david rigby

Something about a cow and not buying the milk?

If you are curious about the source of KJohnson's material, this link is pretty useful: http://www.abanet.org/jceb/agency.html

If the employee thinks he will get away with it, the IRS will know he has exceeded the 402(g) limit because deferrals are reported on the W-2 of each employer.

We are talking about the Internal Revenue Code, aren't we?

Yes, but before going down that path too quickly, what is the old funding method?

Every year I resolve to lose weight and save money. But I get them mixed up.

The resident expert is here: http://benefitslink.com/modperl/qa.cgi?db=qa_who_is_employer Might also want to review non-involvement, as mentioned in this thread: http://benefitslink.com/boards/index.php?showtopic=20451

This is fun. When this is resolved, please post the facts. Related, before going back to "actuary-ing", I spent a few years administering plans on the corporate side. (Large plan.) We had a policy of requesting copies of birth certificates in all cases and marriage certificates whenever the spouse might be in line for a benefit. It seemed like busy work, but had some value.

Hmmm. So the "plan trustee" is also the recipient of the distribution? Sounds as if someone gave some advice. Might be useful to determine who that was, such as independent (he said with a smile) accountant. If so, get that person to explain.

All of those things, and more. Important to have this done in advance. Also important to put this is context with a larger picture. For example, is there a corporate acquisition that is creating the situation? If so, the first thing to decide is whether the acquired plan will be terminated prior to the corporate acquisition. The Mergers and Acquisitions section of these message boards might also provide some information for review.

To the best of my knowledge, we are near the deadline for submitting suggestions for the 2004 Gray Book. Any other information? If time left, when and where should they be submitted?

Check out IRS Publication 590. http://www.irs.gov/pub/irs-pdf/p590.pdf

Be careful. First confirm where the $ was from? That is, are you sure it was from a qualified plan? If so, see above advice about correct 1099 and correct 5500. And make sure the plan's ERISA attorney is included.

This site provides a link to the revenue/tax department of each state. http://www.sisterstates.com/

Try this publication from the IRS: http://www.irs.gov/pub/irs-pdf/p590.pdf It can be ordered by calling 1-800-TAX-FORM.

Amen.

No specific experience with this plan provision. The statute says the PBGC "is authorized", does not say "required". However, since it is a statute and not a regulation, probably wise to assume they will use it. Also, PBGC financial condition right now would indicate they want to go after every dollar they can. Might be some flexibility.

I'm no expert, going thru my first Distress Termination now also. I think the PBGC pays benefits. The "extent funded" provides a measure of how much the PBGC can go after. (If the PBGC paid only "to the extent funded", there would be no need for the PBGC. But then some believe that is always the case.) The PBGC limits what it pays two ways: first, the dollar maximum, then the phase-in of plan amendments. Well, perhaps that should be reversed, but you get the idea. Oh there is another limitation: the "3-year lookback" in Priority Category 3. I'm not sure what you mean about "the parties want to know how the participants would be affected before agreeing to release the funds". I doubt you can have a DT without prominent use of the word "bankruptcy", in which case, the judge likely has a voice (to put it mildly).

Not sure if that is covered explicitly, but you can look at the IRS correction program here: http://benefitslink.com/IRS/revproc2003-44.shtml Is there another paycheck this year? If so, can you use a neagtive deduction to effectively reverse the incorrect deduction? (Ask your ERISA attorney if that is acceptable.)

I doubt the plan trustee has any obligation. But who are you? Do you represent a TPA? the plan sponsor/plan administrator? If the former, perhaps the latter has some information to assist you in recreating the calculation details. Other sources might be back-up computer files. Might be a good time to change your procedures to include such information in any letters sent to VTs.

Blinky, please re-read second link. Part (b) of Q&A99-6 asks the question about a frozen plan.

Just a few thoughts: First search these message boards, using the word "bankruptcy", and read all of the items. Second, review plan document. It might already have some "bankruptcy trigger", such as automatically terminating the plan. If so, then expect 100% vesting. (That will happen anyway, but the correct timing could be important.) Third, talk to the plan's ERISA attorney. OK, mbozek will suggest you reverse the order of these.)

Good question Rolf. Perhaps you can submit (now) for the 2004 Gray Book.

See prior discussions: http://benefitslink.com/boards/index.php?showtopic=16493 http://benefitslink.com/boards/index.php?showtopic=19350 Agreed that Rev. Proc. 2000-40 (by itself) does not require changing the funding method, but by including the cited IRS regulation, I think you can build a case for it. At any rate, per Gray Book 99-6, the IRS seems adamant about their opinion. Then you have to decide if you want to fight it. Or more correctly, the plan sponsor has to decide.

I think the original analysis ignored an important point. What makes up that marginal 40%? Did it include the SS tax? Perhaps it is only 1.45% (or 2.90%) but don't overlook it. Remember that a qualified PS or DB plan [but not 401(k)] is a great way to permanently shelter money from SS tax.