david rigby

We have received a letter from auditor with the same questions described in MGB's post. I wonder how actuaries are planning to respond to these items.

I agree. That is exactly what I did in a similar situation. But be careful that you purchase the correct annuity, in form and amount. A variation on this is to inform the participant that you will take this action if you do not receive their completed distribution form within X days.

Others opinions are likely, but I suggest a 4% deduction in the next pay period. The 5% in subsequent pay periods.

A 412(i) plan will "shelter" more than a traditional funding arrangement, but what really counts is what the employee gets out of it. Just because the upfront annual deposits are higher does not mean the payout is higher.

Nothing specific, but this should not be a surprise to anyone. It is correct that the rate should be reasonable. Any plan sponsor should be able to defend the choice of any assumption, although a range of reasonbleness almost always applies. Suppose average equity return is 10% and bonds 6%, then a 60/40 asset mix gives about 8.4%. Thus, if the SEC is going to let 9% slide by, then they may have been generous.

MGB is right. A wrap arrangement is supposed to work the opposite from what is described in the original post. Summary by Alf looks pretty good. It matters not that some HCE's are not in the non-qualified plan. Perhaps the original post was mis-worded?

...and spouses.

Such a temptation to simply say NO! However, the proper response is "what is he/she trying to accomplish?"

I agree. The recommendation from here is don't number them at all.

The "legal" part is beyond my expertise. But this sounds like another inefficient investment, providing a transfer of wealth from the plan/sponsor to the broker.

"...the tax proposal is revenue driven as well as agenda driven..." Nope. Perhaps someone else has already stated this: this is the way to create a zero percent capital gains tax rate without the politically unpopular use of that terminology.

I've seen GUST restatements with effective dates from 1997 to 2001. It probably does not matter, as long as you get the right provisions with the right effective dates. Form can be important, but substance is usually more important.

Employee terminated employment in 1988 (25% vested). EE received a lump sum distribution in 1995. Now rehired, and re-terminated. Refer to IRS Reg. 1.411(a)-7(d)(4). http://www.access.gpo.gov/nara/cfr/cfrhtml...26cfrv5_00.html Last paragraph of subsection (ii) indicates that a distribution due to participation is defined as not later than the close of the second plan year following the plan year or termination of employment. Does that mean that a lump sum paid at a later date voids the conditions given to disregard prior service?

I believe that the 10% limitation applies to employer stock and property. Review these earlier discussions to see if they help: http://benefitslink.com/boards/index.php?showtopic=16557 http://benefitslink.com/boards/index.php?showtopic=14565

What is the vesting date? Did benefits commence 11/1/99?

Get thee to an attorney!

Careful. You might get both!

Perhaps this Q&A column can help: http://www.benefitslink.com/qa_columns/who...yer/index.shtml

Yes! That is the whole point, to shift the responsibility to later Presidents, later Congress, later taxpayers. Of course, every prior elected official has done the same thing.

Does the plan require hours? If so, any reason to inhibit the plan being amended otherwise? Alternatively, do you care? Normally, it is the plan sponsor who reports hours and comp. If you tell the sponsor, that the plan requires hours for participation/accrual, then either the sponsor can provide corrected hours data, or see above.

If you think this has no impact on DB plans, you have not read between the lines yet, or thought forward a couple of years. BTW, I am referring to a negative impact. However, every prior attempt at simplification has been "complification."

Additional reading material from Treasury website. Start on page 118: http://www.treasury.gov/press/releases/rep...luebook2003.pdf

Might need tax treaty: http://www.irs.gov/pub/irs-trty/

Please don't forget to leave some for your EA.

As is often the case, one can find help by searching these Message Boards. For example, http://benefitslink.com/boards/index.php?showtopic=16873