david rigby

We may getting terminology confused here. The lump sum you get will already have all "adjustments" included. If you choose an annuity, it will be provided by the purchase (from a commercial insurance company) of an annuity contract. That contract will provide you $X per month (I think the benefit is the 1105 amount you quoted earlier). If you will become eligible for early retirement, then the contract must include that as well, using the current plan terms in defining early retirement. For example, if the plan permits early retirement as early as age 60 and defines the benefit as: "age65 benefit, reduced by 5% per year for each year that the commencement date precedes age 65", then the result, for an early retirement date of exactly age 61, is 1105 x (1-.05x4) = 1105 x .80 = 884 per month.

If the desire to provide different benefit levels can be defined by location, division, etc. then that might help with some communication issues. If you are trying to "steer" a higher allocation to older employees, then you might want to investigate a target plan.

I agree with sdolce on the last comment. Using 5.61%, I calculate an immediate annuity factor at age 44 of 184.7365. However, the current factors you have been given may be only for estimate purpose. It is possible that the final amount will have some interpolation. (In our office we usually calculate ages to years and months, and then interpolate the relevant factors.) It is also possible that the 5.61% is only for illustration purposes. The final payment might use a different rate. However, I get a different value than sdolce for the estimated lump sum. I think that amount of about $46,000 takes into account the required mortality table and 5.61% after age 65, but then uses only the 5.61% for pre-65 discounting, essentially assuming that pre-65 mortality is irrelevant. The plan can use that definition, but I would find it surprising. If you use the mortality table for all ages and 5.61% for all years, I get a lump sum of about $42,000.

The entire issue of non-discrimination testing is focused on HCEs vs. NHCEs. If there are no HCEs, then there is no discrimination.

Why not just do it, mark as amended, etc? If you know the original was properly mailed, is there an important reason to know the status of the original form?

I think this is a problem, or merely a not very accurate estimate. Federal law established a basis for determining the minimum lump sum. (The plan is free to establish a basis that is more generous than this, as long as it is non-discriminatory and unisex based.) The minimum basis utilizes a particular unisex mortality table (no variation permitted) and an interest rate based on 30-year Treasury securities (a bit of variation permitted). Using your numbers and the required mortality table, working backwards to the derive the interest rate, I calculate an interest rate of about 6.85%. The reason this could be a problem is that, for a 9/1/2001 payout date, the rate should probably be about 1% lower than my estimate. Please, someone else check my calculation.

There are some earlier discussions that might be useful: http://benefitslink.com/boards/index.php?showtopic=4359 http://benefitslink.com/boards/index.php?showtopic=9963 http://benefitslink.com/boards/index.php?showtopic=3754 Especially note the link to Rev. Ruling 2000-36.

Sort of. We can help, but a bit more information is needed. 1. Is the plan a governmental one (are you covered by a plan that is sponsored by a county, city, state, or some subdivision thereof)? If the plan is not governmental, then we (probably) assume it is a "qualified" plan, subject to the rules of federal pension law. 2. What is the plan's fiscal year? 3. Your exact birthdate. 4. Normal form of benefit under the plan (for example, a life annuity with payments for your lifetime only). 5. Proposed date of payment. 6. Normal retirement age under the plan. (This is a defined term so it should be readily available. You stated 65; I'm just clarifying.) 7. Is the benefit amount you quoted (1,105.23) annual? If so, probably one-twelfth payable monthly. Is that correct? Might be other questions, but this will be a start.

Interesting discussion. Another possible reason for tracking of different types of money is to allow for future flexibility. However remote you might consider it now, there may be a future desire for hardship withdrawals (for example).

Usually this is governed by the plan document. I assume from your message that this plan is a defined contribution plan (that is, a 401(k) plan or profit sharing plan). Every plan must specify how often it values the assets. Could be daily, monthly, quarterly, annually. Must be at least once per year. Then the plan will specify when payments are made. For example, it might value assets (hence the individual accounts) at the end of each month. The plan might state that the payment will be made as soon as possible after the end of the month in which the employee submits the proper form for distribution. The date of termination of employment might not be relevant if the plan requires the employee to submit certain form(s). A good source for this information should be the plan's summary plan description (SPD).

It does smell bad. But that probably does not necessarily invalidate it. The mere fact that the sponsor insists on this discretion (perhaps they prefer "flexibility"), indicates the posibility of discrimination. That is what smells bad. IRS reg. 1.401(a)-4 (especially Q&A 3) addresses discretion, but it specifically focuses on the discrimination in favor of HCEs. http://www.access.gpo.gov/nara/cfr/cfrhtml...26cfrv5_00.html Plan sponsor should probably be able to defend its reasons for wanting this provision, and be able to demonstrate that there has been no prior discrimination.

A man was walking along a California beach and was in deep prayer to the Lord. He said, "Lord, you have promised to give me the desires of my heart. That's what I am asking you for right now. Please give me a confirmation that you will grant my wish." Suddenly the sky clouded up over his head and the Lord in a booming voice spoke to him. "I have searched your heart and determined it to be pure. The last time I issued a blank wish request it was to Solomon. He did not disappoint me with his request for wisdom. I think I can trust that you won't disappoint me either. Because you have been faithful to me in all ways, I will grant you one wish you ask for." The man sat and thought about it for a while and said, "I've always wanted to go to Hawaii, but I'm deadly afraid of flying and I get very seasick on boats. Could you build a bridge to Hawaii, so I can drive over there to visit whenever I want?" The Lord laughed and said, "That's impossible! Think of the logistics of that! How would the supports ever reach the bottom of the Pacific? Think of how much concrete...how much steel! Your request is very materialistic, a little disappointing. I could do it, but it's hard for me to justify your craving for worldly things. Take a little more time and think of another wish, a wish you think would honor and glorify Me as well." The man thought about it for a long while and tried to think of a really good wish. Finally, he said, "Here's the deal, Lord. I've been married for many years. My wife always said that I don't care and that I'm insensitive. So I wish that I could understand women...I want to know how they feel inside and what they're thinking when they give me the silent treatment...I want to know why they're crying...I want to know what they really mean when they say 'nothing'...I want to know how to make them truly happy...That's the wish that I want, Lord." After a few minutes, God said, "You want two lanes or four on that bridge?"

There have been a few earier discussions on similar topics. Here is one of them: http://benefitslink.com/boards/index.php?act=ST&t=11025 You might also try a search.

OUCH!

I'm not sure if Plan A is required to test (and file 5500) on the basis of 9 months or 12 months. It is possible that the IRS will accept either. But that decision probably needs to be made in conjuction with Plan B. I looked at the 5500 instructions. http://ftp.fedworld.gov/pub/irs-pdf/i5500.pdf Sorry, it did not seem to answer the question.

In general, (to oversimplify) the reason that you can or cannot do something in a qualified plan is whether it might violate one of the numerous "non-discrimination" portions of the statutes, such as 415, 401(a)(4), etc. If none of those are "at risk", then you should be able to design whatever plan you want. After all, the non-discrmination issues do not address discriminating among the NHCE group.

Doesn't the plan merger automatically create a short plan year for Plan A?

I'm not sure if there is any guidance on this, but my hunch is that it should be included (whether or not it has been paid out, even if more than 5 years ago), because it is part of the accrued benefit.

John has a good point. Considering the situation he proposed, it seems that ignoring the DRO would be the worst thing the plan administrator could do. However, having the PA determine that it is not a QDRO (because it was delivered too late), and notify all parties of this conclusion, is an interesting option. Anyone know if that is possible? preferred?

IRS Publication 590 might provide some assistance. http://ftp.fedworld.gov/pub/irs-pdf/p590.pdf Beginning on page 32: Early Distributions You must include early distributions of taxable amounts from your traditional IRA in your gross income. Early distributions are also subject to an additional 10% tax, as discussed later. Early distributions defined. Early distributions are amounts distributed from your traditional IRA account or annuity before you are age 59-1/2 , or amounts you receive when you cash in retirement bonds before you are age 59-1/2 . Exceptions. There are several exceptions to the age 59-1/2 rule. You may qualify for an exception if you are in one of the following situations. • You have unreimbursed medical expenses that are more than 7.5% of your adjusted gross income. • The distributions are not more than the cost of your medical insurance. • You are disabled. • You are the beneficiary of a deceased IRA owner. • You are receiving distributions in the form of an annuity. • The distributions are not more than your qualified higher education expenses. • You use the distributions to buy, build, or rebuild a first home. • The distribution is due to an IRS levy of the qualified plan.

As implied by the prior responses, many times the definition of comp will include bonuses because the plan defines comp as "W-2 pay" or something similar. Of course that definition will also automatically pick up overtime.

Depends on the type of investment. If invested in marketable securities (or mutual funds of securities), the value can certainly go down with market fluctuations. If invested in an account at a bank or savings & loan association, then there is probably a guaranteed rate of earnings, which changes over time, but the rate will never be negative.

Perhaps the 5500 instructions will be of some value to you. http://ftp.fedworld.gov/pub/irs-pdf/i5500.pdf 1. 5500 filings are plan-year based. For example, the 2000 5500 is for the plan year which began in CY 2000. 2. The audit requirement is based on the number of plan participants, not on number of contracts or amount of dollars. 7. What does this mean?

I don't think asset transfer date is relevant. The plans are responsible for testing. What happened with the plans? Merged on the date of acquisition? Later?

Do you get the same features, or even some better ones, by not doing anything? That is, if you leave the account within the plan, does the plan offer similar options with respect to investment choices? Certainly you cannot put more in the plan since you are no longer an employee, but that should not automatically invalidate the current investment vehicle and/or strategy.