david rigby

How about a violation of benefits, rights, and features?

Hmm, so an apple is OK, and an orange is OK, but anything that cross-breeds them is not OK.

Correct. NRD not relevant, but vesting % is relevant.

It is my understanding that NC and VA both have 4% mandatory withholding.

Some previous discussions on this topic. Try a search, using the word "demutualization".

Some states specifically require withholding on lump sums. To what exemption do you refer?

The plan produces an accrued benefit of 1625. That should be what is included in funding, and non-discrimination testing. The payment form is another matter. It is likley that both the plan and the QDRO contain language specifying the the QDRO does not require the plan to pay an increase in total benefits (determined on an actuarial value basis). Are you sure that the spouse benefit is "segregated"? You will have to use the QDRO to help determine what adjustments are needed to ensure the plan is not "on the hook" for additional benefits.

What is the basis for this claim? Several states have voluntary withholding (that is, at the election of the recipient). A few states have mandatory withholding.

Start with a cage containing five monkeys. Inside the cage, hang a banana on a string and place a set of stairs under it. Before long, a monkey will go to the stairs and start to climb towards the banana. As soon as he touches the stairs, spray all of the other monkeys with very cold high-pressure water. After a while, another monkey makes an attempt with the same result -- all the other monkeys are sprayed with cold water. Pretty soon, when another monkey tries to climb the stairs, the other monkeys will try to prevent it. Now, put away the cold water. Remove one monkey from the cage and replace it with a new one. The new monkey sees the banana and wants to climb the stairs. To his surprise and horror, all of the other monkeys attack him. After another attempt and attack, he knows that if he tries to climb the stairs, he will be assaulted. Next, remove another of the original five monkeys and replace it with a new one. The newcomer goes to the stairs and is attacked. The previous newcomer takes part in the punishment with enthusiasm! Likewise, replace a third original monkey with a new one, then a fourth, then the fifth. Every time the newest monkey takes to the stairs, he is attacked. None of the monkeys that are beating him have any idea why they were not permitted to climb the stairs or why they are participating in the beating of the newest monkey. After replacing all the original monkeys, none of the remaining monkeys have ever been sprayed with cold water. Nevertheless, no monkey ever again approaches the stairs to try for the banana. Why not? Because as far as they know that's the way it's always been done around here. And that, my friends, is how company policy begins.

Best advice. One possible action might be to leave the plan (and company) in existence.

Correct, but that deadline appears in IRC 412, which does not apply to a PS plan. BTW, there have been several discussion threads on this topic. You can use the Search feature to look for them.

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.