david rigby

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.

It is possible, maybe even likely, the employer's policy on LOA/sabbatical states that if the EE does not return to active employment at the end of the LOA/sabbatical, then the severance of employment will be considered as the beginning of the LOA/sabbatical. It is possible that plan documents could have similar language.

Much confusion. First, you should probably get IRS publications 590 and 575. www.irs.gov or 1-800-TAXFORM. Next, you refer to 20%. This is probably the amount of federal withholding. It is only an approximation of the tax, not the tax itself. For any [pension, profit-sharing, 401(k), etc.] plan, whatever amount is distributed to you will generally be subject to federal taxation in the year it is paid, unless rolled over to an IRA. State tax as well. It is unlikely that a disability status will change that. Get thee to a tax advisor, preferably one who has some familiarity with pension plans.

The comments from MGB and jaemmons are pretty much what I was expecting: specifically, that all references (including the statute) are to a plan, rather than to the employer. Thank you both for your help.

Probably an easy question, but I cannot find an answer. If a plan sponsor is a member of a controlled group, is a possible partial termination evaluated on a plan basis or a controlled group basis? Any cites? (I have already searched the Message Boards for an answer.) Just for reference and not on point, the only Q&A in the Gray Book related to partial terminations is Question 1995 - 22: Multiple Employer Plans -- Terminations and Partial Terminations Two corporations form an IRC Section 413© plan. Corp A has about 2000 employees participating; Corp B about 100. The regulations seem to say that, at least for termination and partial termination purposes, all employees are to be treated as if employed by one employer. Employer B goes out of business. Is there a partial (or full) termination? Must all employees of B be 100% vested? RESPONSE: For termination and partial termination purposes, all employees are treated as if employed by one employer. Thus, given the small percentage of total employees affected by B's going out of business, it is unlikely that there would be a partial termination requiring full vesting of B's employees.

Freeze the money purchase plan? Is this a one-participant plan?

Earlier thread: http://benefitslink.com/boards/index.php?showtopic=13111

I would go further than RTK and suggest that it is very unlikely that an insurer will sell you a deferred annuity on one participant unless the premium amount is high, and maybe only a short deferral period. Thus you can't buy the annuity, and you can't complete the plan termination until you buy the annuity. The practical result is to buy an immediate annuity, a J&S if the participant is married. I don't know if this causes any problems in the regulatory arena.

I wonder about someone who is looking for ways to increase administrative expense. We once had a client that thought they were PBGC covered, then "discovered" they were a governmental employer. The plan sponsor provided legal and auditor opinions of this and asked the PBGC for a refund of premiums. The PBGC paid, including retroactive years.

Just one more reason that every man, woman and child should hire their own actuary!

Could this be an "end run", attempting to get a distribution from the plan when the participant is otherwise not eligible?

Better yet, is there a reason? Seems appropriate to consider any statute of limitations in the context of "why". Also, does the plan permit this action?