david rigby

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.

Instructions to Schedules H and I (only) include "Round off all amounts ... to the nearest dollar." Anyone with experience to determine if this is literal? Can amounts be rounded to nearest $100 or $1000? Can I round on other schedules? (especially Schedule B)?

Perhaps the Department of Labor for your state of residence?

Some earlier discussion: http://benefitslink.com/boards/index.php?showtopic=23311

I'm not aware of any requirement that a salary assumption must always be in the form of X% per year. Although usually trouble than it is worth, there is no theoretical reason that the salary assumption could not be "select and ultimate." Still have the requirement of IRC 412©(3).

Try the "More Options" tab. Then make sure you look at all the paramters carefully, choose key words carefully, use phrases in quotation marks, and narrow down the forum(s).

HR3108. No action in conference committee, although some discussion has been held. Note that the proposal would change the definition of the iterest rate, but does not change the "85% of prior month" characteristic.

Really? Has it been verified that the other time of employment does not already constitute the "waiting period"? I suppose the union would not want that disincentive to join the bargaining class of employees; is it covered in the CBA?

Could be problematic. - Perhaps wing it? - Calculate the amount at 1/1/04 but begin amortization at 1/1/05? (Probably not kosher.) - Cross your fingers that no one would do a window without already being in full funding? (No such luck.) - Calculate the liability change and the asset change (separately) at 1/1/04, add them to values at 1/1/05, then determine the UAL?