david rigby

If the 402(g) limit was exceeded on one plan, that may increase the chances of an audit.

If she receives a 1099, is she really an employee? eligible to participate in the plan? The $41K dollar limit is pretty good, but don't forget the 100% limitation.

Fair enough. Thanks.

I found historical monthly average rates for Moody's AAA and Baa bonds here: http://www.federalreserve.gov/releases/h15/data.htm (near the end of the table) I found historical rates for the last business day of the month for Moody’s AA bonds here: http://www.soa.org/ccm/cms-service/stream/...&g11n.enc=UTF-8 (click on “moody_agreement.html”) Anyone have a link to AA monthly averages?

Could the desired result be obtained by employing the person as a contract employee? "gross-up" the pay for FICA?

Don't forget the deferral limit is individual, not related to employer(s), controlled group, etc.

So many issues and variables. You don't give any specifics about your situation, but descriptions of the TSP can be found here: http://www.tsp.gov/ These Message Boards do not exist to provide investment advice, but many users may be able to provide some general concerns and perspectives for you to consider, if you choose to share any more details. (Always be careful about how much information you share online.) Most likely, the first piece of advice will be to read all the material you have been given on the TSP.

Sounds like difficulty in determining proper funding, also. Might be a classic example of why you should not design a plan this way.

Should we presume that the plan's provisions have been reviewed, especially with respect to defining a beneficiary, or successor beneficiary?

I'm no expert, but I have seen several QDRO's that do this. Where do you think the order is providing "increased benefits"?

I agree with MGB's assessment. And "retirees" may also be considered involuntary separation of employment. So, we are back to facts and circumstances. BTW, the IRS presumes all affected employees are involuntarily terminated until proven otherwise. Burden of proof is on the employer. Probably the only easy ones are deaths. Thus, recommendation from JanetM above may be the result. Consider the cost of vesting vs. the cost of proving your case.

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.