david rigby

Indeed there are many no-load places to put your money.

Kudos to MoJo for reminding us about "fiduciary decision" and good point about remembering what the point is. Using the automatic enrollment to enhance the HCE deferral percentage, other than small increments, should not be the major focus of AE. Of course, we should not expect that any amount of "education" will solve this (or any other) problem, but it can help. Many years ago, when I was administering and communicating a new 401(k), we talked about the match a lot, using the phrase "free money." It helped, but we were glad that no corporate attorneys were in the room.

Not sure if this on point for you: http://www.asabenefits.com/asaalerts7.html http://www.asabenefits.com/asaalerts9.html

Might there be a question as to exactly which participants get any allocation? If this "gain" is a result of a settlement, would/should it be allocated to those who were participants at a particular time, such as the settlement date, or the date a lawsuit and/or complaint was filed? Exclude participants who may have entered the plan after some date?

Ouch! My head hurts just thinking about this!

I'm not aware of a requirement to use UC (I assume you are referring to the method sometimes known as "pure unit credit") in a frozen plan. It is probably "reasonable" to use it. If you have been using PUC, then it should automatically degenerate to UC upon plan freeze. In my opinion, it would be inappropriate to use any individual method (entry age, UC, PUC, etc.) in a fashion that generated a normal cost. Since there is no more benefit accrual, an individual method should have zero normal cost. However, you still could use a method such as FIL or aggregate to generate a normal cost. In fact, it might be easiest to use aggregate: if the plan is underfunded, you get a contribution; if overfunded, you get a zero contribution.

Paying the tax is between the IRS and the taxpayer. Doing the required withholding is between the IRS and the payor. Assuming you are talking about a lump sum distribution, yes you have to withhold. But no withholding is required if the employee elects a direct rollover to an IRA.

Seems surprising that the plan would treat a disability retiree differently. If the Plan does not answer the question, probably advisable to look first for a precedent, and second to treat this person just like any other retiree. Any other thoughts?

I don't remember how it is phrased, but isn't there an exemption under ADEA for benefits under a "bona fide employee benefit plan"?

Possibly. Service for partipation (IRC 410) and vesting (IRC 411) is based on employment with the "employer", which in this case would include the controlled group. It would also include a status (such as union or Division X) that is not covered by the plan. But the definition in the plan still applies. For example, if the plan states that participation is on January 1 or July 1 after one year of service, then you still must observe how "year of service" is defined.

I think there may be other similar discussions that may help you. http://benefitslink.com/boards/index.php?showtopic=8293 http://benefitslink.com/boards/index.php?showtopic=4546

Ok, but who gets the allocation? Is it only those who were there on the date of plan termination? date of plan freeze? Since this is a refund of taxes, could/should it be "attributed" to certain years and therefore should be allocated to those who were participants at that particular time?

Raises an interesting point about whether past payouts were based on some ficticious "book value" (or whatever it was). A price of $100 that does not change for over 10 years sounds a lot like something that does not reflect market value.

Hmm, as best I understand, you state that the amount was incorrect due entirely to mistaken calculation, arithmetic, etc. Not sure if that helps you, but it certainly points away from anyone trying to do anything that was a violation of the plan or the 415 rules. At least that part is good. Might need to investigate the various procedures for plan correction(s). Perhaps the plan sponsor's ERISA attorney should be included in that discussion.

I suggest using the age on the commencement date and compare to the SSNRA. I usually think of both of those dates as "the first day of the month following." In this case, the age will always be interpolated to X years and Y months. Days will no longer be relevant. But caution, this oversimplification is because most plans define any payment commencement date as the first of a month. Check carefully with your plan.

Not sure if this is a defined benefit (DB) plan or a defined contribution (DC) plan. It sounds like it is a DB plan. Likely, the 6% per year you refer to is the plan's definition of early retirement reduction. This is common in many plans and is for the purpose of recognizing that a benefit which starts before "normal" retirement will be payable for a longer period of time, hence the monthly amount must be reduced to reflect this longer time. Your plan may or may not have additional early retirement provisions that would use a different (smaller) reduction for those employees who have at least X years of service. Example, employee may retire early with no reduction if at least age 55 and 30 years of service. If your plan has something similar, it may not be possible to eliminate it merely by freezing the plan. However, even if that provision still exists, it can be restricted to those who retire from active employment. If you are no longer actively employed there, that provision might not be available to you. You need to obtain all written documentation. Start with the summary plan description (SPD, sometimes referred to as the "pension booklet"), and any amendment or addendums to the SPD. Then get any written documentation that was provided at the time of buyout and the plan freeze. Good luck.

I agree with Keith. If the QDRO has been structured as if the plan were a DC plan, then the order is very likely incomplete (at best).

Yes. Use age without regard to the SS phase-in. Year of birth SSNRA 1938 or earlier: 65 1939 - 1954: 66 1955 or later: 67

Maybe. A QDRO can assign any portion of a benefit. That can be on the basis of percentage or flat $ amount. However, if you mean can the QDRO assign a flat amount as a lump sum, this may not fly if the plan does not allow a lump sum form of distribution.

Is it possible that the first payment was half of the maximum because it was 6 monthly payments instead of 12, retirement occurring in the middle of the year?

Are we talking about a 70-1/2 distribution? Is the benefit payable as a monthly annuity?

The original post did not say anything about the ESOP terminating. More facts are needed. Is the ESOP terminating? being frozen? converted to a 401(k) plan? merged into a new 401(k) plan? These are different situations. Only the first of these could lead to a distribution.

Might be hasty to assume that the original amount was incorrect. Probably need a great deal more information about how the amount was determined. I doubt that the plan defines the benefit as "the 415 limit." As for a "make-up", this actuary tries not to give legal advice, but it sure seems like the answer is "too bad". Love to hear some other comments.

This plan sponsor is in need of some very strong advice from his ERISA attorney!

An old, bearded shepherd, with a crooked staff, walks up to a stone pulpit and says . . . And lo it came to pass that the trader by the name of Abraham Com did take unto himself a young wife by the name of Dot. And Dot Com was a comely woman, broad of shoulder and long of leg. Indeed, she had been called Amazon Dot Com. And she said unto Abraham, her husband, "Why doth thou travel far, from town to town, with thy goods when thou can trade without ever leaving thy tent?" And Abraham did look at her as though she were several saddle bags short of a camel load, but simply said, "How, Dear?" And Dot replied, "I will place drums in all the towns and drums in between to send messages saying what you have for sale and they will reply telling you which hath the best price. And the sale can be made on the drums and delivery made by Uriah's Pony Stable (UPS)". Abraham thought long and decided he would let Dot have her way with the drums. And the drums rang out and were an immediate success. Abraham sold all the goods he had, at the top price, without ever moving from his tent. But his success did arouse envy. A man named Maccabia did secrete himself inside Abraham's drum and was accused of insider trading. And the young man did take to Dot Com's trading as doth the greedy horsefly take to camel dung. They were called Nomadic Ecclesiastical Rich Dominican Siderites, or NERDS for short. And lo the land was so feverish with joy at the new riches and the deafening sound of drums, that no one noticed that the real riches were going to the drum maker, one Brother William of Gates, who bought up every drum company in the land. And indeed did insist on making drums that would only work if you bought Brother Gates' drumsticks. And Dot did say, "Oh, Abraham, what we have started is being taken over by others". And as Abraham looked out over the Bay of Ezekiel, or as it came to be known, "eBay", he said, "We need a name of a service that reflects what we are". And Dot replied, "Young Ambitious Hebrew Owner Operators". "Whoopee!", said Abraham. "No, YAHOO!", said Dot Com.