david rigby

Several prior discussions on this topic: http://benefitslink.com/boards/index.php?showtopic=11911 http://benefitslink.com/boards/index.php?showtopic=11566 http://benefitslink.com/boards/index.php?showtopic=8979 To find other discussions, use the search feature.

A plan amendment cannot change the eligility to participate for those already in the plan. But it can change the requirements for non-participants. (That is, the "anti-cutback" provisions affect participants, not employees.) However, there might be other reasons for the plan sponsor to make the change prospectively based on hire date. This is generally a human relations issue, rather than a plan issue.

As usual, Carol's comments are thorough and correct. There is also a practical side, where the governmental sponsor may want the plan to look similar to prevailing plans in the private sector. For example, use a 5-year vesting schedule, or offer joint&survivor options, etc. These are issues of design philosophy and competitive position.

But you might have an anti-cutback problem.

Actually, they do have the forms at the link above, although out of order. When you get to the list of forms, scroll all the way to the bottom. The 5500 C/R and instructions are there.

Oh, even better. The IRS website goes back to 1992. http://www.irs.gov/forms_pubs/index.html Scroll down to "Download Prior Years Forms and Publications"

I have some blanks for some, but not necessarily all, prior years. Also not sure if I have all the schedules. I might be able to fax to you, if I can find the time, and if that is acceptable. Let me know.

You may have a point, but "fairness" is an issue that is defined in the relevant statutes and regulations by comparing benefits and/or contributions between two groups: either compare Key EEs versus NonKey EEs, or compare HCEs versus NHCEs. Although it may be an oversimplification to say this, there is no prohibition in federal law and regs against "discrimination" within the HCE group or the NHCE group, as long as it does not violate other statutes (such as ADEA).

...and the TPA should investigate its own E&O insurance coverage.

The issue of "officer" is not relevant to determination of HCE status. Only the compensation test and the 5% owner test. Officer might be relevant to the determination of Key EE for top heavy determination. In general, if a plan has no HCEs, then issues of discrimination testing evaporate. However, there could be an issue if this group is part of a controlled group.

Do-able? Yes. Best design? That depends. As Stephen as stated, you could get a larger contribution/deduction in a DB plan, but depends on a few factors, most importantly, the ages of the participants.

Interesting. I did not find anything in 1.417(e) that states or implies "every participant must have the same basis" for computing the lump sum actuarial equivalent. However, this might come under the benefits, rights, and features of 1.401(a)(4). If the "greater of (a) or (B) approach" is used only where (a) is less than $3500, then it might not be an issue if it affects only NHCEs.

(2) I viewed the ALI-ABA teleconference last week. One or more of the IRS representatives stated that, in general, EGTRRA provisions must be adopted by the last day of the plan year for which it is effective, else it cannot be effective in that plan year. The only exception I recall was if the plan incorporates by reference the relevant section of the Code, then the plan will have already recognized the changed provision, such as the increased 415 limit(s).

I think I can answer that. The other notification is to tell participants the plan is being terminated. I'm not decreeing any "required" notification, just stating what I think is appropriate. Why would you not do so?

I agree. I don't think a spin-off would give rise to a partial termination.

The plan administrator needs legal advice. In addition, I notice that your profile states you work for a bank. If your role here is representing the trustee, then the trustee may need separate legal advice. Can any of our contributing attorneys out there fill in the details?

My company is in the business of employee benefit consulting. One of the services we offer is just what you are describing, as do many of the users and readers of these Message Boards. It is usually not our policy to give away such service. We would be glad to discuss these services if that is what you mean.

Oooh. My turn! The famous actuarial response: What do you want the answer to be? The lump sum can be any definition under the plan as long as a few conditions are met: - nondiscriminatory in definition and application, - unisex, - cannot be less than the minimum under 417 (GATT mortality for pre and post, and the appropriate 30-year treasury rate) Did I leave anything out?

Sure you can have a short plan first plan year. But the point of the original post was that certain EGTRRA changes are effective for plan years ending in 2002, so a short year that ends 12/31/2001 does nothing to take advantage of this.

At this late date? I would think that the nuisance of having a plan year begin on January 2 would be more trouble than it's worth. But it's a fair question.

There may be a different problem. The previous comments on the "rule of 80" seem to assume that this is one definition related to Early Retirement under the plan. If instead, the "rule of 80" is an alternate definition of Normal Retirement, the resulting analysis may be different.

Not so sure it's a good idea. Does the plan permit it? (I admit, I'm not sure a plan has to explicitly state this. Just trying to be cautious.) If the account is divided, what would you do if the spouse had not been a participant? Would the Alternate Payee have an account set up for the divided portion? If so, what rights would that AP have, such as withdrawal, investments, loans, etc. It seems that you do not want to combine the divided portion for the AP if it might "muddy" the understanding of these questions and/or any other administrative function.

Oops. My earlier response of "Yes" was an answer to the second question in the original post. I think the answer to the first question is "No".

...and 401(l) is a safe harbor definition. General test available as an alternative to safe harbor design(s).

My guess is the Publication 575 is irrelevant. Since this is a governmental plan, the relevant issues probably are the plan provisions and the state or local statute which permits the purchase of service credit.