david rigby

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.

Kevin, I agree there could easily be a 415 problem. But, if you make a contribution equal to the forfeitures, what are you deducting?

Might have a problem if either one is union-negotiated, but this is probably a viable technique. If you have an outstanding waiver of minimum funding standards, you might need to run this by the IRS. But remember 411(d)(6). Make sure the merger does not "injure" the participants in the overfunded plan.

I have seen a DB plan and PS plan combined into one document. Even if you can, it's not pretty. It starts off on a bad note, and goes downhill from there. From my experience administering this arrangement, not to mention communicating, I strongly recommend against using one document.

IRS Reg 1.411(d)-4, Q&A-1, subsection (d) lists examples of items that are not 411(d)(6) protected benefits: ..."(4) the availability of loans (other than the distribution of an employee's accreud benefit upon default under a loan)..."

Please forgive the stupid comment, but this doesn't come close to passsing the "smell test." Am I missing something?

There are several texts that could be useful. I suggest looking for a copy (even an old copy) of "Fundamentals of Private Pensions" or "Pension Planning". Neither will be a technical resource, but both can provide some history. Also, try http://www.benefitslink.com/links/20000912-006899.html http://benefitslink.com/boards/index.php?showtopic=5824

http://www.benefitslink.com/IRS/ir2000-82.shtml

I see two things going on. First is the question of taxable income. But the quoted statute mentioned "subject to withholding". This might imply that the entire match is subject to taxation, but only a portion is subject to withholding. Or something else. Terminology can be important.

It is also possible that the ex-spouse was designated as beneficiary IN the divorce, not after.

Actually, there are some governmental 401(k) plans, grandfathered because they were in existence prior to some date. Sorry, I don't know the applicable date.

I think the receiving plan must affirmatively state that it will accept rollovers.

Can't answer the question about "protecting" the money. You need a competent tax professional for that. However, the question about rollover is well-defined: only a spouse has the right of rollover as a beneficiary.

We'll assume that this is not already defined in the plan. Seems reasonable to use the PIA at 65 since that is the definition of NRD. Might need to be careful with any ER benefit though. Any precedent to help?

There may also be a deduction issue. The Internal Revenue Code contains limits on how much a company can deduct for its contributions to all its qualified pension and profit-sharing plans, including ESOPs, 401(k), etc. If the company has "maxed out" using only the ESOP, then no more can be deducted. Putting in a 401(k) would not change the total, only which plan(s) it is spread to, and who is putting it in.