david rigby

You can get some background on facts and circumstances, and other issues related to "partial termination" from the several prior discussion threads on this topic. Search

And some might think of the word "fraud".

Not sure what is "the product", but I can offer a referral to an actuary who specializes in that, if that will be of help to you.

Methinks this is mostly PR, possibly seeking ways to avoid people asking questions. "Trust us."

Section 404 is part of ERISA Title 1. Section 4(b) states "...this title shall not apply... (1) ... a governmental plan..."

If no written plan document, that sounds like a violation of ERISA to me. Termination procedures would probably be according to plan provisions. But, does the plan document say anything about the required qualification of the plan? (Maybe it isn't really a plan.)

References ?

Good comments. Another point to watch out for: if someone claims the plan passes (a)(26) due to "separate line of business", the only answer is "According to IRC 414®(2)(A), a SLOB must have at least 50 employees."

Are we assuming the sponsor's fiscal year is the same as the PY?

Does this help? GrayBook Q&A 2002-4. Funding: Treatment of 401(k) Plans under Combined Limit of 404(a)(7) In 2001 an employer adopts a defined benefit plan covering 5 of its 10 employees. A profit sharing plan is adopted covering the other 5 employees. Since there is no overlap of participants between the plans, 404(a)(7) does not apply. The employer would like to add a 401(k) feature to the profit sharing plan for 2002 and allow all 10 employees to make elective deferrals. The defined benefit plan participants would only be able to defer – they would not receive PS contributions or matching contributions. Are the defined benefit participants considered to be participating in the defined contribution plan such that 404(a)(7) now applies to the combination of the DB plan and the DC plan? Or does new 404(n) mean that elective deferrals are not counted for this purpose, eliminating any overlap of participants between the plans? RESPONSE 404(a)(7) applies to the combination of the DB and DC plans, since the DB plan participants are allowed to make elective deferrals under the 401(k) plan. A technical correction has been proposed that would reverse this result and eliminate the 401(k) plan from consideration in this application of 404(a)(7). 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.

Good advice to contact an attorney experienced with ERISA. If you contact the PWBA, remember the name of that agency is now the Employee Benefits Security Administration. http://www.dol.gov/ebsa/ You will certainly need a copy of the plan document, especially to confirm it has a last-day rule. I am not an attorney, but I thought that a resignation letter did not require the employer to retain your services as long as you desire, but as long as the employer desires.

You can also remember that Jim Holland is giving the "IRS position". That does not mean it is the sensible one. Many examples where this issue is ignored.

I don't know if this is common, but it has a bad "smell" to me. Might there be a concern for a discrimination issue?

I see no theoretical problem having a different salary scale assumption for every participant, but certainly a practical one.

To the best of my knowledge, the IRS has been consistent in this area. However, the reporting is not really common sense. Does not fit the concept of "termination of services" for which the reporting was created.

My hunch is that the IRS would view this as part of the method. I'm unsure if I agree with that. How about significance? Since the amortization would be similar, perhaps the magnitude of the issue might help make the decision.

c) a mistake ?

Please don't answer. IMHO, an important characteristic of this venue is to avoid any taint of price fixing.

"American Association of Normal Retirees" ? "American Association of Never Retired" ? "American Association of Nerd Retirees" ?

We may have discussed that before. But here is GrayBook Q&A 2002-14: Method Change: Automatic Approval for Plan in Effect for Fewer than Five Years Section 6.02(3) of Rev. Proc. 2000-40 denies automatic approval for any of the funding method changes listed in Section 3 of the Rev. Proc. if a change to the same aspect of the funding method occurred during any of the prior four plan years. May a plan that has been in effect for fewer than five years change funding methods pursuant to Section 3 of Rev. Proc. 2000-40? RESPONSE In general, yes. The initial adoption of a funding method upon the establishment of a plan does not count as a funding method change. However, if the plan is a continuation of another plan that was created as a result of a non-de minimis spin-off, you must consider the funding method history of the predecessor plan in determining whether or not the four-year rule is satisfied. A plan that is created as a result of a de minimis spin-off is considered a newly established plan. See section 3.03 of Rev. Proc. 2000-41. 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.

A few thoughts: - Not sure what is the question, or what needs to be "resolved". - Unless you have a credit balance, the min = max under Agg method anyway (except for possible unfunded current liability). - Is this a plan with only one participant? If so, I wonder if EAN is a reasonable method for a participant with only 10 years until NRA. - Having a range for flexibility is good, but there are other factors to consider, such as plan sponsor's funding policy, investment policy, demographics of entire group, ability to plan for regular cash contributions, etc.

Of course. The rollover $ is an increase in that pot of assets, but (surprise!) it also represents an increase in the liability of the plan.

Hmmm. No other documentation of the relationship?

Maybe. Probably important to review the plan amendment, and other plan provisions. For example, does the plan use "fractional rule"? Again, I have reservations about an amendment that changes PS to PS+1. However, what really is happening? Did the plan previously define credited svc from DOP (for example, DOH plus one year) and the amendment is to redefine credited service from DOH? If so, I suggest your original description of the amendment is misleading. If that is not what happened, but it could apply, then that definition will be much "cleaner". Consider it.

Not sure that this should alter the correct procedure. The amendment base is the change in Unfunded Accrued Liability. Not sure that increasing a benefit via this type of amendment is a good idea.