david rigby

I have the perfect solution: - employee does nothing, - employer makes contribution to the plan on behalf of the employee, - employee later severs employment and receives a distribution, - employee sends the money to me. In the meantime, employee names me as his beneficiary.

I think the issue is the same whether the QDRO applies to a Key or a non-Key. But on a practical level, if the T-H test is not even close to 60%, this might be a waste of time. Also, if the plan in question is a DB plan, then it is seems apprpriate to count the alternate payee's portion, even if distributed at any point in the past.

My understanding of FAS87/132 disclosure using the facts given by BDZ: Prepaid Benefit Cost = $80 (Accrued Benefit Liability) = (180) Intangible Asset = N/A Accumulated other comprehensive income = 180 Net amount recognized = $80 The "prepaid benefit cost" is (and has always been) the accumulated difference between actual contributions and NPPC. It is called "prepaid" because it is positive; an "accrued benefit cost" is negative.

Well, that fact just might change things. The minimum death benefit applies to any participant who is vested, even if not currently employed by the plan sponsor. The minimum death benefit provisions are found in IRC Sections 401(a)(11) and 417.

Sorry. REA refers to the "Retirement Equity Act of 1984". This enhanced the minimum surviving spouse death benefit that was first mandated by ERISA, effective in 1976. In a nutshell, the minimum death benefit is a life annuity to the surviving spouse payable as if the employee had elected a 50% Joint and Survivor benefit. If there is no surviving spouse, the survivor benefit can be zero. The minimum applies to any plan which pays benefits in the form of an annuity. A plan can offer a more generous death benefit, but not required. The primary exception to this minimum is government-sponsored plans. My explanation is intentionally oversimplified. If you need additional info, please post.

Perhaps the plan can be designed to exclude this employee by classification (which would not be "management employees who don't have any sense".) Would it be appropriate to wonder why Mr. 75-Year-Old is a management employee?

Irrevocable waiver of participation?

Sounds like an immediate amendment to freeze the plan would be useful. Suggestion: the amendment which does the freeze should specifically freeze benefit accrual service (whatever name the plan uses), the benefit amount, and participation. Vesting service cannot be frozen, so participants will continue to vest as they earn additional vesting service. The plan can remain frozen for as long as needed. The options available upon plan termination will be based on the terms of the plan. Unless the plan specifies otherwise, the termination could be provided by the purchase (by the plan) of one or more annuities. This may or may not be less expensive than providing individual lump sums.

Mike is correct. But to clarify a bit: assuming an ERISA-covered plan, the minimum REA death benefit is the only death benefit that is protected under 411(d)(6).

I'm not sure there is a requirement that all forms have to be actuarially equivalent to each other. Only that they have to be actuarially equivalent to the normal form, using the definition of AE in the plan.

If the document does not say, then the sponsor is put in the position of interpreting a phrase like "actuarial equivalent". That could be problematic, especially if the interpretation includes mortality pre-retirement but excludes it post-retirement. I come down in favor of being specific in the document.

I thought this is a plan definition issue.

I'll have to make some assumptions. Assuming that by "RPA FFL", you mean the "RPA '94 FFL Override", and assuming that the OBRA 87 FFL is more than the 944K, then the answer to your question looks like YES. But don't forget two items: 1. interest to the EOY (if not already included) 2. check for the Additional Funding Requirement. I am a bit confused why you are asking the question. Seems pretty vanilla. Perhaps there are other facts not presented?

Generally I agree with above responses. However, worth noting that there could be significant variation among different industries. For example, it is likely the textile industry will have a benefit less generous than the automotive manufacturing. BTW, it helps if you summarize your question in the title of the discussion thread.

Sort of. Looks like you have exhausted the possibilities for calculating the liabilities. You can modify the calculation of the assets in two ways: 1. Have the sponsor put in additional $ for the prior year and discount it back to 7/1/01 (oh wait, you are already past the March 15 due date for contributions so that won't work). 2. Modify your determination of actuarial value of assets for the prior plan year. Recall that to calculate the asset at 6/30/2001, you have to use the method of calculating the actuarial value of assets in effect at 7/1/2000. If you can modify that, assuming the Schedule B has not been filed, then you can (must) use that technique at 6/30/2001. Thus, this does not work if you change your asset method at 7/1/2001.

Are you hiring?

Don't forget that EGTRRA changed the definition of how the top-heavy test is done. Might be worth a review to make sure this has been done correctly. BTW, this EGTRRA change is not optional.

You might read this Fact Sheet from the PWBA: http://www.dol.gov/dol/pwba/public/pubs/bkrupfs.htm It is difficult to imagine a liquidation bankruptcy that does not terminate the plan. There may be examples where the court treated that as "automatic".

Doesn't matter how many games they win. They will lose to the Braves in the NLCS.

No. 402(g) refers to the "... the elective deferrals of any individual for any taxable year..." After-tax employee contributions are not made to a "401(k) plan", but can be made to a profit-sharing plan if such plan permits. That is, think of 401(k) as a special feature that a profit-sharing plan is permitted to have. After-tax contributions are another special feature that a PS plan may have.

I disagree with the implication that it is difficult to count hours. Probably very easy with most payroll systems. Elapsed time method makes sense when most of the participants are full time, when counting of hours does not provide any distinction.

Hmmm. I did not mean to imply that some external service provider was at fault, only that such provider might expect to be the target of blame. It is even possible that the employer got some incorrect advice many years ago.

I think the 415 issue centers around the provision (in some plans) that incorporates 415 by reference. Thus, it would be changed, in plans that use this reference, without any action. Plans without such language would an amendment to recognize the new limit. The issue about the 401(a)(17) limit is based on the fact that plans are not supposed to incorporate that section by reference. Yes some do, but that may not be a valid cite, from the IRS viewpoint. So, if the plan is not permitted to incorporate the reference, then it cannot automatically change.

It is a bit breath-taking to think that service crediting might be incorrect for (at least) the last 25 years. If true, the employer might assert a claim that some advisor should have been monitoring this.

Generally, not exempt from FICA. (Might be some exceptions, as described by mbozek, but rare.) When employer dollars under a Section 125 plan are directed to the 401(k) plan be employee election, they first go into pay, hence subject to FICA taxation. Because they are deferred under a 401(k) election, they are exempt from (federal) income tax. These dollars are subject to the 402(g) limit.