david rigby

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/

For those who are interested, here is the referenced Q&A 4 from the 2003 Gray Book: QUESTION 4 Funding: Application of Notice 90-11 to RPA ’94 Current Liability When calculating current liability, Notice 90-11 requires the use of a qualifying current liability interest rate for purposes of calculating benefits in a form other than a non-decreasing life annuity. For example, assume a plan allows lump sum payments and the valuation assumes that participants take a lump sum upon retirement. For purposes of calculating the current liability the lump sum must be determined using the current liability interest rate – regardless of the rate specified in the plan for converting the plan’s annuity benefit into a lump sum. RPA ’94 added a required mortality table to the current liability calculations – currently the 1983 GAM male and female tables. For purposes of calculating the RPA ’94 current liability, must this required mortality table be used to determine the benefit in a form other than a non-decreasing life annuity? In the example above, would the lump sum valued in the RPA ’94 current liability be calculated using the current liability interest rate and the sex-distinct 1983 GAM table? RESPONSE No. The interest rate requirement in Notice 90-11 does not extend to the required mortality assumption, so that the lump sum valued in the RPA ’94 current liability should be based on the mortality table specified in the plan to convert the annuity benefit into a lump sum. Thus, the 417(e) unisex mortality table must be used for this purpose. Copyright © 2003, 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.

Possible: the participant would have to be beyond the PS plan definition of NRA, and the plan would have to permit such distribution.

How about 4.01 (5) ?

I'm looking for PBGC interest rates (graded and immedidate) for 1984. The PBGC website seems to go back to 1993. Anyone know of an online source for years prior?

Just because K-mart filed for bankruptcy doesn't mean that the plan is frozen or terminated. Today, the K-mart website includes "Retirement Savings Plan (with company matching contribution)" in the list of employee benefits. Sounds like a 401(k) plan. However, www.freeERISA.com includes information from the 2000 plan year of a DB plan, so it probably has been frozen. The original post implies that the employee has severed employment. How long ago? "...no longer receives statements.." What was the frequency in the past? Do former employees get statements as often as current employees? Has the employee contacted the company (see correct address in the summary plan description) in writing?

Duh. But what is the purpose of the question?

Good grief! "Recommended"? My doc might recommend I take two aspirin, or even "prescribe" an over-the-counter medication, but that does not mean it is eligible for a medical deduction or covered in a flex plan. Just deny it.

Pardon my ignorance, but what is meant by this?

Interesting. I must presume the participant is under SSRA? I suggest you consider contacting the prior actuary, or at least make it clear in your engagement that you intend to do so to the extent you need information. Also consider the possibility that the plan sponsor is aware of a possible 415 violation, and intentionally ignored it.

Uh oh! From facts given, the Plan Administrator "approved" a draft. What does this mean? Conditional on receipt of a signed copy? Was such "approval" communicated to the parties? If so, was it clear that some action was now required? More learned members of these message boards will probably express concern that the PA may have acted in conflict with its own administrative procedures, and even with information that was communicated to the parties.

Seems like a big leap to go from no contribution in several years, to "abandoned". Does the plan sponsor still exist? If so, "abandoned" seems pretty strong.

Hmmm. Nothing was said about the plan participant actually applying for a distribution. Most plans require an affirmative action, assuming the balance is over $5K. In the original post, I wonder if there was a 411(d)(6) violation.

QDROphile's link took me to regs under 1.401 thru 1.425. This link might be a bit more generic. http://www.access.gpo.gov/nara/cfr/cfrhtml...6/26tab_00.html

Can't find link. How about text? Q-10. If a participant fails to make the installment payments required under the terms of a loan that satisfied the requirements of Q & A-3 of this section when made, when does a deemed distribution occur and what is the amount of the deemed distribution? A-10. (a) Timing of deemed distribution. Failure to make any installment payment when due in accordance with the terms of the loan violates section 72(p)(2)© and, accordingly, results in a deemed distribution at the time of such failure. However, the plan administrator may allow a cure period and section 72(p)(2)© will not be considered to have been violated if the installment payment is made not later than the end of the cure period, which period cannot continue beyond the last day of the calendar quarter following the calendar quarter in which the required installment payment was due. (b) Amount of deemed distribution. If a loan satisfies Q & A-3 of this section when made, but there is a failure to pay the installment payments required under the terms of the loan (taking into account any cure period allowed under paragraph (a) of this Q & A-10), then the amount of the deemed distribution equals the entire outstanding balance of the loan (including accrued interest) at the time of such failure. © Example. The following example illustrates the rules in paragraphs (a) and (b) of this Q & A-10 and is based upon the assumptions described in the introductory text of this section: Example (i) On August 1, 2002, a participant has a nonforfeitable account balance of $45,000 and borrows $20,000 from a plan to be repaid over 5 years in level monthly installments due at the end of each month. After making all monthly payments due through July 31, 2003, the participant fails to make the payment due on August 31, 2003 or any other monthly payments due thereafter. The plan administrator allows a three-month cure period. (ii) As a result of the failure to satisfy the requirement that the loan be repaid in level installments pursuant to section 72(p)(2)©, the participant has a deemed distribution on November 30, 2003, which is the last day of the three-month cure period for the August 31, 2003 installment. The amount of the deemed distribution is $17,157, which is the outstanding balance on the loan at November 30, 2003. Alternatively, if the plan administrator had allowed a cure period through the end of the next calendar quarter, there would be a deemed distribution on December 31, 2003 equal to $17,282, which is the outstanding balance of the loan at December 31, 2003.