david rigby

In the post-Enron days, why would a plan sponsor want to go down that road of ambiguity, and open the door to later charges of intentionally trying to hide something?

There may be other situations that could impact whether this plan is covered by the PBGC. See ERISA section 4021. (BTW, please not the correct acronym above.)

Now you touch on appropriate consulting advice. Amortizing such a plan amendment over 30 years would be the IRC 412 minimum. That does not mean it is a good idea. I would advise a sponsor to make sure its actual contribution recognizes a more rapid amortization.

To expand, it is acceptable to have an assumed retirement age that differs from the plan's defined normal retirement age, if the facts support it. Such ARA could be greater or less than the NRA. The plan definition of benefit comes first, then the assumptions and method. The choice of assumptions does not determine the benefit. Whether a suspension of benefits notice was issued is (maybe) part of how the benefit is determined.

You might find some assistance here: http://www.actuary.org/palprogram.htm

No coins involved. Assuming the window requires affirmative action in the form of a plan amendment, I have trouble understanding why it could be anything else.

Disagree. The facts given do not lend themselves to starting a new plan. Competent ERISA attorney should have no trouble modifying the exisitng plan document. There may be other business-related reasons to freeze the current plan. Discussion with attorney and/or pension consultant may be fruitful. Unlikely that plan termination is needed.

The second question is answered by your first statement: "plan amendment". There may be more than one way of recognizing the window in funding. I would probably include it in 1/1/04 valuation with best estimate of "takers". If actual takers differ, then that will show up in the Gain/Loss at 1/1/2005. Be careful about SFAS 88.

Those of us who are consultants and/or actuaries would probably prefer to be engaged to provide such service (i.e., for a fee).

In our office, the EA's are the ones who make the decisions.

No doubt you will get more thoughtful opinions here, but the sponsor may have some problem trying to "charge" these fees unless there are existing QDRO administrative procedures that address it. Also, your question touches on two techniques: charge the account vs. send invoice to the participant or alternate payee. If both techniques are "in play", then the sponsor will want some clear procedures about priority and enforceability.

Refer to IRS Reg. 1.404(a)-14(d). http://www.access.gpo.gov/nara/cfr/cfrhtml...26cfrv5_00.html Gray Book 90-24 How is a deduction carryover treated for purposes of computing the unfunded current liability limitation under Code section 404? RESPONSE 24 Regulation 1.404(a)-14 continues to apply. Assets should exclude contributions that have not been previously deducted. Gray Book 2000-13 Funding: Adjustment for Undeducted Contribution in Unfunded Current Liability A plan wants to use the maximum deductible limit under Code section 404(a)(1)(D) of 100% of the unfunded current liability. In determining the unfunded current liability, do you subtract from the assets any carryforwards under §404(a)(1)(E)? RESPONSE When calculating any component of the maximum deductible contribution under 404(a)(1) for a plan year, you must exclude from plan assets the amount of any employer contributions not yet deducted in prior plan years and carried forward under §404(a)(1)(E). Copyright © 2000, 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.

Another possibility is that the original plan was frozen? Probably no requirement that it be terminated.

... and possibly some legal advice.

The fact that the plan sponsor is being acquired does not require that the plan will change, or go away. Depends on many factors. The plan sponsor could engage an actuary to assist in comparing the value of the two types of plans. However, there will always be at least some element of "apples vs. oranges" in such comparison. What is the "rule of 80"? "...not particularly generous"? The plans I see are almost always less generous than 1.65% accrual rate.

MGB is correct about copyrights. I am not aware of any electronic copies of APB statments, but look here for more information on FASB statements http://www.fasb.org/st/#fas100

They may have said that but it might be inconsistent. Q&A 20 from the 1990 Gray Book: OBRA Funding In determining Current Liability for 1989 plan year minimum and maximum contributions, will any rate within the corridor described in IRS Notice 88-73 (subject to the 8% floor specified IRS Notice 88-31) be deemed to satisfy the annuity purchase rate requirement? RESPONSE In accordance with recent IRS Notice 90-11, any rate within the corridor of 7.92% and 9.68% inclusive, is acceptable as the annuity purchase rate for a 1989 calendar plan year. The 8% floor is no longer applicable.

If the plan is in danger, the PBGC will challenge the sale of the assets. The buyer will probably wish he/she had some legal advice.

Might? Count on it!

Who is "we"? - Plan sponsor? - TPA? - Two sons? etc.

Anyone have any thoughts on this? http://www.actuarialstandardsboard.org/pdf...and2_repeal.pdf

Perhaps stated too simply, but the only (pre-retirement) death benefit a plan is required to provide is the QPSA, sometimes referred to as the "REA miniumm". A plan can be amended to reduce its death benefit provisions to this level (assuming no other plan provision state otherwise). http://www.benefitslink.com/boards/index.php?showtopic=14485 http://www.benefitslink.com/boards/index.php?showtopic=19204

MGB states very succintly what is significant about a partial termination. It is NOT the same concept as a frozen plan. Several discussions about on the message boards. Here is one that is too verbose (OK, I wrote it.) http://www.benefitslink.com/boards/index.p...ct=ST&f=1&t=244

Blinky's summary is correct.

Assuming this plan is covered by IRC 411(d)(6), the plan change at 1/1/03 to "eliminate" lump sums would apply to future accruals. Thus at subsequent severance of employment, the participant would have all plan optional forms at 12/31/02 available with respect to accruals at that date, and the revised set of optional forms applied to accruals after that date. However, close inspection of plan language is always appropriate. A similar question: http://www.benefitslink.com/boards/index.p...ST&f=22&t=19740