david rigby

Segal's announcement is (of course) not official. But not difficult to derive. See chart at bottom of page 5 of Winter 2003 Enrolled Actuaries Report, http://www.actuary.org/ear/pdf/winter_2003.pdf. For example, to increase the 401(a)(17) limit, the increase in indexing was only 1.1%. The IRS announcement of 2004 limits was issued in October 2003, so expect the 2005 limits soon.

You can find PLRs back to 1997 here: http://www.irs.gov/foia/lists/0,,id=97705,00.html

Several prior discussion threads that might be relevant. Perhaps the Search feature would help. For example, http://benefitslink.com/boards/index.php?showtopic=11025

When a plan terminates, the sponsor usually spends some (but not infinite) effort to locate missing participants. If still not located, the sponsor may have: - "paid" the distribution, but used 100% tax withholding (not a recommended course of action, but it happens), - "forfeited" the amounts. This amounts to ignoring the participants, and promising to pay if they ever show up. - established an account somewhere (such as an IRA), - if J&S rules apply, purchase an annuity (not likely since an insurance company probably will insist on having a real signature from the participant). The participant should contact the plan sponsor and ask. Name, SSN, former address will be useful pieces of information. Caution 1. Before assuming there is a distribution coming, the participant should be certain she/he is (at least partially) vested. Caution 2. If the original plan sponsor was acquired by another company, that does not necessarily mean the original plan was terminated.

Whether other TPA's require spousal consent in this situation is (generally) irrelevant. Pay attention to the plan provisions and the provisions in the IRS regs.

You might find value in prior discussions. Try the Search feature, using the word "overpayment".

1. Your use of the BNA-produced information was not my concern, but that someone may have put into public domain without authorization. Anyone else have this concern? Anyone care? 2. IMHO (which may not be worth much), a negative election percentage should be specified in the plan document. That said, I wonder if the document could include a range (say 1% to 3%), from which the plan administrator could pick; even if possible, it may not be advisable.

Uh.... might that language from BNA be copyrighted material? Did it come from a website for which you/someone paid an access fee?

The other choice is the CL rate for purposes of the Unfunded Current Liability. Prior to PFEA, the CL rate for this purpose was related to the CL for 412 purposes. Under PFEA, this issue may not be as important, although PFEA is temporary.

Logic? Tax code? Regulations? Any more questions?

I would not do anything additional for the Schedule B, since the 5500 itself will have some indication of disaster relief. If you feel the need anyway, the easiet solution might be to write in "Disaster Relief - Hurricane Charley" at the top of the B.

Asking for marital status at enrollment/participation/hiredate and assuming that status remains applicable at a later severance of employment might not be considered prudent.

Technically, the IRS does not make any Gray Book responses. Here is the introductory paragraph to the 1994 edition. Note the reference to "summaries of the answers":

No expert I in this area, but I thought there are prior examples (either case law or DOL/IRS comments). Anybody have any cites? As rcline suggests, the ER may have other sources of information (especially medical insurance or beneficiary designations) that can help. But comparing/reviewing such information may be easier said than done. Gray Book Q&A 94-28 Proof Required to Avoid Spousal Waiver of QJSA or QPSA -- 401(a)(11), 417 Reg. Section 1.401(a)-20 (Q&A-27) provides that spousal consent to waive a QJSA or QPSA is not required if the plan representative is satisfied that there is no spouse or that the spouse cannot be located. In establishing to its satisfaction that there is no spouse due to divorce or legal separation, is the participant required to provide legal proof of the divorce or legal separation? RESPONSE: The plan administrator may rely on a certification by the participant that he is divorced or legally separated. However, it would be a good idea to request legal proof in situations where the employer has knowledge that indicates or suggests that the participant is married. Copyright © 1994, 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 agree with the suggestion to review plan provisions. However, isn't the COLA part of the accrued benefit, not to be ignored in determining a present value? For example, Gray Book Q&A 94-39: Automatic COL Provisions - Lump Sums and other issues -- 411, 415, 417(e) A plan provides for lump sum distributions based on actuarial equivalent interest rates equal to the PBGC interest rates on lump sums in plan terminations (i.e., the 417(e) rates). The plan also provides for annual post-retirement cost-of-living increases based on a National Cost-of-Living index, but not to exceed 3% in any year. The plan states that for the lump sum determination, it is assumed that there would be no increase in the COL index. Does the lump sum cashout feature satisfy the qualification rules? If not, how can the plan be changed to comply? How are the 415 limits applied to this plan -- (a) can the initial amount of annual annuity be as high as the full current 415(b)(1)(A) amount and (b) how is the maximum lump sum determined? RESPONSE: Subject to section 415 (discussed below), an automatic cost-of-living provision is an integral part of the participant's accrued benefit and, therefore, must be taken into account when determining amounts payable under optional forms of benefit. The assumption that there will be no increase in the COL index in determining lump sums would not be reasonable and, therefore, would result in the impermissible forfeiture of accrued benefits under section 411. The plan should specify a reasonable basis for determining the value of the COL provision. Various approaches could be considered, such as a fixed annual increase rate (e.g., 2.5%), a moving basis equal to the COL index (subject to the 3% cap) as of a recent date or the average over a recent period, etc. In accordance with Reg. §1.415-3(b)(2)(iii), no reduction in the 415 limits are required to reflect an automatic COL increase provision to the extent that such increases do not exceed those provided under 415(d). Thus, for example, assume that the plan grants annual COL increases that are determined using the same percentages that apply under 415(d), subject to a maximum increase in any one year of 3%. An employee retiring at age 65 in 1994 could receive up to the full $118,800 dollar limit during 1994; such amount would increase by the plan's COL adjustment in subsequent years. Copyright © 1994, 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.

You don't say what the "misrepresentation" was, or how you know it was false. IMHO, this is an issue for administrative procedures. For example, suppose the EE was not married but claimed to be married in order to provide a J&S benefit to someone. Can the plan's admin procedures, and the election form(s) signed by EE and/or "spouse", include language enabling the plan to adjust the benefit at a later date if the EE presents information known to be false? Perhaps the plan already contains some language that will help with the immediate situation.

And not without plan provisions that permit it, including description of when and how. BTW, should we assume this really means the payroll of the other company? Or does it refer to the joint venture itself?

Did client's (current or former) attorney have any involvement at the time of the "transaction"? If not, did you/tpa put in writing your disclaimer that you are not engaging in the practice of law and that you recommend the client/sponsor have their own counsel review the transaction/documentation/plan amendment(s), etc.??????

And we are cautioned not to discuss fees when attending actuarial conferences.

Very reasonable answer. I would go with that.

I'm with Kirk on this one. BenefitsLink is too valuable as an information sharing resource to taint it with any hint that might be interpreted in a negative light. If you want to share your fees, do it on your website or in other literature, but please not here.

Although it may not be the case here, whenever there is sigificant emphasis on the level of deduction without corresponding emphasis on the level of benefit, there might be life insurance involved. Often that can be an expensive vehicle for providing life coverage.

No expert on VCP or Rev. Proc. 2003-44, I'm not sure this transaction would be recognized; the IRS may consider that the DB plan still exists. In this context, does "transfer" mean the same as "merger"? Need competent ERISA attorney.

Several prior discussion threads related to this. Here is one: http://benefitslink.com/boards/index.php?showtopic=25846 You can use the Search feature here: http://benefitslink.com/boards/index.php?act=Search&f= In general, yes, plans can be merged. However, the process is not much different from termination. See IRS Reg. 1.414(l) [that is a lower case L]. W/R/T your second question, the participants in the DB plan will have the same options as if the plan were terminated, including taking a distribution (if defined by the plan) or an annuity. There may be some relative advantages to merging or terminating. See your actuary or ERISA attorney for evaluation of the options. (BTW, this assumes the plans are subject to ERISA.)

IMHO, the plan sponsor is on the horns of a dilemma [all you mathematicians will recognize the redundancy ]. The sponsor appears to be bound by separate, and conflicting, documents. Perhaps this means the sponsor's and union's attorneys should get together ASAP and clarify. It seems the sponsor should insist upon it.