david rigby

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.

Oops, just assumed that most readers were familiar with the Gray Book. It was initiated in 1990 as a way of asking the IRS, on an informal basis, certain questions that were not addressed in either regs or statute. It is co-ordinated by several actuaries, and distributed at the Enrolled Actuaries Meeting each year (usually in March), and at other professional meetings. This is the caveat at the beginning of the Gray Book: "Summary of Meeting between the Enrolled Actuaries Program Committee and Staff of the Treasury Department and Internal Revenue Service on January 23, 2003 The following pages set forth the questions posed to certain staff of the Treasury Department and the Internal Revenue Service at a meeting on January 23, 2003 with representatives of the Enrolled Actuaries Program Committee. Included also are summaries, prepared by the representatives of the Program Committee, of the oral responses to those questions, which represent only personal views of the individuals who responded. Because those oral responses do not result from the systematic legal and policy analysis, review and clearance involved in producing regulations and other administrative guidance on which taxpayers can rely, different responses may be given at other times or by other staff, and administrative guidance may be issued that is inconsistent with the oral responses. Accordingly, the responses do not necessarily represent the positions of the Treasury or the IRS and cannot be relied upon by any taxpayer for any purpose. " Attendance at the EA meeting usually entitles one to a CD-ROM of that year's Q&A's. Also, please note this copyright: 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.

Possibly relevant Q&A from the 2003 Gray Book: "QUESTION 21 Nondiscrimination: Determination of Highly Compensated Employees After Acquisition A client maintains a 401(k) plan. In 2002, they acquire a company through a stock purchase and brought new people into the plan. For the new people who just came in as a result of the acquisition, how do we determine if they are HCEs? Do we look at their compensation from the prior year even though they worked for someone else? RESPONSE Since this is a stock purchase, it would be reasonable to base the HCE determination on compensation with the purchased company. " Note that other case (asset purchase) was intentionally not answered by the IRS representatives.