david rigby

Another point is the allocation. Even if you deposit the match, it does not have to show up on EE statements until allocated. BTW, the plan probably already tells you when that should be. By showing a match allocated, you might actually be violating the plan.

I would not try or even go near your suggested "reimbursement". To the best of my knowledge, there are no IRS regs under section 4980, which probably means that common sense applies. IRC 4980(d)(2)©(i)(II) states "...over the 7-plan-year period beginning with the year of the transfer." My interpretation is that refers to the plan year of the replacement plan in which the transfer date occurs. The plan year may differ from the plan which is being terminatied. It may be that the plan sponsor's may use its judgement as to whether that date is the physical asset transfer date, or the plan termination date, or some other. My own view is that the first date on which you know how much the surplus is (and hence can then find 25%) is the point in time that makes the most sense. It might also be prudent to get a written opinion from ERISA counsel. BTW, note that 4980(d)(2)(B)(i) uses the word "equal" in its definition of the 25% cushion. It does not use "at least". Therefore, it appears that only the 25% is eligible to be subtracted from the surplus for purposes of determining the excise tax. In other words, if you have $100 surplus, you must transfer $25 to the replacement plan, and pay a 20% excise tax on $75. It does seem reasonable, but not documented anywhere, that you could transfer more than $25, but you would still owe excise tax on the full $75.

The original post used the term "plan". All of the other posts are concerned with IRAs. My hunch is that the IRS would find a difference between an IRA and a plan. If this is an issue of distributions from a qualified plan, then only a QDRO is relevant. Even then, it seems questionable whether a judge has standing to make any change in a benefit after distribution has commenced.

Is he over the plan's defined NRD? If so, does the plan permit an in-service distribution to participants in this case?

I would certainly recommend against this. Better would be to make the change on plan anniversary date. You might end up with 2 required contributions in the year of change.

NRA has some very important characteristics. For example, in any qualified plan, it is the point of vesting without regard to service. ERA won't (necessarily) do that. Also, in a DB plan, it is the point in time at which a topheavy minimum benefit is defined. Likely also, the plan defines actuarial equivalence based on the normal form of payment at NRA. Notwithstanding the comments by Kirk and Wessex, I still believe that the definition of NRA is not part of the vesting schedule. However, this is probably semantics. I believe that 411(d)(6) will require that the NRA be "protected" for those who are participants, at least with respect to current accruals.

I disagree. The amendment has no effect on current participants, so the plan sponsor is within its rights to make such amendment.

Purchasing a paid-up whole life policy?! Wow! Where is the advantage to the IRA owner? This looks like the goal is to generate a large commission.

Generally, no. One of the primary purposes of a tax-qualified plan such as a pension plan, profit-sharing plan, 401(k) plan, etc. is that any amount of earnings inside the plan is tax-deferred. Amounts are not subject to taxation until they come out of the plan, that is, they are paid directly to a plan participant. Since earnings inside the plan do not have any immediate impact on taxable income, losses inside the plan are treated in the same manner.

Twenty years ago, I drove a cab for a living. It was a cowboy's life, a life for someone who wanted no boss. What I didn't realize was that it was also a ministry. Because I drove the night shift, my cab became a moving confessional. Passengers climbed in, sat behind me in total anonymity, and told me about their lives. I encountered people whose lives amazed me, enobled me, made me laugh and weep. But none touched me more than a woman I picked up late one August night. I was responding to a call from a small brick fourplex in a quiet part of town. I assumed I was being sent to pick up some partiers, or someone who had just had a fight with a lover, or a worker heading to an early shift at some factory for the industrial part of town. When I arrived at 2:30 a.m., the building was dark except for a single light in a ground floor window. Under these circumstances, many drivers would just honk once or twice, wait a minute, then drive away. But I had seen too many impoverished people who depended on taxis as their only means of transportation. Unless a situation smelled of danger, I always went to the door. This passenger might be someone who needs my assistance, I reasoned to myself. So I walked to the door and knocked. "Just a minute," answered a frail, elderly voice. I could hear something being dragged across the floor. After a long pause, the door opened. A small woman in her 80s stood before me. She was wearing a print dress and a pillbox hat with a veil pinned on it, like somebody out of a 1940's movie. By her side was a small nylon suitcase. The apartment looked as if no one had lived in it for years. All the furniture was covered with sheets. There were no clocks on the walls, no knickknacks or utensils on the counters. In the corner was a cardboard box filled with photos and glassware. "Would you carry my bag out to the car?" she said. I took the suitcase to the cab, then returned to assist the woman. She took my arm and we walked slowly toward the curb. She kept thanking me for my kindness. "It's nothing," I told her. "I just try to treat my passengers the way I would want my mother treated". "Oh, you're such a good boy," she said. When we got in the cab, she gave me an address, then asked, "Could you drive through downtown?" "It's not the shortest way," I answered, as we pulled away from the curb. "Oh, I don't mind," she said. "I'm in no hurry. I'm on my way to a hospice". I looked in the rear-view mirror. Her eyes were glistening. "I don't have any family left," she continued. "The doctor says I don't have very long." I quietly reached over and shut off the meter. "What route would you like me to take?" I asked. For the next two hours, we drove through the city. She showed me the building where she had once worked as an elevator operator. We drove where she and her husband lived when they were newlyweds. She had me pull up in front of a furniture warehouse that had once been a ballroom where she had gone dancing as a girl. Sometimes she'd ask me to slow down in front of a particular building or corner and would sit staring into the darkness, saying nothing. As the first hint of sun was creasing the horizon, she suddenly said, "I'm tired. Let's go now." We drove in silence to the address she had given me. It was a low building, like a small convalescent home, with a driveway that passed under a portico. Two orderlies came out to the cab as soon as we pulled up. They were solicitous and intent, watching her every move. They must have been expecting her. I opened the trunk and took the small suitcase to the door. The woman was already seated in a wheelchair. "How much do I owe you?" she asked, reaching into her purse. "Nothing," I said. "You have to make a living," she answered. "There are other passengers," I responded. Almost without thinking, I bent and gave her a hug. She held onto me tightly. "You gave an old woman a little moment of joy," she said. "Thank you." I squeezed her hand, then walked into the dim morning light. Behind me, a door shut. It was the sound of the closing of a life. I didn't pick up any more passengers that shift. I drove aimlessly, lost in thought. For the rest of that day, I could hardly talk. What if that woman had gotten an angry driver, or one who was impatient to end his shift? What if I had refused to take the run, or had honked once, then driven away? We're conditioned to think that our lives revolve around great moments. But great moments often catch us unaware--beautifully wrapped in what others may consider a small one. PEOPLE MAY NOT REMEMBER EXACTLY WHAT YOU DID, OR WHAT YOU SAID, ...BUT THEY WILL ALWAYS REMEMBER HOW YOU MADE THEM FEEL. (Author Unknown)

Correct. My point is that there may be another issue if the EE is still subject to 70-1/2 distributions under this plan. Of course, the timing is different.

Possible issue if: EE is vested, and plan has not been amended to new 70-1/2 rules, or EE is a 5% owner?

I thought that the (over-simplified) rule was that the plan should continue its normal operation while a termination was in process. For example, if an EE terminates employment, dies, becomes disabled, etc. the regular operation of the plan should remain in place. Observe break-in-service rules in the plan, etc. Just don't do anything not in the plan, such as give a lump sum where such lump sum is authorized only by the plan termination.

Use IRS Form 5330 to pay the tax.

I would love to read some more about this technique. Know any sources, online or otherwise?

Yes. You may also find some help here: http://www.benefitslink.com/boards/index.p...=ST&f=20&t=7635 http://www.benefitslink.com/boards/index.p...=ST&f=20&t=7138 http://www.benefitslink.com/boards/index.p...=ST&f=20&t=3768 http://www.benefitslink.com/boards/index.p...=ST&f=20&t=3019

Caution. Certain attached schedules are not open to public inspection: SSA, E, and F.

I don't disagree with the conclusions, but I think the Plan must state the forfeiture could occur in such cases.

See Reg 1.411)d-4 Q&A1. You might also consider whether using the Rule of 90 in a temporary early retirement window would satisfy the issue.

I have a frozen DB plan that the sponsor wants to "terminate" in phases. Liability is about 1.8 Million, assets about 1.2 million. Plan has active EEs (all vested), VTs, and retirees. 1. Buy an annuity for retirees now, about 800K. About 175 participants remain. There is no resolution to terminate yet. 2. When the sponsor has more cash, plan will undergo a standard termination for remaining participants. This could be in 2 months or 12 months, etc. Any problems with this that I have not noticed?

A little more info please. Are you stating that 3% was used for NHCEs even though no amendment was done?

A 5% owner is Key no matter what the compensation. A 1% owner is Key if the comp exceeds $150,000 (not indexed).

Also note that this is settlement under SFAS No. 88 accounting rules.

So many times the answer seems to be that a governmental plan can do almost anything unless it is prohibited by the terms of the plan itself or by state law. I often see govt. plans that utilize provisions that would apply to an ERISA-covered plan, such as defining a year of service using the 1000-hour rule, even though the plan is not required to use such language.

If necessary, I'll be glad to perform some "services" for the plan and send an invoice to use up any amount leftover.