david rigby

I am reviewing a draft QDRO for a conventional DB pension plan. The date of divorce is after the participant's date of hire, but prior to the participant's date of participation. Upon participation, the participant gets a full year of credited service back to January 1 (which precedes the date of divorce). Got the picture? Specifically, it awards X% of the participant's accrued benefit "as of date of divorce" to alternate payee. Does this have any force? Could it (assuming all other provisions OK) be a valid QDRO but with an award of zero dollars? Could it be construed to award part of the benefit which has not yet been earned as of date of divorce? What responsibility does the plan sponsor have to point out these issues? (Sorry, that is kind of open ended.)

I guess there could also be different treatment of service based on acquisition dates as well. For example, Corp. A acquires Sub. B in 1995. Sub. B does not have any qualified plan. B is not covered under the Corp.A plan until 1998. Employees with Sub. B should have all service since acquistition date recognized for vesting purposes. A could recognize service prior to 1995 but is not required to do so. And the plan amendment which recognizes B as a participating employer should state this. Did I get that right?

For those of use who don't have that Opinion Letter, the conclusion is what?

Again, Keith is correct. The unfunded CL is a minimum to the deductible limit, for plans with more than 100 participants. See IRC 404(a)(1)(D). The AFC issues are not relevant. I also agree that this amount is determined as of the end of the plan year.

I don't do this ratio, but I agree with your reasoning that AV seems to be the appropriate value. We do show a "benefit security ratio", which is MV assets divided by PVAB (using funding assumptions).

I thought the emphasis was on "not readily tradeable on an established market".

Not necessarily. What kind of plan is this? profit-sharing? defined benefit pension? ESOP? 401(k)? more than one of the above?

... remembering that there is a difference between "guardian of the person" and guardian of the person's estate".

Not a lawyer, but I thought that it was the Fourteenth Amendment that provided that extension.

From the original post, it is not clear whether the participant is entitled to a distribution. Just "requesting a distribution" is not enough.

This is the most recent summary of state tax withholding provisions that I have seen: http://www.cigna.com/professional/pdf/CPA_iidw0201.PDF I'm pretty sure some things are out of date. Does anyone have a more up to date / complete list or link? (Interestingly, if you look for this on the Cigna website, the link is inactive.)

And make sure you get a US attorney who knows the meaning and importance of a QDRO. Interview. If the proposed attorney does not seem to have immediate sense of importance for this, then keep shopping.

I don't know if there is specific IRS guidance on this. If none is available, I would fall back on common sense. For example, if the check bounced due to some simple oversight, then you might be able to claim that it was made. If the sponsor wrote the check knowing that there was insuffucient funds, then that looks to me like there was no payment. How do you prove this? Good question. Seek out anything that could document actions and intentions.

Are you sure that the due date was 9/18/00? My calendar says the 8-1/2 months after 12/31/99 was 9/15/2000.

If you are terminating the plan, you cannot "leave it open", both from a practical perspective and regulatory perspective. You may find some help on the Message Boards by using the Search function. Here are some places to look: http://benefitslink.com/boards/index.php?showtopic=10784 http://benefitslink.com/boards/index.php?showtopic=10534

Tough analysis. Not sure if this will help, but here goes. As always, even though there is no minimum funding requirement under ERISA, there may be state or local statute which weighs in on the matter. This may be hard to track down. Although it may seem irrelevant to your question, it may have a direct impact on whether you should have one or three plans. Even if not required, there might be other reasons for separating the assets and liabilities of each group, such as politics or public impression.

The particular situation I am focusing on is plan years which begin October 1. A smoothing method adopted for 2001 valuation might be advantageous, especially if the plan year begins 10/01. However, the PBGC unfunded liability for variable premium must use the "same actuarial assumptions and methods" as used to determine the minimum funding contribution for the prior plan year. (Quote from 2001 PBGC premium package, page 28.) Is anyone contemplating revising 2000 valuations, using a smoothing method, so that you can use that smoothing method to determine the PBGC variable premium for the plan year beginning in 2001?

I'm not sure there is one correct answer. My preference would be to specify the answer to this question in the amendment that changed the plan year. Perhaps it is only "style", but I steer away from annualizing any comp because someone will complain no matter what method you choose. Also, how do you annualize bonus, commissions, overtime, etc.? A reasonable choice would be to use the comp for the applicable 12-month period as if the plan year had not changed. This might also mean that your averaging period could have some overlapping time periods. (I'm not sure if this causes problems under 401(l) or other safe harbor regs.)

Amen!!!!!!! And what is the purpose of using such a definition for the plan sponsor's fiscal year?

Don't forget careful plan drafting. For example, most plans will include statements that require contributions only if it is deductible. It might be contrary to the goal of the plan sponsor to be required to make a contribution (by the terms of the plan) but not be able to deduct it (by the terms of the Internal Revenue Code).

Well, probably so. Perhaps I was too wishy-washy. Comes from listening to attorneys.

Any actuaries out there already planning a greater use of smoothing methods in light of the recent market activity?

The usual meaning of the term "frozen" is that the plan no longer: - accrues additional benefits, - allows additional contributions form employee or employer, - permits new employees to become participants in the plan. Thus, freezing a plan does not freeze its assets or investments. It also does not freeze ongoing administrative actions, including payments to those entitled to a distribution. It normally does not automatically create 100% vesting, but it could depending on the circumstances and the type of plan.

Adoption of such amendment prior to 10/21 is probably advisable.

I must be an idiot today, because I don't understand your question. What does dividend payment have to do with ADP/ACP testing? Aren't the dividends a portion of the investment return on assets? Don't ADP and ACP tests concern themselves with actual contributions?