david rigby

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.

Not sure, but I'll try. If the MP plan is amended to reduce future accruals, an advance notice is required. Section 204(h) of ERISA. This notice currently requires at least 15 days. That is, the notice must be given after the plan amendment is actually adopted, but at least 15 days before it is effective. There is a proposed (I think) reg. from the IRS changing this time period to "reasonable". As yet, an undefined term. However, in other cases, this term has sometimes meant "at least 30 but no more than 90 days." Thus, 30 days would take care of the current rule and the "new" rule.

You use the phrase "manage your deduction percentage". If this refers to how the money is invested, then that is not relevant to the process of actually taking the deduction. However, if this refers to your being able to control the amount ($ or %) of the actual deduction, then that might be another matter. In any case, the company ceased your deduction because you hit the $ limit. Common sense should indicate that you did not make that election, so they should have resumed deductions on January 1. (But don't rely too much on common sense.) The IRS issued Revenue Procedure 2001-17 http://www.benefitslink.com/IRS/revproc2001-17.shtml to address how plans can make corrections to various types of "failures". This one falls into the "boo-boo" category. Scroll to the bottom, and look at Section 2, subsection .02. The answer to your question is "it depends". If the mistake is more than 3 months, then the employer should make a contribution on your behalf equal to the average for your group (either Highly Compensated Employees or Nonhighly Compensated Employees). Plus appropriate match, plus appropriate earnings. I'm not sure you will get the full $10,500 as QDROphile suggests.

Why would T.Rowe Price be involved in the deductions from your paycheck? Unless you work for Price, it seems unlikely that they are responsible for your paycheck. Sounds like someone is trying to pass the buck, to you. But to be charitable, perhaps the HR person you talked with does not have any idea how the payroll process works.

In JEP's first comment above, it is stated that the catch-up can be made if the EE reaches one of three limits: 402(g), 415, or a plan-imposed limit. I belive the correct interpretation would be: if the EE reaches the least of the 402(g) limit, a plan-imposed limit (if any), or a limit imposed by the ADP test. IRC 415 does not figure in this test.

Variation. Some employers have 30-hour per week employees. In some cases, the employee has flexibility about when those 30 hours occur. For example, 6 hours on Monday, 8 hours each on Tuesday thru Thursday, off Friday. But then a holiday comes along, and the employer pays 6 hours (one-fifth of 30) of holiday time to that employee, with out regard to actual schedule. Might end up with more or less than 30 that week. The same issue could apply to a half day of holiday time.

Correct. But the plan must recognize the change in comp. limit (generally that means a plan amendment) in order for it to have any effect.

Although this thread started out differently, it may have evolved in the direction of your question. http://benefitslink.com/boards/index.php?showtopic=12407

And ultimately, this is a decision that the plan sponsor must stand by, with advice from counsel. The decision does not belong to the TPA, etc.

The currect IRC 401(a)(17) provision was effective for plan years beginning in 1989. Prior to that, there were limits that might affect top-heavy plans or shareholder-employees. Any other information on the plan/employee in question?

1. The age used is most likely governed by the plan and its prior administrative practices. Unless specifically stated otherwise in the plan amendment, I would use the same provisions/practices as used before. It is worth noting that the plan amendment could alter this only for the window, but it should be in writing. 2. I think the language you (and the rest of us) see is from the IRS, and is a carryover from the pre-GATT language. Recall that the most common (OK, one of the most common) phrasing pre-GATT was to refer to the PBGC rates in effect at the beginning of the plan year (or "for the first month of the plan year", etc). In that case, it made more sense because PBGC rates were announced in advance. GATT rates are not known in advance, so to accomplish the same thing, you have to use a lookback period. If you use November as your lookback month, it only gives you about a month's advance information. Using October (or sooner) is possible, but it caused problems with safe harbor definitions.

1. Be careful about how plan defines the lump sum equivalent. Some, but not all, use a deferred annuity calculation. Some plans are silent on this point, thus leading to "what is the precedent?" This may not be relevant directly to your question. If the plan amendment adopting the window has not yet been executed, then there is still some flexibility in how it is defined. If the plan is ambiguous, or if the plan uses the immediate age and the plan sponsor wants to limit the cost of the window, then solely for the window, it can be defined in another manner. 2. I would anticipate that your language means the rate for December, which is not available until the end of that month. (Makes it pretty hard to anticipate the true cost. Also very difficult to make the payment on January 2, when everyone wants it.)