david rigby

Since the original post stated "church", I assume the audit has nothing to do with the IRS, but is related to some internal (or CPA audit) of the plan records. (Of course, this could be a "church plan" that has elected to be in compliance with ERISA.) Katherine's advice seems pretty good to this non-lawyer. If your father believes the audit is incorrect, it is very reasonable to request that the pension board provide documentation of why they want to reduce his benefit, with as much detail as possible. He may need a legal representative.

If the proposed benefit is intended to offer a lump sum whose present value is less than the 417 present value, does not sound kosher to me.

Interesting question. Just guessing, but it seems that your "stepping into the shoes" logic is a good start, assuming you mean that the AP gets the same diversification rights as the participant. However, it may be that the plan can also be more generous than this.

Q&A 28 from the 2002 Gray Book: QUESTION 28 Retroactive Increases to Reflect EGTRRA Pay Cap IRS Notice 2001-56 explained that it is acceptable to take into account earnings of a participant up to $200,000 in periods prior to 2002 for purposes of determining benefit accruals for plan years beginning on or after January 1, 2002. An example in the notice demonstrates this for a final average pay plan. Can an accumulation plan, including a cash balance plan, provide additional accruals on incremental pay up to the new limit for past years? May additional accruals be provided to active employees in the first year the EGTRRA change is effective even if the employee does not otherwise accrue additional benefits under the plan's benefit formula (for example, due to a failure to complete 1000 hours of service)? RESPONSE A plan sponsor is not precluded from creating any particular plan formula effective for plan years beginning on or after January 1, 2002, as long as it specifies that pay for the current or any prior year in excess of the new limit is not considered. Thus, an accumulation plan, including a cash balance plan, can be amended to provide that a participant's accrued benefit as of the beginning of the 2002 plan year is equal to the benefit that would have resulted had the compensation limit been $200,000 for 1994 through 2001. The difference between this amount and the accrued benefit as of the end of the 2001 plan year (based on compensation limited to $150,000, as indexed) is treated as an accrual during 2002. The modified formula must also meet any additional applicable qualification rules. For nondiscrimination testing, for example, all the additional accruals need to be tested in the current year, based on the usual testing options of annual, accrued-to-date or projected testing. Employees currently providing services to the employer may be included when providing these additional accruals even if they would not otherwise accrue benefits under the existing plan formula. As a result, these current employees would be "benefiting" and would be considered as such in applying all relevant coverage, nondiscrimination and minimum participation requirements. If the individual is no longer providing services after the effective date of the new limit, then the individual is consider a "former employee" and separate testing under the rules for former employees is required if additional accruals of any type, including accruals to take into account the additional compensation, are provided. See Question 27 for additional information on minimum participation, coverage and nondiscrimination rules applicable to these accruals.

I cannot locate anything directly addressing the question of a plan year the begins other than the first day of a month. However, Q&A-1 from Notice 89-52 states "...quarterly installments are due 15 days after the end of each quarter." It does not refer to "calendar quarter". In addition, the first paragraph of the "Background" section of Notice 95-31 includes "...quarterly contributions are made not later than 15 days after the end of each quarter of the plan year." My hunch would be to use a literal read of the language. For example, I have a plan that begins on March 31. I think the first quarterly contribution due date is July 14.

Let's see if this works.

I agree with Blinky's comment that it is not "reasonable" under the perspective of the IRS. See GrayBook Q&A's 1993-10, 1993-12, and 1999-6. In the latter, the IRS states that the

I agree.

How about the phrase quoted above: "...and the participant has a court order to such effect..."?

Non-lawyer opinion. "Legally separated" means a court is involved. A couple can get "separated", even with a "signed separation agreement" without going to court, but the term in the reg. is intentional, and to make sure it has a judge behind it.

http://www.actuary.org/pdf/practnotes/pension_0501.pdf

Yes. I should have been a bit more specific. If the form of benefit includes a survivor benefit to a specific person, then it is unlikely any pension plan would allow a change following commencement.

Not sure I agree with Keith's last comment, although the rest of his answer is excellent. Absent a conditional spousal waiver as Keith mentions, if a participant is receiving a retirement benefit under a life with 15 year certain form (for example), the plan does not care who the beneficiary is. The plan's concern is that the form of benefit cannot change.

Denied!

Hey Kirk, where can I sign up for that plan?

Top heavy status is determined at the date of 5/31/2002 for the purpose of giving (or not giving) a top heavy accrual during the plan year beginning 6/1/2002. As always, be careful if you have more than one plan.

I might volunteer to "accompany" the patient.

Probably the terms of the plan will already describe when you need to know the value of assets. For example, if a profit-sharing plan permits payments to terminated employees four times per year, then you need to know the assets on a quarterly basis. Almost all plans need to have type of accounting at least annually. The fact that the plan sponsor has undergone a structural change does not necessarily have a direct impact on the plan.

What kind of plan? What are you doing with the valued assets?

True. For example, benefits under the plan generally cannot be reached in a bankruptcy, but that is not true of an IRA.

Generally, a qualified plan (pension, profit-sharing, 401k, ESOP, etc.) is not subject to such action. (It is possible that different rules apply to plans sponsored by state or local governments.) Internal Revenue Code section 401(a)(13) reads as follows: "(13)Assignment and alienation. - (A)In general. - A trust shall not constitute a qualified trust under this section unless the plan of which such trust is a part provides that benefits provided under the plan may not be assigned or alienated. For purposes of the preceding sentence, there shall not be taken into account any voluntary and revocable assignment of not to exceed 10 percent of any benefit payment made by any participant who is receiving benefits under the plan unless the assignment or alienation is made for purposes of defraying plan administration costs. For purposes of this paragraph a loan made to a participant or beneficiary shall not be treated as an assignment or alienation if such loan is secured by the participant's accrued nonforfeitable benefit and is exempt from the tax imposed by section 4975 (relating to tax on prohibited transactions) by reason of section 4975(d)(1). This paragraph shall take effect on January 1, 1976 and shall not apply to assignments which were irrevocable on September 2, 1974. (B)Special rules for domestic relations orders. - Subparagraph (A) shall apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a participant pursuant to a domestic relations order, except that subparagraph (A) shall not apply if the order is determined to be a qualified domestic relations order." Note that the first sentence of (A) is pretty strong language. The reference in (B) to a domestic relations order is the express exception to (A).

Although not a "hard rule", my experience is that the lack of clarity in plan provisions should be addressed by either amending the plan or by administrative interpretation. The latter happens often, but its documentation happens less often. In either case, consistency is important. That is why plan documents must be in writing. To be fair, it is possible that the original sponsor had one consistent but undocumented interpretation. Later administrative authority may have had to make a best guess as to what that was, and may have done so without benefit of prior information. Your continued insistence on their consistency is a good idea. But allow for the fact that they may not have any good information. It would not hurt to suggest other names that they could research, although records may not be available.

Perhaps not what you want to hear, but your phrase "the age 65 Social Security Benefit projected as of December 31, 1988" is consistent with the "level future earnings" as mentioned earlier. But you should continue to request additional documentation.

Ah a clue! It may be that earlier calculations used the "zero future earnings" technique, and later calculations are using the level future earnings technique (both probably without adequate docuemntation). Now you have an inconsistency that the plan sponsor should address. (I am not stating that one is "more correct" than the other, only that the process should be documented and consistently applied.)

Perhaps you could try to obtain: - a copy of the calculation of the offset actually used. - a copy of the administrative interpretation from the plan's "retirement committee" that is used to fill in the "gaps" of the definition of PSSB. If the plan definition does not define future compensation (alternatives described by MGB), then it would be impossible to calculate the PSSB without some additional information.