david rigby

Frank, when and where was this position published/pronounced? Can you provide a link or other reference so we can read it? Thanks.

The client we assisted with a waiver needed three addresses: original address in Rev. Proc, and two more when other IRS offices asked for additional information. Ridiculous.

What do you want the answer to be? Seriously, if you want B to sponsor the plan, then the attorney should get busy drafting the agreement that states B will assume the plan. Then B can merge plan A into plan B. If you don't want that to happen, then you are already there. Plan A will be probably be deemed terminated, although maybe not right away since there is still an employee (OK, sort of). If the plan has any PS contributions that are not 100% vested, they are now (partial termination).

Correct.

Asuming I understand the original post correctly, the plan participant is still an employee, so there has not yet been a distributable event? If there were "lengthy divorce proceedings" is the plan administrator already on notice of a pending QDRO? Pardon my ignorance, but since there is no way for hospital to attach plan benefits, how is moving $X to the ex-spouse going to protect $X any better?

For the most part, "termination" and "transfer" are two different animals. Termination of a DB plan can permit a participant to elect a transfer, but not require it. Most likely, the plan document will already note the options available to a plan participant.

Others will disagree.

Absolutely. And if the attorney you interview does not immediately know the importance of a QDRO, then keep looking.

Probalby depends on the exact plan wording. Most situations I see would require (at least) vesting of any participant whose employment severed in the plan year in which the plan termination occurred. I don't think date of payment is relevant, but check the document. Other opinions?

Earlier discussion thread on this topic: http://www.benefitslink.com/boards/index.p...08&hl=teamsters BTW, as of today, freeERISA.com did not have a 5500 after the plan yer beginning in 1999. Don't know why.

The attorneys who contribute to these Message Boards will be better informed than I, but assuming anything about guardianship could be hasty. There is a difference between guardianship of the minor and guardianship of the minor's estate.

No such experience, but there is the school of thought that P.T. Barnum was wrong. It's every 30 seconds.

"...never heard of having a separate 401(k) Plan checking account..." Yikes! Just because it is a small plan does not mean it should not be operated correctly, and prudently. Since the assets of the plan are not assets of the plan sponsor, why would anyone want to cast doubt on that and commingle, even in the slightest way? BTW, it might be prudent to review the new small plan audit requirements. This plan might not be exempt.

Good comments all. A possible answer to the original question is found Mike's first comment. For example, the employer could make an administrative decision regarding "who pays" as long as that practice does not conflict with the plan.

There is no such thing as an "after-tax 401(k) contribution". Yes, the 402(g) limit refers to pre-tax contributions under 401(k). Be careful about 401(k)(4)(A).

"pollution-free" Where do they think the electricity comes from?

Since the IRS is not friendly toward the term "negative unfunded", I would determine this year's expected unfunded by starting with last year's zero unfunded. The expected unfunded can be negative. Then compare to this year's zero unfunded. I would make it balance. Since last year's unfunded was zero and the contribution was zero, you really don't care what the expected is this year. Just create a base to make it balance.

This might be relevant: http://www.benefitslink.com/boards/index.p...t=15137&hl=nipa

I agree with above analysis. As always, evaluate every situation carefully. Note that a partial termination could occur over a period of time. Example, a termination on March 1, involving 10% of the employees/participants, and another layoff on October 1 involving another 10%. If the indvidual in question was in the first group (which did not trigger a PT), the second layoff might trigger a PT for both groups.

It may be possible, but I have never heard of a refund. My understanding is that the IRS position is that the first excise tax in 4971(a) cannot be waived because it is statutory. The second in 4971(b) has some flexibility, and might be waivable.

Is top-heavy an issue here?

There may be another issue. Many plans require distribution if the balance is below $5000, although perhaps after a waiting period. The admonition about sending "...a notice to the participants advising them and giving them the chance to elect a direct transfer" is probably not strong enough. If the plan administrator plans to send them a check, then tax is withholding is required, and the participant must be given an opportunity to elect a direct rollover to avoid the withholding.

Kirk is correct, at least according to IRS viewpoints. The following questions are from the Gray Book. The first in 1993 is rather tame, but the IRS gives a much stronger opinion in 1999. Mathematically, there is no reason that an aggregate method could not be used to fund over the remaining lifetime of retirees, etc. However, there is probably a public policy reason to avoid this. It appears the IRS is of the opinion that a reasonable funding method should allocate costs over working lifetime. In Reg. 1.412©(3)-1(b), the IRS also gives a clue when they talk about "present value of normal costs ... over the future working lifetime of participants." (This is of course just what FAS87 desires also for expensing purposes.) QUESTION 93-10 Aggregate Funding Method -- No remaining actives A sponsor has a defined benefit plan at a location where the company closes down the operation for economic reasons, effective as of the first day of a plan year. After the closing, the plan will cover only terminated vested and retired employees and their beneficiaries. The funding method is the aggregate cost method. Assume the following with respect to the plan year: Present Value of Benefits: $20,000,000 Valuation assets: $19,000,000 Under these circumstances, is the average future working lifetime for each participant equal to 1 year and thus the normal cost and maximum deductible limit equal to $1,000,000? Would the answer be different if the closing did not occur until sometime during the plan year? RESPONSE No. It would not be acceptable to use one year as the average future working lifetime where there are no remaining actives. One acceptable approach is to use the expected retirement ages as if the employees were still active. QUESTION 99-6 Funding: Spread Gain Method for Plan with No Future Benefit Accruals Plan A uses the aggregate method (level percentage of compensation) to determine funding requirements. As of December 31, 1998, all active participants are terminated, but the plan remains in existence. (a) How is the normal cost for 1999 determined? (b) Would the answer be different if the plan was frozen, but participants continued in active service with the sponsor? RESPONSE (a) The funding method must be changed to an immediate gain method. Under any immediate gain method, the normal cost would be zero and the accrued liability would equal the present value of benefits. Any unfunded liability initially recognized should be amortized over ten years. (b) No. The response in (a) would also apply to a frozen plan covering participants who are still employed by the plan sponsor.

In the Guide to Implementation of Statement 87 (often referred to as the Q&As), item 11 mentions that, if the plan sponsor has COLI policies which are used to fund a non-qualified plan, "...the accounting for those policies should be in accordance with..." FASB Technical Bulletin 85-4. Any change that would modify this answer?

Find a Revenue Ruling: http://www.taxlinks.com/