david rigby

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.

No I would not agree. It all depends on your definitions and your starting point. By using actual comp, which also helps if you are trying to have a safe-harbor plan definition, you automatically "pro-rate". But just because you decide to award partial years of credit does not also mean that is "double proration." Seems to me that the partial years of credit is intended to reflect less than "full-time" work. By annualizing the comp , you will be negating that philosophy. In addition, you open the door to many idiosyncracies in the future. Consider someone who works full time, perhaps even overtime, but who terminates and is rehired within the same plan year. Annualizing comp for this person might, depending on definitions, give this person more credit than someone who worked the same hours and comp but did not terminate. Another example might be employees who often terminate and are rehired, even several times over a career. The same problem could easily happen.

Most pension actuaries have such programs, and the skill and experience to know how and when to apply them. Perhaps you should consider hiring an actuary. If your need is very simple, IRS Reg. 1.72 contains certain tables that might be useful. Some of these can be found in Appendix E of IRS Publication 590 http://www.irs.gov/forms_pubs/pubs.html

Caution! Annualizing compensation for benefit purposes is a very dangerous plan provision. In addition to a zillion different ways to annualize, you may end up getting equal benefits for unequal work/employment/compensation. I recommend against such a provision.

As usual, BenefitsLink is the source for information: http://www.benefitslink.com/conferences.shtml You might also look at websites for ASPA, http://www.aspa.org/index2.htm or any benefits organizations in your area. Other sources of information might be HR staff of large local employers.

Does it have a market value? Usually a plan termination requires that all assets be converted to cash and then distributed (of course possible exception for ESOPs). No matter how "exotic" the asset, it should have a value, meaning the trustee should be able to find a buyer.

Agree. The only correct guidance here is how the plan document defines the employee deduction/contribution. Might be the definition of "compensation" that is relevant. The participant should probably inquire about this (as spouse of a participant, you don't really have any standing to inquire). Also look in the summary plan description (SPD) for a description of "compensation" or "deduction". In my experience, the description given above by IRC401 is very common. Possible that your situation is a mistake in the payroll system.

Pardon my ignorance, but what do you mean by "warrants?"

A daughter complained to her father about her life and how things were so hard for her. She did not know how she was going to make it and wanted to give up. She was tired of fighting and struggling. It seemed as one problem was solved a new one arose. Her father, a chef, took her to the kitchen. He filled three pots with water and placed each on a high fire. Soon the pots came to a boil. In one he placed carrots, in the second he placed eggs, and the last he placed ground coffee beans. He let them sit and boil, without saying a word. The daughter sucked her teeth and impatiently waited, wondering what he was doing. In about twenty minutes he turned off the burners. He fished the carrots out and placed them in a bowl. He pulled the eggs out and placed them a bowl. Then he ladled the coffee out and placed it in a bowl. Turning to her he asked. "Darling, what do you see." "Carrots, eggs, and coffee," she replied. He brought her closer and asked her to feel the carrots. She did and noted that they were soft. He then asked her to take an egg and break it. After pulling off the shell, she observed the hard-boiled egg. Finally, he asked her to sip the coffee. She smiled as she tasted it and smelled its rich aroma. She humbly asked, "What does it mean Father?" He explained that each of them had faced the same adversity, boiling water, but each reacted differently. The carrot went in strong, hard, and unrelenting. But after being subjected to the boiling water, it softened and became weak. The egg had been fragile. Its thin outer shell had protected its liquid interior. But after sitting through the boiling water, its inside became hardened. The ground coffee beans were unique, however. After they were in the boiling water, they had changed the water. "Which are you," he asked his daughter. "When adversity knocks on your door, how do you respond? Are you a carrot, an egg, or a coffee bean?" ~~~~~~~~~~~~~~~~~~~ How about you? Are you the carrot that seems hard, but with pain and adversity do you wilt and become soft and lose your strength? Are you the egg, which starts off with a malleable heart? Were you a fluid spirit, but after a death, a breakup, a divorce, or a layoff have you become hardened and stiff. Your shell looks the same, but are you bitter and tough with a stiff spirit and heart? Or are you like the coffee bean? The bean changes the hot water, the thing that is bringing the pain. When the water gets the hottest, it just tastes better. If you are like the bean, when things are at their worst, you get better and make things better around you. How do you handle adversity? Are you a carrot, an egg, or a coffee bean? Author Unknown

Well, looking at the facts in the original question, I would suggest that the retiree who has received an additional $100 per month for several years has "relied on" the actions of the plan sponsor. Seems pretty likely that cutting back will cause some friction. And it's certain that trying to recoup overpayments will cause negative reaction and publicity. Since this is a DB plan, it could be argued that other participants have not been harmed, but that argument might not stand up if the plan has been amended (downward) sometime in the recent past. I stand by my earlier statement: "Every situation must be evaluated on its own facts, and any relevant precedent is then factored into what the solution is."

A few days ago I heard a news commentary stating that the Treasury is not currently selling short-term notes, and may cease (or temporarily cease) selling 30-year bonds. Any comments on this, especially with respect to the various indexes we use that derive from treasury yields?

How do you know the plan is not qualified? Is there a determination letter? When you say that the plan is "not safe-harbor and has never passed the general test", do you mean it has failed the safe harbor test, or do you mean it has never been tested? If the actuary believes the plan is not qualified, then it's time to get the lawyers involved.

Not sure I understand all you are asking. I would have a hard time signing the Schedule B where the valuation was completed by someone else in a different firm. If you completed the valuation, signing the B does not (at least I hope) mean that you are stating the plan is qualified. Looks to me like this is an issue of qualification first, valuation second. Any other thoughts?

Earlier discussion: http://benefitslink.com/boards/index.php?showtopic=9284 http://benefitslink.com/boards/index.php?showtopic=8885 http://benefitslink.com/boards/index.php?showtopic=7683 http://benefitslink.com/boards/index.php?showtopic=7656

A QDRO could assign a dollar amount. Does not have to be a percentage. As far as John's specific situation, it looks like this plan needs to have some good legal advice by someone who knows QDROs. The change from employer-directed to participant-directed is likely not trivial to the QDRO issue.