david rigby

I'm confused. Are you offsetting the value of one DB 2% accrual by the entire balance in the DC plan?

Ditto. What does the plan say about becoming a participant? If you discover that this person did beocme a participant, watch out for vesting under top heavy rules.

Normally, severance of employment is an event that permits distribution. John should probably check the terms of the plan document. Perhaps the SPD will help also.

In the DB-related DRO's that I see, I continue to hope the order will address the question of death; 4 cases. - if the participant dies first and before any benefit commencement, - if the AP dies first and before any benefit commencement, - if the participant dies first after benefit commencement, - if the AP dies first after benefit commencement.

not govt plans

See ERISA section 103(d)(11)

Anyone can put a paragraph in quotes. When you do so, please offer the source and the (at least approximate) date. I'm not sure the dollar amounts in the above quote are accurate, but there is some validity to the general argument. However, that does not necessarily lead to the conclusion in the last sentence.

I hope no one responds to (1). The information sharing on these Message Boards is too important to risk any accusation of price collusion.

I'm not sure I agree with the use of the word "must", but it is a minor point. I agree with MGB's explanation. To the best of my recall, prior discussion on this point included this same IRS sentiment, but not with as much finality. Some of that discussion can be found on this Message Board. FYI, here is the text: Gray Book 2004-20 Method Change: Required Change in Funding Method for Frozen Plan Plan A, a calendar year defined benefit plan is frozen, effective December 31, 2003. Under what circumstances is a funding method change required for the 2004 valuation? RESPONSE The normal cost for the plan should be $0 beginning with the 2004 plan year. Accordingly, the plan must use the unit credit cost method described in section 3.01 of Rev. Proc. 2000-40. Thus, if a plan is not using the unit credit cost method, the plan must make a funding method change. Automatic approval to change to the unit credit method in this situation can be obtained using section 4.01(5) of Rev. Proc. 2000-40. 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.

Some prior discussions: http://benefitslink.com/boards/index.php?showtopic=16873 http://benefitslink.com/boards/index.php?showtopic=18212 http://benefitslink.com/boards/index.php?showtopic=20082 http://benefitslink.com/boards/index.php?showtopic=15689

Why does the plan sponsor care? Who is giving tax advice here?

I think the charge for a 5500 is if you get your own copy. If you just sit there and read it, isn't the charge zero?

If the participant is eligible for and elects to commence payment (even if still active), then that would probably solve your problem, so choice 1 would make sense. Choice 2 may require a change in assumptions. Is that reasonable? perhaps even necessary?

Opinion: point out the positives and negatives, just as you recommend. Minor point. Technically, the reference is to the Blue Book, 2004 edition. Andy has the correct Q&A.

The 401(a)(4) regs include "safe harbor" definitions, the prime purpose of which is to deem the plan as "non-discriminatory" (no testing). IRS regs here: http://ecfr.gpoaccess.gov/cgi/t/text/text-...26/26tab_02.tpl See 1.401(a)(4)-3(b) for safe harbor.

Seems like the alternate payee would be concerned about this also. Isn't the burden of action on the AP (and the AP's attorney)?

Can I listen in when you tell this law firm that they should retain counsel?

Is this participant still an active employee? What does the plan say about when distributions can occur? must occur?

Don't blame the messenger. If "pro" is the opposite of "con", what is the opposite of progress?

Absent other provisions that might define an alternative formula, that would be my interpretation of your description. However, close inspection of all terms of the plan document is always appropriate.

You may have to look around a bit, but this should have what you need. http://www.benefitsattorney.com/

This has been a disappointing discussion thread, not because the topic is unworthy, but because it has degenerated to name calling. Please, let’s return to civility. If the participants want to argue/discuss the particular pros and cons of 412(i) plans, I suggest, and request, doing so with numbers, facts, and logical reasoning. It is also OK if we agree to disagree. Thank you.

This is not a good forum for getting legal advice. You should seek personal counsel. Your attorney should know something about IRA's and qualified pension/profitsharing plans, especially with respect to how, if at all, they are available to creditors (usually not). If bankruptcy or an IRS judgment is involved, variations may occur.

What is your meaning of "DB providers"? The employer (generally) is the plan sponsor, and will be entitled to make most decisions, not the "provider." There are many actuaries and consultants out there willing to serve you. (I am one of the former.) You may also get a referral thru your corporate attorney or auditor. If you talk to a consultant who tells you what to do, instead of asking what you are trying to accomplish, keep looking. As usual, a good place to look for information is… this website! http://www.benefitslink.com/yellowpages/index.shtml

Not quite. IRC 411(d)(6) protection applies to plan amendments. It is possible for a benefit to decline due to decreasing compensation, but if you have to amend the plan for that to happen, then the accrued benefit at the date of the amendment will serve as a minimum.