david rigby

No disagreement with other posts, but I think there might be other issues. The correct reference is Rev. Rul 77-2. Section 2.02 discusses this issue, but note that the charges and credits are supposed to reflect the portion of the year that the amendment is effective. That might mean, especially in an individual funding method, that the normal cost is determined with and without the plan change, and then prorated. Also, section 3 states that if the plan amendment has not been adopted by the valuation date, then the actuary may defer recognition until the next valuation date.

The participant might have some information in the form of W-2's or paystubs. OK, it's not very likely, but no harm in asking.

We'll, right now I can address only the last question. "...is it proper to change the val date?" Unless you are changing the val date TO the first day of the plan year, you need "permission" from the IRS. This is often not worth the bother. See Rev. Proc. 95-10 Section 3.13

"Projecting TH is an assumption. Do as you please." I would be careful with this. Assumptions should be reasonable, not as you please. However, in most situations, the top-heavy status won't change, at least not much in any one year. Usually, the most reasonable assumption is that the plan will remain top-heavy (or not top-heavy) if that is its current status.

Interesting. Harry, you mention PLRs. Any other cites, since PLRS cannot be considered applicable to other situations?

Non-qualified supplemental plan. Vanilla. SFAS 87 accounting rules. Vested EE terminates employment and goes to work for a competitor. Sponsor state that this violates the non-compete clause in the plan. Forfeits the entire liability for this EE, thus increasing the accumulated gain (or decreasing the accumulated loss) in SFAS 87 balance sheet. But EE files lawsuit. If the suit/settlement later results in some payment to the EE, should this be accounted for as if it is paid under the plan (even if not specified)? What if a settlement is reached after the plan no longer exists? Any specific cites?

It's not clear to me that your situation is the same as Q&A-8. When you say "partial", do you mean that $X (orY%) of the life annuity is paid by the insurance company TO the participant, or is it paid to the trust? If the insurance company is paying to the trust, then NO settlement has occurred; this would be merely an "investment" of the trust. If the insurance company is paying directly to the retiree, Q&A-8 can be interpreted to define your situation as not a settlement. Still a good question. (I have a hard time understanding why a trust would purchase such insurance contracts.) Other point is the word "significant". See Q&A-18. I also suggest that the determination of significant should be related to the entire PBO of the plan, not merely the PBO of the retirees. Might be that the auditor has an opinion on this Q&A.

You might find this discussion useful. http://benefitslink.com/boards/index.php?showtopic=6713

ditto. The point is that a YOVS could be defined in more than one way, so check the document to find out.

And of what value would that "clear case" be? If the ER is defaulting on the loan(s), then the ER is probably defaulting on everything else and is bankrupt. Not much for the employee to go after. Might be a case where the exec should review their resume.

In general, 5500's are public information. However, some of the schedules are not: schedules E, F, and SSA. Schedule B is not open to public when attached to a 5500EZ.

An accrued contribution can be made anytime within the 8-1/2 months following the end of the plan year. If it is late, say 9/18/2000 for the 1999 calendar plan year, then it canNOT be applied to the 1999 plan year, and would then be a contribution for the 2000 plan year. The plan would then have an "accumulated funding deficiency" as of 12/31/99. As of 1/1/2000, this funding deficiency becomes part of the required contribution for the 2000 plan year. Problems: excise tax (10%) on a funding deficiency is due (essentially) immediately. If not corrected, a second tax of 100%. Watch out for audit.

Quote from Kirk' post: "...if the typical term of employment is less than five years" Of course, many of these plans are covering employees whose expected employment is well more than 5 years. Even if younger employees change jobs often, resulting in average job length of only a few years, the target employees here are usually older and change jobs less often.

The Federal Reserve Link mentioned above has been updated. http://www.federalreserve.gov/releases/G13/

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