david rigby

I agree with Mike.

Probably want to be consistent. Look to prior practice for precedent?

IRS publication 590 http://www.irs.gov/pub/irs-pdf/p590.pdf See page 13 for this comment: "Benefits from previous employer’s plan. If you receive retirement benefits from a previous employer’s plan, you are not covered by that plan."

This seems contradictory to me.

Neither this http://benefitslink.com/IRS/revproc2003-10.shtml nor BNA have any indication this Rev. Proc. has been modified.

Correct. See section VII at http://benefitslink.com/IRS/notice98-52.shtml

Try www.freeerisa.com

Not sure. One hopes that the plan will answer that question, but perhaps you have checked. If not, then you may have a situation that needs administrative interpretation. Usual advisable to make sure it is in writing.

Look here. Maybe use the "hand-print" version. http://www.dol.gov/ebsa/5500main.html

Why would you want to do this? Negatives: - administrative expense of the distributions, - remaining ongoing expenses will probably be higher as a percent of total funds, - undesirable precedent of early distribution of funds otherwise earmarked for retirement, - lessened bargaining power for the plan since total funds will now be reduced.

I'm a pension actuary, not life insurance. Broadly speaking, your summary is valid. Putting aside the question of insurable interest (which is not trivial), the ability of the Texas system to "profit" from large numbers of life insurance policies is suspect. More likely, the profit will belong to whoever gets a commission. Or the underwriting will be "questionable." Be carfeul who you take advice from.

I think most states require an insurable interest at the time at policy is issued, without any conditions later. However, it appears in the original link above that the Texas system is considering purchasing life insurance on retirees, without regard to whether they are insuring a death benefit or any other insurable interest.

Seems difficult to apply that concept to retirees.

Exactly! http://www.plansponsor.com/pi_type10/?RECORD_ID=23800

Facts and circumstance. See Mike's advice. BTW, the net impact might be the additional FICA taxes.

http://www.dfw.com/mld/dfw/news/7751814.htm

At its very basic, this is "the taxpayers cannot afford..." The PBGC is a mandatory insurance program that does not contain the prime elements of insurance: voluntary purchase by the buyer and insurable interest. (OK, I know that is an oversimplification, but my point stands.) If this were being designed from scratch, we would have mandatory minimum funding that made the PBGC irrelevant. There is no reason the taxpayers should subsidize/guarantee everyone else's pension plan. The other result is that 99% of the DB plan sponsors view the "premium" as a tax. I’ll get down off my soapbox now.

Does the financial advisor stand to benefit in any way?

PBGC year-end 2003 report http://www.pbgc.gov/news/press_releases/2004/pr04_20.htm

What type of plan? If a DC plan, the plan already provides (at least annually), an individual statement showing the participant's account, increases via contributions or earnings, and decreases via distributions or (earnings).

In 1997, the IRS indicated a lack of concern for the distinction between a merger at 12/31 or 01/01: Gray Book Q&A-97-38: A plan sponsor intends to merge two calendar year plans. To avoid filing a short plan year Form 5500 for either plan, should the merger date be December 31 or January 1? RESPONSE The merger documents should include language describing the transaction as taking effect at a time such as "as of the beginning of the plan year" or "as of the end of the plan year." As long as the intention is clear, the IRS should not question a date of either December 31 or January 1 on Form 5500 or on Form 5310-A. Copyright © 1997, 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.

Might be a problem. Whenever the plan is amended (say amend in 2006 to increase the comp limit from $200K to $210K), that amendment will have impact only on HCEs. 1.410(a)(4)-5.

Succinct. Agreed.

That sounds like the estate is the recipient, and then gives it to the charity. (Not sure if that distinction is significant.)

AVA?