david rigby

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.

Im not clear about your reference to the current liability interest rate. The language is "...rate of interest used under the plan in determining costs (including adjustments under subsection (b)(5)(B))..." OBRA89 added the parenthetical phrase above. Subsection (b)(5)(B) refers to the current liability interest rate, and its range.

Notification should be by the time of filing the Form 5500 for the plan year following the plan year in which the severance of employment occurred. Such participant should be included on the Schedule SSA of that filing, unless the benefit has commenced by that time. BTW, if you include them on that (or any) SSA, and later make a complete distribution, it is OK (even advisable) to use the next SSA to remove them.

"Who May File" is on page 1 of the instructions. http://www.dol.gov/ebsa/pdf/2002-5500-ez-inst.pdf

I thought a "loan balance" is always principle.

There are (at least) two issues: 1. What the plan says about "recovery" of the original employee amount. I think that the summary provided by kdfox2 is the most common. 2. What about the tax-related questions. Using the above example, this is what I recall: The employee contributions are being recovered at the rate of $10 per month. Since the employee received only $120 of the original $3000, then the balance is taken as a tax deduction. IRC section 72 is the relevant cite. Note that the $3000 is assumed to be the employee contributions without interest. Any other, more learned, opinions? (Of course we are back to the irony of filing a tax return, so you can take the deduction, in the year of death.)

As previously noted on these message boards, if you can hold your Board of Directors meeting in your bathtub, you don't have a problem.

Kinda. Mildly interesting only if it is commonly used.

Not sure anything is required. Spousal approval usually has to do with distributions from a plan, rather than participation in the plan.

Yes, REA84 will apply to this plan. One hopes the current plan document has been amended to deal with this. I think the appropriate references are section 303(e) of REA and Q&A 45 thru 47 of IRS Reg. 1.401(a)-20.

I agree with Blinky's statement only if the employee is given a choice. If the plan terminates and purchases annuities for plan participants, then the plan provisions must be maintained.

Whether it can be amended to eliminate anything might be governed by the terms of the plan itself. However, such amendment would not violate the 411(d)(6) protection; the only death benefit that is protected is the minimum J&S benefit to a surviving spouse.