david rigby

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.

Very possible that this has been discussed previously. This might answer your question. http://benefitslink.com/boards/index.php?showtopic=16347 Alternatively, try the search feature.

Funny, Mike. No, DW did not offer any reasoning or authority.

At the 2003 Enrolled Actuaries meeting, Dick Wickersham of the IRS clearly stated his preference on the question of 100% withholding: don't do it!

...but then ERISA generally does not impact governmental plans. Such plans are specifically exempt from IRC 411, as amended by ERISA, providing it complies with pre-ERISA sections 401(a)(4) and 401(a)(7). So it might be appropriate to look at: - the plan, - state (or local) law.

I asked that this question be inlcuded in the 2003 Gray Book. It was not answered, so either it was not sent to the IRS or it was purposely not answered. Due to the conflict between the Code and the regulation, it seems the latter is likely. At the 2003 Gray Book discussion, we were told that about 70 questions were submitted; 44 were answered.

Well, here is something I heard Don Segal say, but I cannot prove it. IRC 412(d)(1) discusses funding waivers and how they are amortized. I have always thought that the amortization rate is the greater of the funding rate or 150% of the federal mid-term rate. My SOA study note from 1991 says the same thing. Don stated that the "greater of" is permitted but not required if 150% is less than the funding rate. Can anyone help?

I partially agree with those comments. The 20% "trigger" may be a guideline, but it has acquired more emphasis over the years. My experience is that 3/12 = 25%, greater than 20%, will lead to a partial termination. However, the comment about "facts and circumstances" is always valid. For example, if the layoffs occurred during the same year but at different time, it might be possible to assert that they should not be aggregated. Not necessarily. There have been many discussion threads about this topic. I suggest using the Search feature on this site. Try using "partial termination" as the keywords.

For those interested, this question was submitted for the 2003 Gray Book, and it received an answer. The question posed was "Does the use of any corridor other than the 80% to 120% invalidate the automatic approval? Response "Yes. The automatic approvals under the Revenue Procedure specifically refer to the 80%/120% corridor. Thus, the use under the proposed method of any narrower corridor invalidates the automatic approval for the change in funding method. Note that the proposed method change would likely receive approval if submitted under Rev. Proc. 2000-41." Opinion This IRS response is probably a result of the exact wording of the Rev. Proc. It is not a common sense result. A better solution would have been for the Rev. Proc to have authorized any symmetric corridor within the 80% / 120% range. It seems likely that this will happen only thru a formal revision to the Rev. Proc. itself.

For clarity: - new plan? - what is plan year? - when you state "2001 PYE ratio", what date does it refer to?

Would it help (in the future) to have a "last day rule"?

I agree with Katherine's comment RE the intent, but Keith also has a good point about the actual language. Poor drafting. However, when document provisions are ambiguous, the next best source of help is precedent. Has this issue been questioned, and decided, previously?

No expert I (that never stopped me from having an opinion). (1) I would show the total cost of the plan, show the expected amount of EE contributions, and the net. (2) Base pay should be defined in the document. If the plan is amended to add the 414(h) feature, then such amendment should specify whether these EE contributions are included in the definition of comp.

I agree with Katherine. In a nutshell, it states that someone who works at least 50% of a 40-hour week will reach the vesting level, assuming 5 such years. Note that this vesting provision is very common among various types of pension and profit sharing plans. Also very common is a written statement that the plan document is more important than the SPD.

http://www.tedgoff.com/today/

Normally, such plans are governed by the laws of whoever created the plan, such as a city or county government. However, this is also a high likelihood that state laws are also relevant, perhaps even more important, since most local governments derive their authority from state legislation. The first place to seek information is almost always the HR function of your local goverment. It is possible that your plan is a "subset" (using that term very loosely) of a state plan. This attorney has a website with lots of resources that might help you, although navigation may take some time. The link to state government retirement systems might be a good place to start.

Well, it is not surprising that www.mumbojumbo.com is a real website. However, isn't it the lawyer's credo? Oh, wait, I'm an actuary; it's my credo!

Not being an attorney or versed in Latin, I had to look up "nunc pro tunc". Google search found this: Nunc pro tunc literally means "now for then." This phrase is used to express that a thing is done at one time which ought to have been performed at another. Leave of court must be obtained to do things nunc pro tunc, and this is granted to answer the purposes of justice, but never to do injustice. A judgment nunc pro tunc can be entered only when the delay has arisen from the act of the court.

Revenue Ruling 77-2 http://www.taxlinks.com/rulings/1977/revrul77-2.htm

Good advice from mbozek and QDROphile. But, how about opting for simplicity? If the QDRO does not address this situation, then the plan does nothing (that is, continues payments per the order). If the parties want to stop payments, then let them pay to have the court change it. In the meantime, the plan and sponsor stay out of it, incurring zero additional expenses.

Does the QDRO say anything about stopping payments if the participants remarry? If not, then the plan administrator probably has no authority to make a change. Not usually a good idea to impute yourself into the judge's chair.

MGB is 100% correct. Holy cow! the Mississippi PERS provides an incredible benefit. Where do I sign up? http://www.mississippi.gov/frameset.jsp?UR....state.ms.us%2F

Sheriff? Levy? Do you mean that the local sheriff is delivering a levy? In other words, what is the source of the levy?

IRS Reg 1.412©(3)-1(d) should provide the answer: (d) Prohibited considerations under a reasonable funding method (1) Anticipated benefit changes (i) In general. Except as otherwise provided by the Commissioner, a reasonable funding method does not anticipate changes in plan benefits that become effective, whether or not retroactively, in a future plan year or that become effective after the first day of, but during, a current plan year. (ii) Exception for collectively bargained plans. A collectively bargained plan described in section 413(a) may on a consistent basis anticipate benefit increases scheduled to take effect during the term of the collective-bargaining agreement applicable to the plan. A plan's treatment of benefit increases scheduled in a collective bargaining agreement is part of its funding method. Accordingly, a change in a plan's treatment of such benefit increases (for example, ignoring anticipated increases after taking them into account) is a change of funding method. (2) Anticipated future participants. A reasonable funding method must not anticipate the affiliation with the plan of future participants not employed in the service of the employer on the plan valuation date. However, a reasonable funding method may anticipate the affiliation with the plan of current employees who have not satisfied the participation requirements of the plan.