david rigby

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.

Perhaps this could help. http://www.ssa.gov/planners/calculators.htm

... and 401(m)

Company A is a wholly owned subsidiary of B, and has been for several years. On July 1, the employees of A are no longer paid directly by A (using A's EIN), but are paid directly by B (using B's EIN). Should B recognize the year-to-date Social Security earnings and tax already paid by A's employees?

It ir my understanding the purpose of that line was to replace the need for a separate signed agreement.

The term "Account" as used in the plan document refers to a bookkeeping function, not to a physical division of the money.

We have done a couple in this office. Our experience is that the IRS is in no hurry to look at it. I submitted one last December 14, with no communication from the IRS to date. Don't forget the acompanying PBGC filing. However, if it is past the deadline (2-1/2 months after end of plan year), a waiver request will not be considered. Period. The IRS user fees are subject to change. They issue a Rev. Proc each January to give all applicable fees. Be sure you find the current one.

Perhaps I misunderstand the question. Are you referring to a discount for the probability that the company will go bankrupt or a probability that the employee will survive (and remain employed) until payment age? (or both?)

Don't do it. Don't have cites, but it is well-established that a new plan must have a new plan number. IRS and DOL will be very unhappy. For the plan name, choose a name that is clearly different from any other plan, so that no employee, auditor, attorney, bureaucrat, etc. is potentially confused. Never ask for trouble. http://www.irs.gov/pub/irs-pdf/i5500.pdf

If the terms of plan A clearly include A1 service for vesting purposes, the Joe would be vested in Plan A. But this should be in the plan, not in some side agreement. The next question is what date B will use to determine service: employment date with A1 or with A. B gets to decide this. If B chooses the date with A, then it appears that Joe is not vested in B. If Joe does not like it, then he can petition plan B sponsor to amend the plan.

Indeed. And be careful that the document does not contain some indirect reference to the Code or IRS regulations (even if not required to).

I would ask first if the plan permits payment to a deceased. Most plans define beneficiary.

http://www.dol.gov/pwba/newsroom/0302fact_sheet.html

Now I would like a variation, similar to MGB's example but with a twist. Company A has 100 employees, 80 of which are active participants in the plan. But A is a wholly owned subsidiary of Company B, which has 10,000 employees and also has its own plan(s). At a single date, the following actions occur: - Plan A is frozen, pending formal merger into Plan B later, - employees in Company A begin participation in Plan B, - employees of A were previously paid directly by A but are now paid directly by B, but were in the same controlled group at all times. A week after this action, 20 employees of A are laid off. Assume all are participants in Plan A. (1) If Plan A were evaluated on its own, then this would probably be a partial termination (20/80 = 25%), but is this the correct test? (2) Is the answer different if we state that 2 months prior (that is, while still actively participating in Plan A), the 20 laid off employees were told of their pending layoff? (3) Is the answer different if the number laid off is 15, followed by 5 more one month later? (Opinion, I don't think this changes anything.)

If there might be precedent, it might be prudent to include it in the analysis.