david rigby

3. invest in some other assets (to avoid this problem in the future).

I just reviewed a DB document that included the following steps: - company will attempt to locate "missing" participants, - after 5 years from date payment is due, send a registered letter to last known address, - 3 months after letter, if no response, the Committee may "cancel" the benefits, - if the participant later shows up, the benefits will be paid.

I got the same results you did. But one caution. Let's be clear that the mortality table in use here is the unisex version of the GAR94 table, with projection to 2000, issued by the IRS in Revenue Ruling 2001-62. http://www.benefitslink.com/IRS/revrul2001-62.shtml

Sounds like you both need some tax advice. The pension plan cannot send anything directly to you without a Qualified Domestic Relations Order (QDRO). Highly unlikely that a divorce order would also consititue a QDRO. That is, the divorce order likely tells him to pay you, but it does not tell the plan to pay you. If he is not paying you, then your attorney should probably seek judicial enforcement, depending on the laws in your state. It may be possible to have the court issue a QDRO, even though he has already retired. You should probably anticipate some attorney costs, but maybe you can make him pay that. Highly unlikely that such a QDRO would be retroactive. By the way, the common advice given around here is that if your attorney does not know the meaning and importance of a QDRO, then you need a new attorney.

Minor clarification. Are you stating that both plans are terminating? The PBGC will take "missing participants" only if the DB plan is terminating. BTW, I'm not sure about the answer to your question, but I doubt that the PBGC would look favorably on it. There is a proposed IRS reg that permits a DC plan to set up an IRA for missing participants under certain circumstances. http://www.benefitslink.com/IRS/revrul2000-36.shtml

As so often is the case, the website can be a great place to start. Go here. Use the Search function with words such as "demutualization" or "prudential".

One minor caution. IRC 411(a)(8) defines the latest point at which the plan can define NRA. 411(a)(9) then defines "normal retirement benefit", commencing at NRA. But many plans also use a definition of NRB. This plan definition should not be confused with the Code definition.

Sounds to me like that provision does incorporate 401(a)(17) by reference. Yes, the plan can be amended to use a $170K limit, but IRC411(d)(6) will require that any resulting benefit not be less than the accrued benefit immediately prior to the change. Has any participant already exceeded $170K? If not, such amendment should accomplish your goal.

I'm skeptical also. Sounds to me like a plan amendment, which means the plan is not frozen. Or perhaps it is frozen, then amended, and frozen again.

Suppose a DB plan with mandatory employee contributions: 1. Is it possible that SSCRA could be interpreted to require the employer to make contributions on behalf of the employee? 2. Is it possible that SSCRA could be interpreted to require a minimum of 6% interest? I think the answer to both is NO, but let's hear other opinions.

"...Alternatively, you could treat the switch to the new employer as having terminated the employees' service with the old employer. That would require full vesting of account balances." Why?

Probably look to the terms of the plan for answers to both questions. w/r/t the union status, it appears that the employment status has not changed. Why would anyone think that union representation changes employment status? The presence of the union may or may not change whether the employees are eligible for future accruals. w/r/t the layoff vs. termination, it's a good question. Ideally, the plan should address it, but we should not be surprised if it does not. Then might look to other personnel practices for help in being consistent. As always,precedence can be mighty useful.

Your alternatives should work. Another method is to limit any HCE's allocation to $X or Y%, without limiting NHCEs. Remember that you are permitted to discrminate against one or more HCE's.

To the best of my knowledge, the provisions of a "divorce decree" are not relevant. The plan cannot divide the benefit between X and Y. The only document that can do that is a Qualified Domestic Relations Order.

Try page 10 of IRS publication 590. http://www.irs.gov/pub/irs-pdf/p590.pdf

Huh? I don't see any double attribution. Are the families related to each other?

Entirely dependent on Canadian tax law.

... a bit more. Schedule B is open to public inspection except when attached to Form 5500-EZ. Schedule E is not open to public inspection. Schedule F is not open to public inspection.

Andy, I think you are on the right track. The occurrence of a distributable event is important. If the person has attained such an event but returned to employment, then you have some flexibility. For example, EE leaves at age 50 as a VT. Reaches age 55 and commences payments under early retirement provisions. Rehired at age 58. The plan could suspend payments, subject to the existence of such provisions in the plan. The plan is not required to have such provisions. The accompanying discussion by KJohnson and Kirk focuses on whether a plan can be amended to add such provisions when not already present.

What do you want to do? If the goal is to permit employees to manage their retirement, then the plan provisions and the personnel administration can, in tandem, help. Suppose the employee has a legitimate severance of employment amnd commencement of benefits under the early retirement definitions. At a later date, the employer rehires the employee (possibly parttime, but not necessarily), and the plan benefit does not change. Ideally, the plan should make it clear that no suspension will occur, the employee can contine to earn credited service, and that benefit at subsequent severance of employment will be redetermined at that time, likely with an adjustment for the value of any benefits received. In the real world, this very often means that the benefit does not change at the later retirement date. This might be a very good process, depending on the type of employer. Example, a hospital. Note, that the original severance of employment should not be on Friday, with a rehire date on Monday. Don't play games with the timing.

In what way does having employees join a union affect whether a plan is top heavy? Are those employees exiting the current plan?

Yes. To elaborate on Frank's alternatives: the method chosen is an accounting method. The plan sponsor chooses it the first time. To change it may require prior IRS approval.

Your title to this question confused me. Are you asking about retirement benefits in pay status? LTD coverage as an active employee/LOA? What type of plans are you referring to? Are they covered under a benefit program of a Canadian company? US company? US subsidiary of a Canadian Company? Canadian subsidiary of a US company? How are these employees paid? Are they Canadian citizens living in the US? Paid in US dollars? Do they work for a US corporation? It seems unlikely that Canadian law could modify the terms of any plan in the US.

I agree, it may not matter. Just curious about whether this owner is applying the same standards to all employees. Also curious whether the owner actually understands what plan he really has. One of the worst scenarios is a top-heavy 401(k) plan (unless there is another plan to absorb the minimum).

Are all employees being treated the same?