david rigby

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.)

Any thoughts on whether it makes sense to continue doing the MEA calc, or at least gather the data on annual basis, until we know for sure that the MEA repeal does go away permanently? Any experience discussing this with the plan sponsors?

As Dave was getting at, this question probably needs some initial clarification. Has the participant separated from employment? If not, then there is probably not an event which would entitle a distribution from the plan. If so, then the participant is then free to use the amount distributed as desired. (If you need some ideas, then my daughter's college tuition is available.) Perhaps instead the questioner is asking if the plan (and/or the participant?) can direct, prior to a separation of employment, that some or all of the portion invested in company stock can be sold and invested in something else? If that is the question, the answer will depend entirely on the terms of the plan. For example, does the plan give the right to switch investments? Moving money between investments is not a withdrawal hence there can be no 10% penalty. Another possibilty is that the plan specifies that all or a portion of a company match (or other company contribution) will be invested in company stock. If so, it seems unlikely that any of this could be "switched" to another investment or distributed prior to separation of employment.

Raises an interesting question (to me anyway). Virtually every employee who dies prior to a separation of service will have this problem. Should employers have a beneficiary designation solely for the purpose of disbursing a final paycheck? Or must it be paid to the EE's estate?

Sounds good. But I'm not so sure that 12/31 is the "correct" date to merge the plans. A january 1 date might give you some more flexibility with respect to when you get the work done. So what if you have to do a 5500 for a short plan year. Is that a burden?

I agree with the comments about amending the plan as needed. Usually a bad idea to try to anticipate all possible permutations in one document. What's wrong with doing a one-page amendment each year, after you have identified the cross-tested formula you want to use? Seems a lot safer than trying to do it all at once.

Lots of instances of this. It is the very essence behind a profit-sharing plan: the amount of company contribution will depend on how much profit we have. This concept is now extended to the 401(k) plan, which is a prfit-sharing plan. For example, "the company will match your employee contribution by 50%, but if our net profits are at least X% or$Y, then we will increase the match to 75%."

More help from the Society of Actuaries website. Go to this link http://www.soa.org/tablemgr/tablemgr.asp , read the qxtables.txt file, and scroll down to see that many different projection scales are available.

That's a nasty spot you're in. I suggest the PWBA: http://www.dol.gov/dol/pwba/ Especially focus on the "Contact PWBA" link. Having agreement from the participants might be a good idea, but it will not guarantee anything (this is the government, after all).

Found it. TRANSACTIONS OF SOCIETY OF ACTUARIES 1971 VOL. 23 PT. 1 NO. 67 Discussion of new scales D and E begins on the sixth page of this article: http://www.soa.org:80/library/tsa/1970-79/...V23PT1N6724.pdf

Yep, that's correct. Of course, this (or any) formula can be made to pass the accrual rules of IRC 411(B) by putting a "project and prorate" around the whole thing.

Whole thing: http://www.benefitslink.com/IRS/revproc2001-55.shtml

That's what I thought also. Thanks for the feedback.

I decided to re-read this thread. I think the answer to the original question is Yes. But MGB is absolutely correct: what does the plan say?

Consider an otherwise vanilla DB plan, safe-harbor. Upon the death of an active employee, the surviving spouse receives a benefit of the following: - assume the participant had remained employed to NRD, at the same rate of pay as in effect at date of death (thus a "projected NRB"), - spouse gets one-half of this amount, payable immediately, - benefit ceases at the earlier of spouse's death or remarriage. Plan also contains the following statement: "In no event will the death benefits received by the surviving spouse be less than the Actuarial Equivalent of the amount the surviving spouse would have received under the QPSA." [QPSA is defined according to common meaning of that term under the regs.] I'm not sure the 417 statute or regs would anticipate that a surviving spouse annuity could cease on remarriage. A provision that reduced the amount to the QPSA seems passable, but total cessation does not. Anybody think the quoted sentence above is valid? Any other comments?