david rigby

Probably not. GATT establishes a minimum. It sounds like your plan is using that as a minimum. As long as the alternative method is well-defined, available on a non-discriminatory basis, and is a unisex-type of calculation, it should be OK.

You might want to check with the plan document as to whether it authorizes forfeitures, without regard to what the Trustee authorizes.

Assuming that NRD is age 65, normal form is Life Annuity, and payment is made 4/1/2001, I get a lump sum factor of 6.39988 (is that enough decimals?). Multiply by the monthly life annuity (assuming no early retirement reduction factors apply), and also multiply by 12.

Also might be a ggod idea to read the Summary Plan Description (SPD). Should be some generic language in that similar to comments from Consultant above.

See http://benefitslink.com/boards/index.php?showtopic=10294

Yes. The determination of a lump sum equivalent is, at its most basic, a matter of how the Plan defines it. Most plans will define "actuarial equivalent" or some similar term. If that defintion includes reference to a mortality table, then it should be used. Should be NO discretion in this. See my generic description here: http://benefitslink.com/boards/index.php?showtopic=10579

Sure. This is two separate transactions. First, the retiree is electing the life annuity. Second, the retiree is spending $X per month to buy life insurance. Is it a good idea? Much different question, and one that cannot be answered here. Many factors, such as health of retiree, health of spouse, other financial issues.

I think that the terms of the plan would govern this, but it seems likely that the person must be an employee as of the potential vesting date. If the person has no hours, that might imply not an employee, but what controls the employer-employee relationship will usually be defined outside the plan.

I'm no expert, but it sounds like a failure of the plan administrator, which does not necessarily mean the plan is in violation of anything. Hard to argue with the approach of doing an 1099 now, send to the IRS, possibly with letter of explanation, and having the employee refile taxes. It probably makes sense that the additional tax is the employee's, but the employer could pay for any fee necessary to refile, and any possible penalty.

If the employee never worked 1000 hours in any plan year, is it possible that this employee never became a participant? If a participant, it looks to me like 100% vesting at NRA = 9/15/2001. The condition required for this would be "is he still an employee?" What have I missed?

I'm also bothered by this, but for a different reason. My read of the original question is that the job offer may be one of two ways: 1. The usual, salary and benefits, or 2. Salary only (presumably higher) and no benefits. If this is what you are asking, then the employer might be trying to find a way to avoid paying for benefit costs, by "hiring" independent contractors. See Microsoft for how this can backfire.

Instructions to the 2000 Form 5500 do not imply a third party signature. See page 6 of the instructions: Signature and Date The plan administrator must sign and date a Form 5500 filed for a pension or a welfare plan under ERISA sections 104 and/or 4065. Either the plan administrator or the employer may sign and date a Form 5500 filed for a pension plan under Code section 6058. Generally, a Form 5500 filed for a pension plan is filed under both ERISA section 104 and Code section 6058. The employer must sign and date a Form 5500 filed for a fringe benefit plan under Code section 6039D. When a joint employer-union board of trustees or committee is the plan sponsor or plan administrator, at least one employer representative and one union representative must sign and date the Form 5500. A representative authorized to sign on behalf of the DFE must sign the Form 5500 submitted for the DFE.

Under FIL, when the UAL goes negative, I think there are three alternatives: 1. Change to any method, either using the automatic approval of Rev. Proc. 2000-40 or by making application to the IRS if 2000-40 does not fit. 2. Change to the Aggregate Method. (I think this is a subset of 2000-40.) 3. Keep the FIL method, but it will be applied (mechanically, that is) just like the Aggregate Method. Thus, if you have a credit balance, you will have a NC for 412 that differs from your NC for 404 purposes. That said, you may have other reasons for heading in one direction, such as a change in the demographics of the group, or a plan design change.

Good question. Per 412 regs., aren't all bases under the FIL method determined by the change in the Unfunded Entry Age Actuarial Accrued Liability, which is automatically limited to zero?

I think there is some rule on the ordering. Where a method determines a gain/loss, that should come first.

I think there are two schools of thought on this (and I'm no expert on this). The first is that you look at the benefit at the final termination of employment (retirement or death) after NRA, using the plan formula and definitions in effect at that date, and compare this to the actuarial equivalent of the NR benefit. Take the greater amount. The second is to do this same comparison one year at a time, which would probably be on each anniversary of NRA, taking the greater amount at each age. Very easy to get different answers under these two methods. Sorry, I don't know if there is a right answer.

Yes and no. The plan must give the greater if the participant did not receive the a notice of "suspension". Another method to avoid this "greater of" process is to pay the benefit to the participant even though not yet retired or separated from employment. However, consider a VT who reaches NRD, requests commencement of benefit one year later. I think the Plan is required to give an acturial increase.

I think that the calculator at this page might do what you want. Choose the one labeled "Online". Let us know if it works for you.

How about contact through attorney(s)?

Is there an important reason to terminate? If not, a better approach would be to amend the existing plan to include a 401(k) feature.

Hans is right that this cannot be explained in a post, but I'll try a generic comment. A lump sum distribution from a defined benefit pension plan is the "actuarial equivalent" of the lifetime annuity otherwise determined under the plan's benefit formula. The term "actuarial equivalent" or "present value" refers to a lump sum, payable as of a particular point in time, that is equivalent in value to all future payments. "Equivalent in value" means that all future payments are discounted for the anticipation of future events and time. Discounting is from anticipated future payment dates back to the lump sum payment date. Payment of such lump sum is in lieu of, not in addition to, future monthly or annual payments. By its very nature, any actuarial calculation of present value includes one or more assumptions regarding the anticipation of future events. The actuary uses professional judgement and training in determining such assumptions. In the case of a lump sum benefit, federal statute/regulations have specified certain assumptions, as a minimum. The assumptions relevant here are: · The use of an interest rate to anticipate the time value of money. · A mortality table to anticipate future life expectancy. (Some actuarial calculations include assumptions for future rates of turnover, rates of disablement, salary increases, cost of living adjustments, etc., but such items are assumed to be irrelevant to this situation.) For the case at hand, the lump sum is determined by multiplying the benefit (let's assume a lifetime annuity of $100 per month) by the factor: 100 x 129.97 = $12,997. Thus the lump sum is correct only if the benefit (100) is correct and if the lump sum factor is correct. Hans is correct that the lump sum factors given above do not seem to agree with the birth date, interest rates, and payment dates given. What other information are we missing?

Andy is correct.

To the best of my knowledge, there is no "maximum contribution", only a maximum deduction. However, there is an excise tax on actual contributions greater than what can be deducted. IRC section 4972.

Not sure about the timing, but 1988 sounds familiar. I think earlier discussions on this topic might have identifed such reference. (Proposed IRS regs under section 411?) Try this. http://benefitslink.com/boards/index.php?showtopic=10139

I think we need a bit more info to help you. Date of birth? Normal form of benefit payment (such as life annuity)?