david rigby

Implicit in this thread is the possible concept that an administrator should/could be compensated based on the revenues/profits generated. To what degree is this in actual use?

What kind of employee? HCE? You are right, this is a bad situation. If HCE, very bad. If owner, very very bad. Sounds like the EE might be trying to keep funds away from spouse. I'll bet the judge will have something to say about this. The plan's best hope might be that his divorce attorney will let him know the meaning of "fraud".

Attachment is in our files with the name "71GATPFC". I have never used it so I cannot comment on its origin. I cannot even confirm that this is exactly what Gary has requested. I only have it as unisex, although this might be a male only table. Sorry I can't be more specific.

Thanks for clarifying the terminology.

The ACP test comes from IRC 401(m). This tests the sum of matching contributions and after-tax contributions. If you this test, how are you going to adjust to pass? Reduce match (not a well-received option)? Refund after-tax (then why do it in the first place)?

Well, that is one of the reasons for the SPD requirement. Employer has the responsibility to provide (an accurate) one. Employee has the responsibility to read it. Still, anyone can sue anybody for anything.

Excuse my ingnorance here, but why is an Illinois district court involved in this? Isn't this an issue for federal courts? http://www.thompson.com/libraries/retireme...s/mend0110.html

What do you want the answer to be? I have seen many transactions where the acquired employees' prior service is used for vesting and eligibility only. But, this might depend on prior policies, whether the acquired entity has a plan, whether the acquisition is assets or stock, etc. In the case of a 401(k) plan, these employees could enter immediately, on the next entry date, or on a special entry date (such as first of next month) created just for them. Lots of variation, and it may depend on what is negotiated in the transaction. Practicality may be important. Choose a method that everyone will understand, and that will make doing the ADP testing easiest. Is this any help?

You might look at this link http://benefitslink.com/boards/ scroll down to the "Operating a Pension Consulting Firm" message board, and see if there is related discussion.

I agree with Harry O comment. An accrued benefit can decrease if it is due to a decrease in compensation. The mindset of "accrued benefit cannot go down" is an oversimplification of IRC 411(d)(6). This states that a plan amendment cannot decrease an accrued benefit.

Don't know, but it seems to me the plan spinoff would occur prior to the corporate spinoff. If that is the case, then the answer should be yes. I think the answer for vesting service is yes in any case. Perhaps someone with some actual intelligence can help.

I agree. Another point to note is that the zero might be the result of a termination of employment, followed by a rehire. In that case, it should be obvious that the intent of "high 5 out of last 10" refers to years in which the participant actually worked. Unless there is precedent to prevent it, seems likely that the purpose of the plan is to exclude the zero years. This probably means you go back further to identify the last 10. Probably not a problem to amend the plan to clarify.

I would read the plan. If it does not provide answer the question, I would look for precedent. For example, the plan might state (or imply) that the last 10 years are years in which the participant earned a "year of service". If so, then the zero years would (probably) be thrown out anyway. If not, then prior examples might help. If that does not work, then the plan sponsor could make an "administrative interpretation" or a plan amendment.

Careful review of plan provisions needed of course, but I agree with you: no additional benefit.

I agree. Waiver of funding must be applied for by 2-1/2 months after plan year end (March 15 for CY plans). No extension possible. You might get some consideration from the IRS to waive penalties. However, they have previously stated that they do not have authority to waive the 10% excise tax for a funding deficiency. BTW, it is due immediately. See IRS form 5330. Next problem is the current year. You can freeze the plan now, thus impacting your funding requirement for current PY.

I agree, except that I think Item 4 cannot be mandatory.

I suggest trying the DOL.

Well, sort of. Accountants/auditors are bound by their own code of practice to use generally accepted accounting principles. With respect to publicly-traded companies, the SEC has stated (I think that is the proper term) that GAAP includes procedures issued by the Financial Accounting Standards Board. Other than that, perhaps someone else can tell us if the AICPA has any rules/guidelines about this. I had an example a few years ago of a private company that did not use SFAS No. 87 accounting for its DB plan. This company was considering going public. As part of that, they were informed (by auditor, I think) that they needed to adopt SFAS No. 87. So, they did, with an effective date that was retroactive about 4 years, thus giving potential investors and/or lenders some current and historical information that was on par with other companies.

Yeah, I had the same thought. Probably would be advisable for the sponsor to make sure documentation is complete, and even to get auditor to review.

This link might be the items in Appleby's list, to link to tax websites of all states. http://www.kentis.com/siteseeker/taxusst.html

The question of vesting has been discussed on these Message Boards recently. I believe the conclusion is that 100% vesting is not required when a DC plan is merged into a DC plan.

Maybe I'm the only reader with this problem, but what are you talking about?

I agree with the above responses. The ending balance on a final return should be zero. I suspect that the situation posed in the original question is more common than we think.

PWBA Notice http://www.benefitslink.com/cgi-bin/show_a...tabase_id=24642

I certainly endorse the comment about this website. Don't forget the Operating a Pension Consulting Firm Message Board.