david rigby

How far back do your records go? If you know about an error, seems like a good idea to do whatever you can to correct it, without regard to time.

And some of those morons were professors?

I have FIL method, changed the asset method to an approved asset method in Section 3, and the result is a small negative unfunded. Does section 6.02(6) prohibit this change (that is, under automatic approval)? or does it, in conjunction with Section 4.01(2), automatically entitle (require?) me to set the unfunded to zero? I think this is the answer: since the unfunded is negative, automatic approval is denied. Period. However, I might still have automaitc approval to change to something else anyway, including changing from FIL to FIL. Am I reading correctly? Comments?

Clearly, you lawyers have all the fun!

There might be another point w/r/t the "cash flow" issue. If the funded status of the plan, and the actuarial funding method, permit a contribution range, then the employer can make his $X contribution per month to even out cash flow (a good idea in my opinion), staying within that range. This lessens your worries about "not enough" or "too much." If the spread between the min. and max. contributions is small, then a change in funding method might create some flexibility.

Oops, I left something out. Mike is correct. Also a good point about "what is the point."

Another way to get to the same site: http://www.taxlinks.com/

Yes. (In following comments, I am assuming that the plan year and the company fiscal year are both equal to the calendar year. Also assumed is that there are not carryforwards from the prior year.) IRC 4972 imposes an excise tax on amounts contributed "for the taxable year" [cite is section 4972©(1)(A)(i)]. By the way I read your description, the amount contributed by 9/15 was at least equal to the 412 minimum but less than the 404 maximum for the prior plan year. Thus, 4972 is not violated. Stated another way, any amounts contributed after 9/15 may not be counted as contributions for the plan year ended on the prior December 31. Amounts contributed after 9/15 will thus be deductible in the current fiscal year. Depending on other factors such as cash flow and taxable income, if (by 9/15) amounts more than the 412 minimum have been contributed, then the plan sponsor has the flexibility to determine what plan year this "excess" will be applied to.

And you can find Revenue Procedure 92-64 here.

Minor modification to comment from Archimage: The determination of whether an audit is required is whether the plan has over 100 participants. The number of company employees is not relevant. BTW, there is no requirement that the plan auditor be the same as the company auditor.

I disagree with RCK's conclusion (3). The current beneficiary is not the spouse, and no spousal approval was required at the assignment of that beneficiary. Why would the retiree need the spouse approval to change now?

This may be grasping at straws, but... For the current retiree, what was his employment status at date of plan termination? If active, perhaps you can respond to the IRS that its claim of discriminatory is ridiculous.

Again, what does the plan say? The plan can define "eligible spouse" by placing a minimum on the period of marriage. The longest the plan can use for this definition is 12-months, but look to the plan definition first. You state "The participant has obviously been terminated and is eligible for a distribution." That is not so obvious to me. What does the plan say about termination of employment? If no POA, it seems unlikely that the plan could make any distribution based on the spouse's statements. You might also want some proof that this really is a spouse. If the marriage certificate is dated after the stroke, caution might be in order. If there is an ex-spouse, be sure to check your files to make sure there is no QDRO. It's easy to overlook.

The frequent response is "what does the plan say?" The likely result is that the plan will specify that no one (not the retiree, not the plan sponsor) can change the form of benefit distribution after it has begun. It likely will also permit a retiree that chooses that form (5 C&C) to elect any beneficiary he likes, with spousal approval if married. If the retiring employee is not married (at the date of commencement) then spousal signoff requirements are (probably) not relevant. I conclude there is no spousal signoff issue now. The plan terms will determine whether the beneficiary can be changed.

In my opinion, that would be covered under 411(d)(6). See Q&A-1. http://www.access.gpo.gov/nara/cfr/cfrhtml...26cfrv5_00.html

I think that is possible. Any other opinions?

The "recalculation" is only for the purpose of determining if you have a quarterly contribution this year. This does not change your entries for the Schedule B, unless the IRS tells us otherwise. They did not in the recent Enrolled Actuaries Meeting.

I can tell you who not to call. Don't call your Senator or Congressman. Such call might (not necessarily) get action but it most certainly will annoy the agent(s) who have to stop whatever they are doing to respond to a question from Capitol Hill. The end result can be more time in review.

At the 2002 Enrolled Actuaries Meeting, when asked about the 30-year treasury rate, the IRS representatives stated they were working on it and that they expect to have a rate for February 2002 soon (my paraphrase). They seemed to understand the sense of urgency. I expected that we would get a February rate within a week. It is now 15 days. Anyone heard anything else?

I think: (a) Yes. To pay the benefit less frequently would be contrary to what the plan says. To amend the plan in that manner would (likely) violate 411(d)(6). To amend the plan to be more generous is probably permitted, but possibly irrelevant. (B) See (a). © If the participant is receiving an annuity form of distribution, the value of the annuity is irrelevant. If that participant has an option to receive a lump sum, then that lump sum (as well as any other optional forms) should comply with the terms of the plan. (d) I doubt it. Those who are eligible for early retirement (likely) would be entitled to elect an early retirement annuity under the plan. The value of that participant's lump sum option (if available) may or may not reflect any early retirement subsidy, depending on the terms of the plan and prior administrative practice.

No.

Not trying to be picky, but, in the context of SFAS 87, what do you mean by "...no assumption of future changes allowed"?

Perhaps a terminology issue? Your question refers to "paying out". The following IRS "Special Tax Notice" contains a reference to "10-year averaging" with respect to the taxation of a distribution. http://www.benefitslink.com/IRS/notice2002-3.shtml

It depends. Sounds like part of your assumptions to me. For example, you may have an assumption that X% of those eligible for the lump sum will actually take it. Then you should probably determine the amount of those lump sums, using your best estimate, and then use the SFAS 87 discount rate to value them in today's dollars. Any other opinions?

To be a bit more precise, a distribution can be "forced" when the plan terminates, whether or not the amount is greater than $5000. If greater than that amount, then the participant might have some choice about the form in which it is received. - If the plan termination offers a lump sum, then the participant can choose an annuity, in which case the plan will be forced to purchase that annuity on the commercial market. - Alternatively, the plan termination might be accomplished thru the purchase of annuities for all employees, in which case nobody gets a choice.