david rigby

QDROphile has pointed us to the correct IRC citation. Note that the last phrase of that paragraph reads "... and is witnessed by a plan representative of a notary public...". My read is that the plan sponsor does not have an opportunity to specify only one of these choices in the plan document. Is that correct?

I am looking for some historical information on the unrounded wage base. Anyone have a source of this data?

A QDRO cannot change the terms of the plan, so it cannot force the plan to add a valuation date. Thus, the response to the QDRO might give the prior valuation amount and a statement that the plan investments are valued only once per plan year. However, the Plan might already contain language that permits the Plan Administrator (not the TPA) to order an additional valuation date. I'll leave it to others to decide if, and under what circumstances, that is a good idea.

Didn't work here either.

Try this link to ask a question: http://www.benefitslink.com/qa_columns/adv...questions.shtml

You must really be a (car) nut to own two Mavericks!

In the U.S., anyone can sue anyone for any reason. But is it likely to succeed? Is it worth the cost of litigation? etc.

I am helping a client prepare a filing for waiver of minimum funding standard. I find in Rev. Proc. 2001-8 a user fee of $2,050. Any aware of any subsequent changes to the user fee schedule?

Depends. Is this plan subject to IRC 410?

Such threats can be useful, but flexibility is also useful. As the prior post notes, a lump sum was paid in error, but the plan is willing to permit repayments monthly. This can go a long way toward solving the problem without rancor. However, it is also prudent to identify what will happen if the repayment stream is interrupted by death. There is not a single correct answer, just advisable that all parties know.

Assuming this plan is subject to ERISA, the"anti-cutback" provisions of IRC 411(d)(6) would apply to those who are participants as of the effective date of the amendment (or actual adoption date, if later). That is, there is no requirement that any special "grandfathering" apply to employees who have not yet become participants.

ERISA pre-emption does not apply to taxation of income at the state level. It is very likely that some states will not have brought their tax laws into agreement with EGTRRA. (This happens every time Congress makes a change.)

Perhaps some more information would help. Ages? Will the plan and company survive beyond the retirement of the older HCE? What "goals" do you have in mind?

I believe the Notice to Interested Parties is an advance notice that you are making a filing request with the IRS. If no filing request is made, it seems logical that no advance notice is relevant.

.....and if that lawyer does not know the meaning and significance of a Qualified Domestic Relations Order, keep looking.

I would not know the details but I recall seeing many (dozens?) court cases where the answer was exactly that: sorry, this law does not apply because of ERISA pre-emption. End of discussion. Probably several of these originated in Mass. Perhaps even some were decided in federal court in Boston. Might be interesting to hear how the Mass. Secretary of State reacts to actual facts.

If it helps to have more than one vote, I agree.

No lawyer I, but it seems like a bad idea. Seems like the plan should stand on its own. But I await other opinions. I also ask a different question. Has anything like this happened before? If so, is there an administrative practice to state how it was handled? It may be that the plan will (should?) decide to eat the loss.

RCK's advice sounds good. One minor modification: when specifying the name of the new plan, it might be a good idea to describe it as the successor to the old plan. Yes, I know it's picky, but you rarely have too much documentation. For example, if the DRO is for a former employee who still has a benefit/account in the old plan, that employee may never have been an employee of the successor company. Just avoid the confusion.

With respect to the specific dates mentioned, there are many sponsors who make an administrative interpretation that the employee may enter on January 1 after hire, on the assumption that, since it is a (pretty much) universal holiday, NO employee can begin work on January 1. If so, consistency of application is important. Thus, the answer may not be found in the plan, or the SPD, but in that well-documented administrative manual maintained by the sponsor.

Here is the text of the Q&A mentioned by MGB: QUESTION 18 (2001) Method Change: Automatic Approval to Remedy Unreasonable Allocation of Cost Section 4.01 of Rev. Proc. 2000-40 gives approval to funding method changes that are necessary to remedy an unreasonable allocation of costs. One situation where this special approval applies is where the unfunded liability under the frozen initial liability method becomes negative. Under this method, the unfunded liability may be reduced to, or below, zero under any of the following circumstances: - All bases are fully amortized - All bases are eliminated due to the plan being in full funding - Excess contributions are sufficient to eliminate the unfunded liability - Charge bases are amortized more rapidly than credit bases, resulting in required contributions sufficient to eliminate the unfunded before the expiration of all bases 1) If the unfunded liability is reduced to exactly zero, must the funding method be changed? 2) If the unfunded liability is reduced below zero, must the funding method be changed, or may the unfunded liability be restricted so as to be no less than zero? 3) If the funding method must be changed, and the unfunded liability measured using the entry age normal method is less than zero; must the plan use either the aggregate method, or an immediate gain method? 4) If the answer to (3) is yes, and that the plan switches to the aggregate method, the funding method may be changed back to frozen initial liability once the plan has a positive unfunded liability under the entry age normal method. Would this change be eligible for automatic approval even if the plan had received automatic approval for a change to this same method pursuant to section 3.06 of Rev. Proc. 2000-40 (or its predecessor) within the last four years? 5) If the answer to (4) is no, would the IRS grant approval for such a change pursuant to a request made in accordance with Rev. Proc. 2000-41, notwithstanding section 4.02(2) of that Rev. Proc? RESPONSE 1) No. However, if all bases have been eliminated due to the application of the full funding limit, the method may be changed. In the future, any contribution in excess of the normal cost would result in a negative unfunded liability the following year. At this point, the method would have to be changed. 2) The method must be changed unless the description of the method defines the unfunded liability in such a way as to prevent it from becoming negative. Such description would need to specifically state the methodology that would be applied to prevent the unfunded liability from becoming negative. 3) If the method must be changed from FIL due to a negative unfunded liability, and the entry age normal unfunded liability is less than zero, automatic approval would not be available for a change to FIL. However, the actuary may submit a request to the IRS under Rev. Proc. 2000-41 for a change to a variation of FIL that prevents the unfunded liability from becoming negative. 4) No, the change would not be eligible for automatic approval. 5) In considering the request for approval in this particular situation, the IRS would not reject the application merely due to a recent change to the same method.

Good comments. Another issue is how the Financial Accounting Standards Board wrote Statement Number 87, generally effective in 1986 or 1987. This required standardization in the accounting for pension costs (that is, how and what the plan sponsor recorded in its financial statements). In many ways, this was a very positive step. However, in my opinion (and this is not necessarily shared throughout my actuarial profession), it did create one very undesirable aspect. When plan assets grew dramatically as they did during most of the 1990s, the sponsor might have a negative pension cost. Another term for "negative pension cost" is pension income; thus, the pension plan actually became a profit center for many companies. I believe that is a very undesirable result, for reasons too lengthy to discuss here. Simply put, a pension (or profit-sharing) plan, by its nature, costs money. To let short term fluctuations distort that leads to financial decisions that do not allow for the fluctuations. The quoted article suggests that defined benefit plans are the "culprit" in stock market bubble. I suggest that it is exactly the opposite: the dramatic equity growth of the 90s is (part of) the culprit in how pension plans have affected the corporate bottom line. OK, while I'm at it, here is another complaint. Many DB plans reached the "full funding" limitations of the Internal Revenue Code. The result was that the plan sponsor could not make any deductible contributions. And now, when the market has fallen, along with other negative economic signs, full funding limitations no longer apply. Now the sponsor is required to make a contribution, just when its business environment may not readily generate enough cash. Wouldn't it be better to have allowed deductible contributions a few years ago, when the cash was there?

Does 1.401(a)(4)-8(d)(1)(vii) cause you a problem?

The point of mentioning the SPD is that it summarizes the claims procedure(s). I agree strongly with doing this in writing. You may have to start by giving a chronology of all your past conversations. The claim should be in writing. Your email records are fine, but not enough.

The 2001 version of Publication 590: http://ftp.fedworld.gov/pub/irs-pdf/p590.pdf The quoted section is on page 33.