david rigby

OK, I'll say it: what do you want the answer to be? If the plan was fully funded at 3/31/2001, perhaps you don't want a 412 or 404 contribution as of 12/31/2000. If so, can you re-do the 2000 valuation to make it fully funded? Just a thought.

.......and only the spouse has special rights when inheriting an IRA.

Well, the plan should state when commencement is or isn't. For example, it might state that no payment will be made until the participant actually severs employment (with exception for 70-1/2 requirement, of course). We also know that a plan can permit commencement without regard to separation of service if the EE has reached NRA. I wonder if the plan could be amended to permit distribution if the EE has reached age 74 (for example) instead of NRA. Would this work?

IRS publication 590 might help (requires Adobe Acrobat). http://ftp.fedworld.gov/pub/irs-pdf/p590.pdf

Is the employer aware of this issue? It may be an operational failure, merely because someone did not know what the plan said, rather than intentional action. The first step should be to make sure the employer knows of the potential problem.

Jack VanDerHei (sp ?) of the Employee Benefits Research Institute spoke at the 2000 Enrolled Actuaries meeting. The transcript included the following quote "....106 plans that had converted to cash balance by 1996." He admits his data gathering process may be biased toward publicly-traded companies and therefore may not pick up all the cash balance plans. Also, the focus was on conversions, rather than any started from scratch.

Top-heavy status is determined as of 12/31/99 in this case. That means that Key and Non-Key status is also determined as of that date. If T-H, then the plan will define who gets the T-H allocation in 2000 (or generically, in the next plan year). The plan will state either Non-Keys get T-H allocation, or that all participants get it.

Oh, that sounds different. When you say "frozen" are you referring to a plan amendment that formally "freezes" the plan, or are saying that it is frozen because you are leaving the employ of this company? The result of the plan may be the same for you, but this is just clarification. If the latter, you should not worry that the changing CC (between now and actual retirement) will cause your benefit to go down. It will not. Yes, CC will change each year (unless you are already over SSRA), but from the plan's point of view, once you sever employment (that is, death, retirement, disability, or other termination), then the benefit is fixed. With some very unusual exceptions, the plan will calculate your benefit as of your date of severance of employment.

I volunteer to help, but I think the plan sponsor owes a complete explanation. My preference is that explanation should be in the form of a benefit calculation. To me, such includes a statement of all relevant data: DOB, DOH, average comp, Covered Comp, years of service, etc. Then the calculation should show how the benefit formula is applied using this data. For M.Fox, take note that the CC is probably based on the 35-year average, such 35-year period ending in the year of attaining SSRA. However, note that the definition you quoted above does not include the word "average". In the section of the plan document where the formula is given, does it also identify the appropriate CC? For example, does it say something like "1.6% of average compensation that exceeds Covered Compensation, where the CC is the amount in effect at the date of the employee's severance of employment"?

Alternatively, the plan can also change NRA (or NRD) only for future participants.

Well.... That definition is probably "old". The correct definition probably should refer to the year in which the participant attains Social Security Normal Retirement Age, rather than the year the employee reaches age 65. For those born before 1938, SSRA = 65. For those born 1938-1954, SSRA = 66. For those born after 1954, SSRA = 67. However, the plan should also define how it is used. Perhaps a more useful question would be to ask how you, M.Fox, are using this information. In other words, can you express your question with regard to how you are going to use the information you receive? (No value in explaining things that won't be useful to you.)

As often, the answer is "what does the plan say?" The plan should define the CC. Many plans define it as the amount in effect at the "date of determination." If the plan is frozen, use that date as date of determination. But read the plan definition carefully.

Agree. But I would suggest 2 accounts to give flexibility on differing match amounts, even if there is no difference now.

I believe Andy is correct. As he points out in his first post, after 1/1/2000 and until the GATT amendment is actually adopted, the minimum lump sum requirement is the greater of the GATT basis or the PBGC basis.

You might want to look here: http://www.irs.ustreas.gov/prod/bus_info/t...art/part07.html

I'm not an attorney, but it was my impression that you cannot be in the practice of law if you are in some other business, such as accounting, TPA, etc. Certainly state laws vary. My consulting background wants to scream that anyone who is in TPA/consulting relationship with a plan and/or plan sponsor is not, and cannot be, also the attorney for the plan or the plan sponsor. And it does not matter if the individual employee is an attorney. Am I incorrect? Oversimplified?

One day a father of a very wealthy family took his son on a trip to the country with the firm purpose of showing his son how poor people live. They spent a couple of days and nights on the farm of what would be considered a very poor family. On their return from their trip, the father asked his son, "How was the trip?" "It was great, Dad." "Did you see how poor people live?" the father asked. "Oh Yeah" said the son. "So what did you learn from the trip?" asked the father. The son answered, "I saw that we have one dog and they had four. We have a pool that reaches to the middle of our garden and they have a creek that has no end. We have imported lanterns in our garden and they have the stars at night. Our patio reaches to the front yard and they have the whole horizon. We have a small piece of land to live on and they have fields that go beyond our sight. We have servants who serve us, but they serve others. We buy our food, but they grow theirs. We have walls around our property to protect us, they have friends to protect them." With this the boy's father was speechless. Then his son added, "Thanks, Dad, for showing me how poor we are." Too many times we forget what we have and concentrate on what we don't have. What is one's person's worthless object is another's prize possession. It is all based on one's perspective. Makes you wonder what would happen if we all gave thanks for all the bounty we have instead of worrying about wanting more. Take joy and appreciate every single thing you have, especially your friends.

Hmmm... The definitions quoted are only slightly helpful. I suggest that you obtain the exact wording in the plan document. Still seems likely that the practical application (that is, in the payroll system) may not agree with the plan, although I am only suggesting an untentional misapplication.

Is there a 1.401(a)(4) "benefits, rights, and features" issue? Does the lump sum feature affect only HCEs? Is there a possible violation of safe harbor status (such as, 401(l) permittted disparity)?

Assuming Son is not married, and has not outstanding QDRO, then provisions of the plan, and procedures of the plan sponsor probably will be the guide. Sponsor might not want to accept a beneficiary designation where the beneficiary is also a witness, but that should be determined at the beginning of the process. Why are we even discussing witness? Does the plan and/or the sponsor require a witness for any beneficiary designation? Seems that just about any form with the Son's signature on it would be valid. If there is a beneficiary designation that the plan sponsor deems valid, then the "back-up" beneficiary should probably be irrelevant.

Several earlier discussions. Start here. http://benefitslink.com/boards/index.php?showtopic=8952

Could question John. I agree with your interpretation of "on account of". I'm not aware of any requirement that the match be some percentage. I wonder if such plan design will help or hinder passing the ADP test.

Agree with MGB. There is also a version of the 1951 GA table with projection to 1970. Could that be it?

Some earlier discussion. http://www.benefitslink.com/boards/index.p...=ST&f=20&t=4558 http://www.benefitslink.com/boards/index.p...=ST&f=20&t=8869

Bingo! That is (part of) the point. Annualizing any comp will open the door to unintended distortion and undesired comparisons. Don't do it.