david rigby

Are the receipts from the sale recorded on the books of Corp. A? Does A have taxable income from that? Is X performing services? If not, then how does X expect to be paid W-2 income?

Good comments from sdolce. Another planning idea to consider is a cash balance plan, the purpose of which is to "use up" the excess in future years. (This may not be an attractive alternative if the current employees will not be around to participate.)

100 employees (not participants). $5. This is the link to the original text of the act: http://thomas.loc.gov/cgi-bin/query/D?c107...p/~c107BPKgoP:: Scroll down to section 702.

Is that PDF different from the CIGNA summary? http://www.cigna.com/professional/pdf/CPA_iidw0201.PDF

Revenue Ruling 2000-36 states that a plan can be amended to define the default distribution as an IRA, under certain cricumstances. http://www.benefitslink.com/IRS/revrul2000-36.shtml

Flip-flop http://www.benefitslink.com/boards/index.php?showtopic=8211

I don't know the Quantech issues, but you are correct about the 5 years. For any participant who does not have a year of service within the last 5 years, you must exclude that person from the top-heavy test (whether or not paid out).

It seems an actuary was retained by a major airline to do a study on the statistical chances of a bomb being on an airplane. Before the study, this particular actuary never flew on planes due to his personal fear of a bombing. After the study, his associates noticed he now flew everywhere. One of his colleagues asked about this marked change in behavior. The actuary replied that he had determined in his research that the statistical chance of a bomb being on an airplane was very small, though not small enough to relieve his anxiety. But then, he said, he determined that the probability of TWO bombs being on the same airplane was infinitesimal. Hence he's now quite comfortable flying on airplanes, because he makes it a point to always carry along one bomb!

The answer to the eternal question: "Is it better to be a jock or a nerd?" Michael Jordan having "retired," with $40 million in endorsements, he makes $178,100 a day, working or not. If he sleeps 7 hours a night, he makes $52,000 every night while visions of sugarplums dance in his head. If he goes to see a movie, it'll cost him $7.00, but he'll make $18,550 while he's there. If he decides to have a 5-minute egg, he'll make $618 while boiling it. He makes $7,415/hour more than minimum wage. He'll make $3,710 while watching each episode of Friends. If he wanted to save up for a new Acura NSX ($90,000) it would take him a whole 12 hours. If someone were to hand him his salary and endorsement money, they would have to do it at the rate of $2.00 every second. He'll probably pay around $200 for a nice round of golf, but will be reimbursed $33,390 for that round. Assuming he puts the federal maximum of 15% of his income into a tax deferred account (401k), his contributions will hit the federal cap of $10,500 at 8:45am on January 1st. If you were given a penny for every 10 dollars he made, you'd be living comfortably at $65,000 a year. He'll make about $19.60 while watching the 100-meter dash in the Olympics, and about $15,600 during the Boston Marathon. While the common person is spending about $20 for a meal in his trendy Chicago restaurant, he'll pull in about $5600. This year, he'll make more than twice as much as all U.S. past presidents for all of their terms combined. Amazing isn't it? However... If Jordan saves 100% of his income for the next 500 years, he'll still have less than Bill Gates has at this very moment. Game over. Nerd wins.

Usually the application of a plan change is prospective only to avoid problems with IRC 411(d)(6). Probably B-I-S would be the same.

Another similar discussion. http://benefitslink.com/boards/index.php?showtopic=10747

Oops, you are correct about the cite to IRC 404(a)(7). The purpose of this section is to limit the deduction taken for all qualified plans when taken as a whole. I like to think about this issue by using examples. 1. Suppose the DB minimum contibution is 20% of comp, and there is a 10% profit sharing contribution. Then the ER has a total contribution of 30%, but only 25% of it is deductible. 2. Suppose the DB minimum contribution is 12% of comp, but the ER actually contributes 18% to the DB plan [assume otherwise permitted under 404(a)(1)] and the ER also contributes a 10% PS contribution. Then the ER has a total contribution of 28%, but only 25% of it is deductible. I don't necessarily agree with your comment about the repeal of 415(e). From one perspective, it is a good idea to have this 404(a)(7) still there, thus putting a safety valve on the deductions. Note in IRC 404(a)(1)(D), that DB plans with more than 100 participants can deduct the "unfunded current liability". This does not alter or increase the 25% test in 404(a)(7). It is my understanding that there is some ambiguity about the precise manner in which this is modified by EGTRRA.

That is (sort of) the correct IRC cite. Notice that 412(a)(7)(A) has an introductory paragraph that ends with "...the greater of-". Thus, the deductible limit for that fiscal year (not plan year) is the greater of 25% of comp, or the amount required (that is, the IRC 412 minimum required contribution) for the DB plan(s). If the DB plan(s) require contribution of 30% of comp, then that should be the amount contributed and deducted, but then the contribution to the DC plan(s) will not be deductible, even if it is required to be made under the terms of the Plan. Does that address your concern?

I'm confused. Are you asking about the benefit limitations of IRC 415 or the deduction limitations of IRC 404?

See this (PDF - 72 pages). Also see http://www.dol.gov/dol/pwba/public/pubs/401kfe~1.htm and http://www.dol.gov/dol/pwba/public/pubs/401kt799.htm and http://www.dol.gov/dol/pwba/public/pubs/401kt799.htm

It strikes me that the best insurance you can get is to discuss your options with a competent attorney. I suggest using one who has more than a little experience with ERISA and employee benefit issues. You definitely want to do this before calling the DOL!

BTW, the report can be found at this site. (PDF, about 110 pages.) http://www.soa.org/research/rp2000.html

I think there is no automatic vesting here. See IRC 411(d)(3) and Reg. 1.411(d)-2.

Seems unlikely. An IRA is supposed to accept amounts from a tax-qualified plan. That seems to be directed at U.S. taxes.

It seems unlikely that any plan sponsor would want to "take over" these assets, when there is a viable mechanism for doing otherwise. I have used the PBGC Missing Participant program twice. Although there is a bit more paperwork, I appreciate having it available. Nice to be able to get rid of these benefits without having to worry about whether you did the right thing. So much cleaner. In my opinion, if you have "non-responding participants", it is reasonable to treat them as "missing". To do otherwise would force the plan sponsor to "keep open" the entire process. However, you might want to make sure the non-responders have been informed of the consequences.

Blinky is right. It the plan is overfunded, then one of 2 things will happen to the excess: 1. The IRS gets most of it, or 2. The excess can be allocated to plan participants. If the 415 limits have prevented the "top staff" from getting more benefit, then the change in the law should help that.

Follow the money!

Grandfather, no. Greater of, yes. For all lump sums paid between the first day of the plan year beginning in 2000 and the date of adoption, the lump sum must be the greater of the GATT amount and the basis contained in the plan. As soon as the amendment is adopted, this requriement goes away.

Neither. The SOA taskforce did an exceptional job in looking at basic mortality data and has submitted this table to the actuarial profession and to the IRS with recommendation that it be considered as a replacement for the 1983 GAM table. That table is currently used for calculations under IRC 412(l) current liability and for determining PBGC variable premium liability. The RP-2000 table is really multiple tables, with strong discussion and documentation illustrating the mortality variations by gender and by "collar" Although I have a personal concern over how the committee defined collar, it is clear that there is more than trivial differences between white collar and blue collar. The ball is in the IRS's court. They could do nothing, adopt as recommended, adopt with some modification, adopt with some phase-in, etc. My guess is that they will not adopt anything right away, but will adopt with a phase-in. Because there is an entrenched mindset at all government levels that "one size fits all", I doubt they will take the advice of the taskforce in allowing different mortality tables by collar.

You might try searching the websites of news organizations, computer manufacturers, or computer magazine publishers. I think AT&T and Delta AirLines have offered some computer benefits.