Later plan provisions probably will not impact prior participants unless the plan change includes a retroactive effective date or other specific coverage. In addition, many plan amendments will include language noting that its provisions apply to participants who have at least one hour of service after date X. So, what does your plan say?

Polling this question is not relevant. Do you have an attorney?

What kind of plan is this? See 5500 instructions and forms here: http://www.dol.gov/ebsa/5500main.html See the "What to File" section beginning on page 7. Note the "Caution" items in this section.

I think that optional form is available, with proper spousal consent. Funding for a particular form of payment is part of the actuarial assumptions.

Could we all just elect Florida or Texas?

Instructions for 5500EZ here: http://www.dol.gov/ebsa/pdf/2004-5500-ez-inst.pdf See page 1.