david rigby

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.

not the point!

I suppose the answer is that it applies to all companies that have a DB plan (government units are not subject to FAS accounting rules). Statements issued by the FASB are part of how the accounting profession defines "generally accepted accounting principles". But the real teeth is from the SEC, which states that publicly held corporations must report their financial results using GAAP. A privately held corporation may choose to use SFAS87 in order to adhere to GAAP, but there is no SEC oversight that requires it. If that company wants to borrow money, the lender may require GAAP. Any accounting experts out there want to embellish / correct my synopsis?

Can we put our birthday in the profile without the year?

The "View New Posts" on the Boards produces a different result from the "Active Message Threads" on Benefits Buzz.

Employee left employment on 1/1/2001. Was not aware of retirement eligibility. has now (in 2003) requested retirement with a retroactive effective date of 1/1/2001. (1) The plan includes a minimum from a prior money purchase plan account balance. This balance (with fixed rate of interest) can be taken upon any severance of employment, without regard to $5000 limit, the balance of the accrued benefit to be paid as an annuity. The plan defines the annuity conversion of this account balance as based on the 417 conversion factor in effect at the annuity starting date. At 1/1/2001, that would be the GATT mortality table (Revenue Ruling 95-6) and 5.49%. (2) Suppose a slightly different scenario: same as above, except there is no MP plan account balance, but the plan offers a lump sum option on the entire accrued benefit. Revenue Ruling 2001-62 refers to annuity starting dates on or after 12/31/2002. Since the participant has elected a 1/1/2001 annuity starting date, does Rev. Rul 2001-62 apply? Is this interpretation correct? Any other comments?

It is my understanding that a later amendment will require testing under 401(a)(4).

Agreed, but that is the "flaw" in having legislative history: it allows lawmakers to draft the statutes loosely, but say what they mean elsewhere. This probably will never change.

I found this in the Legislative History of JCWAA: "The provision expands the permissible range of the statutory interest rate used in calculating a plan's current liability for purposes of applying the additional contribution requirements for plan years beginning after December 31, 2001, and before January 1, 2004. Under the provision, the permissible range is from 90 percent to 120 percent for these years. Use of a higher interest rate under the expanded range will affect the plan's current liability, which may in turn affect the need to make additional contributions and the amount of any additional contributions. Because the quarterly contributions requirements are based on current liability for the preceding plan year, the provision also provides special rules for applying these requirements for plans years beginning in 2002 (when the expanded range first applies) and 2004 (when the expanded range no longer applies). In each of those years (“present year”), current liability for the preceding year is redetermined, using the permissible range applicable to the present year. This redetermined current liability will be used for purposes of the plan's funded current liability percentage for the preceding year, which may affect the need to make quarterly contributions and for purposes of determining the amount of any quarterly contributions in the present year, which is based in part on the preceding year." Thus, it appears the intent was to grant relief related to the AFR.

IRC 3405: http://www.fourmilab.ch/ustax/www/t26-C-24-3405.html Sorry, I have no idea how well, or if, this site is maintained.

I have often wondered what it means to have vesting upon partial termination "to the extent funded". Perhaps you have to pretend the plan terminated, allocate as far as you can, and then award additional vesting if there is money left over. Probably would require some proration that might be arbitrary.

With respect to the 100% withholding, please see this: http://benefitslink.com/boards/index.php?a...=17&t=15321&hl=

Revenue Ruling 81-213 is the usual source of prohibiting a negative UAL. However, it does not prohibit a negative expected UAL. Hence, refer to Blinky's comment about the definition in the funding method.