david rigby

Actually, Derrin Watson has already answered that question: http://www.benefitslink.com/cgi-bin/qa.cgi...d=234&mode=read

This just posted on BenefitsLink: http://www.dor.state.nc.us/practitioner/EG...RA_pension.html To this NC observer, it is quite a surprise due to the impact on revenues, probably not noticed by most legislators.

You attorneys sure are a fun bunch.

The offset should be determined based on factors, definitions, and administrative practices in effect at date of plan freeze.

Places in the Bible where automobiles are mentioned. a. During the Exodus from Egypt, all the children of Israel were in one Caravan. b. In the book of Acts, we are told that the disciples were all in one Accord. c. In the book of Genesis 3, we read that God drove Adam and Eve from the Garden of Eden. We can only guess that it must have been in a (Plymouth) Fury. d. In Isaiah 40:31 we are told to "mount up with wings as Eagles".

Does the plan have a checking account, or cash account? If so, the ER can make a payment to that account, which is part of its $100K contribution. Then the participant can be paid from that account. Much better audit trail. P.S. If the plan does not currently have such an account, this would be a good time to create one.

If "Guy" refers to a plan covering only one person (or husband and wife), don't think about a waiver. Think about amending the plan, such as a plan freeze.

That is the usual meaning of "freeze". I suggest a freeze amendment be explicit about freezing benefits, service, and participation. Also, look to see if there are ancillary benefits that you might want to eliminate or "tighten"; for example, a disability benefit is not 411(d)(6) protected.

The first thing to do is refuse to work on this plan!!! Then, triple your fee quote (it won't be enough).

Yes. But don't forget about employee relations problems. There may also be "contract" issues, hence my reference to competent legal advice.

Several issues. For example, - Has the plan been amended? If so, then an amendment in the opposite direction could be a problem. - From your description, there appears to be a problem with the agreement between buyer and seller. This does not necessarily involve the plan. Plan and plan sponsor need legal advice.

The resident expert on this topic is Derrin Watson. He has column of Q&A's here.

Take? Pension and profit-sharing plans are (with a few specific exceptions) regulated by federal law. Internal Revenue Code section 401(a)(13) provides that no plan shall permit a benefit to be "assigned or alienated." For example, this means that a creditor cannot get at the money, and the participant cannot do anything to give the money to a creditor; however, once a benefit is paid to a participant, then it is merely part of the participant's assets, no longer in the plan. Does this help?

Can you be more specific in describing your term "partial plan freeze"? Also, are any plan participants covered by a collective bargaining agreement?

...unless the plan provisions make them applicable.

Here is the table I mentioned above. Please note that it is not guaranteed to be the 1971 table projected to 1980, only that its filename leads me to think that. I have not verified any projection.

Several prior discussions related to this topic. You might try the Search feature. Here is one of them: http://benefitslink.com/boards/index.php?showtopic=15887

Interesting discussion. However, Kirk I'm confused by your statement: To this actuary, that seems backwards. The investment policy should come first, then the choice of an assumed rate of return.

Yes. the valuation can reflect any amendment that becomes effective during the plan year, as long as it is adopted prior to 2-1/2 months after the end of the plan year. But be careful to recognize the correct benefits. If the valuation does not include any normal cost, that is essentially assuming that no one will have 1000+ hours prior to the freeze. Is that a realistic assumption? Another caution: the effective date of the freeze will be the later of the effective date in the amendment or 45 days after the distribution of the 204(h) notice. Final caution: the IRS has stated informally that the use of the Aggregate Method is not appropriate for a frozen plan. Gray Book. Let me know if you need the specific cites.

That might be a bit oversimplified. For example, I have seen lots of documents that include the "applicable mortality table as defined in Rev. Ruling 95-6". So, amendment would be required.

Probably not. Consider "salary earned in December". If that is paid in January, then it is part of January wages, and would be included in the W-2 for the January year. However, as is often the case, a careful reading of the terms of the plan may be in order.

As usual, MGB is correct. Gary, here is a link to the Revenue Ruling: http://www.taxlinks.com/rulings/2001/revrul2001-62.htm

I agree. Here is a link to the reg.

I could be missing something, but I see no contradiction. The plan defines compensation and average compensation. The accrual fraction does not alter those definitions.

...and page 7 of the instructions also describe this. http://www.irs.gov/pub/irs-pdf/i5500.pdf