david rigby

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?

I have a plan that offers lump sums to all retiring employees. Current data shows 53 people in pay status and 58 who have received lump sums anytime in the past. Don't know for sure, but I suspect this is a direct result of the J&S requirements for spousal signoff.

Yes, Rev. Ruling 2001-62 is the correct one. But a word of caution. I should have pointed out that the change in mortality table for the purpose of determining a minimum lump sum. The plan definition might be different.

Perhaps my original suggestion could be modified as follows: Hire a competent pension actuary to design your procedures. A existing product/service may already exist!

Purchase of an annuity is usually an option. However, it is the participant's option most often. Your situation seems like a good solution on a practical level. However, if the plan sponsor already has another DC plan, you might consider the alternative of merging the MPP plan into the other.

Keith is correct. However, I would not bother with a "load" for the unisex mortality. Instead, just use the appropriate mortality table in the calculation. BTW, for most US plans, the applicable mortality table will be changing on 12/31/2002.

Perhaps it is just my bias, but I am partial to the phrase "Hire An Actuary".

Or do you mean that the TPA will reside in Bermuda? (It is a shame that they no longer teach sentence diagramming.)

Assuming that "cash option" means the addition of a lump sum form of benefit distribution, a simple technique of estimating any increased funding (and expensing) needs is to value the post-decrement liabilities using an interest rate that more closely follows the GATT rate.

In the U.S., most of the contributory DB plans are sponsored by a governmental organization. If that is the case here, please use caution in applying the Code.

Some valid points from mbozek. An issue that has gotten little attention in this discussion is cash flow. While plan X may be 105% funded (and there are many methods of measuring this), plan Y might be 75% funded. Of course, it is desirable to make these measurments in the same manner and with similar sets of assumptions (especially the discount rate used for the time value of money). Assuming that, then the lower funded plan will require greater contributions (that is, more cash from the plan sponsor). This might be useful to a prospective investor. I don't mean to imply that cash flow is the only issue. However, it might be worth mentioning, particularly in a published article, that the total cost of any pension plan is not what goes in but what comes out in the form of benefits and expenses. The cash that is used to pay these benefits and expenses comes from investment income or cash contributions. If investment income is less than anticipated, then additional cash contributions will be required.

Try this thread: http://benefitslink.com/boards/index.php?showtopic=15664

You might ask that it be submitted in the next Gray Book. Contact Larry Sher or Don Segal. Email addresses available at http://directory.soa.org/CGI-BIN/LANSAWEB?...web3+mdx000+prd

If you have old exams, it also helps to take a practice exam, under timed conditions.

Well, to be precise, the quoted items for General Motors are found in the Schedule B for the plan year beginning 10/01/1999. Thus, for example, the actual investment return would apply to the actuarial value of assets for the 12 months ending 9/30/1999. www.freeErisa.com (It is very possible that the actual yield on market value of assets was higher.) But more importantly, as MGB points out, let's not get confused about actuarial assumptions for funding purposes (for example, those items quoted by vebaguru) and accounting purposes (which seemed to be the focus in the original post). And another point, the assumed rate of return (for accounting purposes) can legitimately be affected by the asset mix. If the plan sponsor chooses a more conservative investment strategy such as 40% stocks and 60% bonds, then the expected yield (long-term average) would be lower than a 60/40 mix.