david rigby

Sounds to me like some confusion in terminolgy. The requirement for an SPD is on the PLAN. The insurance policy is merely the method (or one of the methods) that the plan uses to provide the benefit.

This may not be on point, but it is relevant to the way our society views savings and qualified plans. I hope that our perspective of all savings vehicles can be flexible enough to recognize this. (Taken from an earlier discussion topic.) People in their 20s do not need to be focusing primarily on saving for retirement. Most people have different needs at different points in their lives, and saving is no exception to that rule. Sure, put some aside in your 20s, but don't put it all in a vehicle which is intended for retirement savings. Put some aside for the shorter term needs, especially saving for a house and college education for children. Yes, I know that there are vehicles that can be used for both, but what I am discussing primarily is the "mindset" of long-term vs. short-term. Also, don't forget, that those in their 20s should put some aside to anticipate being a one-earner family with kids. It does not matter if you think that won't happen: odds are very high that it will happen, or that you will wish it could happen, at least temporarily or partially. The savings before kids merely gives you more options later.

Apples and oranges. I suspect the following: 1. The plan year is the calendar year. 2. The plan formerly used the PBGC rates to determine the value of a lump sum. 3. The interest rate defined in the plan (for the purpose of determining a lump sum value) was the PBGC rate in effect at the beginning of the plan year (that is, 4.0% at Jan. 99, and 5.0% at Jan. 2000). 4. The plan has been amended to adopt the GATT provisions for determining a lump sum. In order to completely answer your questions, I think we need some more info: a. Your date of birth. b. Your DB plan benefit earned as of whatever date you severed employment, probably expressed as a monthly benefit commencing as of Normal Retirement Date. c. The plan's defintion of "Normal form of payment", probably "life annuity" but not necessarily. d. The plan's definition of Normal Retirement Date,likely age 65, but not necessarily. e. The date the plan adopted the GATT provisions. f. Confirm whether Item (1) above is correct.

The Society of Actuaries maintains an excellent resource called Statistics for Employee Benefit Actuaries. The item you want is in Table 1A. http://www.soa.org/library/stats/seb.htm In general, the rate that has come to be known as the "GATT rate" is the monthly average of the 30-year Treasury yield rate (note that this is not the rate on the last business day of the month). Perhaps someone else knows of a site, possibly IRS or Federal Reserve, where this is also posted.

To be picky, the term "super top-heavy" is no longer applicable if your plan has adopted the repeal of IRC 415(e).

Sometimes (perhaps often?) a TPA negotiates a separate contract/agreement w/r/t the tremination process. This probably includes such items as filing the final 5500, etc. even though this action occurs after the TPA has received its final payment. Such agreement should address who will handle routine questions that arise shortly thereafter, especially if such questions come from IRS or DOL. It happens often.

http://benefitslink.com/boards/index.php?showtopic=2828

If there is no precedent, and no other indication of the original intent, then using the actual population as of a particular time is not an unreasonable definition, but that should mean a one-time decision, not likely to change. BTW, if the actual population is really 95/5, then it seems silly to me to define a blend. Another perpective is that you don't really care about the population mix; a better comparison would be the PV of benefits (probably using a turnover assumption) as of some "snapshot" date. At any rate, you would probably want to round your blending percentages, especially if you expect that data as of your snapshot might be changing. For example, if you have 84/16, then round to 80/20, or even 75/25. If the group is expected to change significantly over the next 10 years, then 60/40 might be reasonable.

Such long discussions! I understand your perspective about being "screwed", but that is merely the definition of the benefit. That is, the plan defines what comes out of the plan by using a formula. That formula includes service and final average comp, both determined as of the applicable date (that is, death, disability, retirement, or other termination of employment). Yes, your benefit will be less at 65 than if you had remained in one plan, but that is exactly how this type of plan works. It is not designed to "hurt", but is just the opposite, to "reward" long service. This is just what happens when any employee changes jobs. Of course, in this case, the "other termination of employment" is not your choice. Unfortunately, it appears to be a motivation for ill feelings. I'm not trying to defend anyone or anything, just describe. There really is no "actuarial constant" as described in your first post. Instead, use "service".

I'm not sure why you are actuarially increasing the 4/1/99 benefit to 7/1/99. Usually this provision refers to the normal retirement benefit, which in this case is calculated as of 1/1/95.

I would assume a 50/50 blend, based on the wording you have given, but it's hard to believe this has not come up before, thus creating a precedent.

Does the plan address this already? If so, then plan provisions would appear to be most important, even if it is more "generous" than required. IRC 401(a)(25) requires that actuarial assumptions be specified, but I don't know if this has full applicability to govt. plans. Of course, the plan would be exempt from IRC 411. On a practical level, it seems that the sponsor needs to establish a philosophy about this, such as, "we want the rate to be fixed" or "we want the rate to be tied to some external measure of interest". The former might mean that the rate is fixed at (eg) 7.5%. The latter might mean that the rate is defined as (eg) "prime plus 150 basis points". There is no reason that the plan could not use the GATT rate, or that rate plus some loading factor, etc. I also believe the same issue applies to the choice of a mortality table, and I suggest the use of some current standard table, which would allow for future modification by plan amendment.

As in so many cases, the answer begins with "what does the plan say." Most plans address the case where a participant is eligible to retire but dies before actually retiring. Likely, there are no "back payments" but careful review of the death benefit provisions is required. The most likely benefit is to the surviving spouse, assuming the employee had retired the day before death, probably with a J&S form of benefit with x% continued to the surviving spouse. ("x" is at least 50, could be 75 or 100, etc. Review the death benefit provisions.) If the death benefit is defined similar to this shorthand description, then the first thing to determine is the employee's accrued benefit. If an actuarial increase of the NRD benefit should be included in that, so be it. Beware that there may be no benefit if there is no surviving spouse.

I would say that this fails 411(B). The next step probably should include the advice of a competent ERISA attorney, preferably one who has been around since at least 1989.

I think it may fail IRC 411(B)(1). Notice the paragraph at the very beginning of IRC 411(a). Is this a qualified plan? Is there an SPD, even an old one? Any other samples of actual benefit calculations?

you can send email from the "profile" I could not get the link above to work. Let's try this one: http://www.taxlinks.com/rulings/findinglis...evrulmaster.htm

Segal; thinks so, but don't expect anything official for a couple of weeks. http://www.segalco.com/corporate/pub-corpo...rate.cfm?ID=299

Another thought: If you have your ex-husband named as your beneficiary anywhere, whether on employer-provided benefits or personal insurance, then you should change that ASAP.

Another point would be how the plan defines normal retirement age. A plan can permit in-service distributions to an active employee who has attained NRA.

I doubt that one is online. You have my sympathy for having a need to read it. Email me your fax number and I will try to send you a copy.

Good point by Brian4 about the accrual rules. I wonder if we are missing some information. Gary, you state that the offset is not prorated for service. But what accrual rule is the plan using? For example, the plan may define a benefit formula (often in the "retirement" section of a document) but it will also have a definition of "accrued benefit" (usually in the definition section). My hunch is that definition is based on the fractional accrual rule.

Keith is correct. When the comp limits were lowered by statute (200K was effective in 1989, indexed to about 235K in 1993, lowered to 150K in 1994), the "grandfathering" was based on the benefit as of the day before the change, not a grandfathering of the comp itself. See 1.401(a)(17)-1(a)(3)(ii) and (B)(2).

I wonder if Study # 65, in the SSA link above, might be what you want.

Although the facts are a bit sketchy, I would guess that Yes the participants are 100% vested. This points out the importance of doing two things in any plan termination: 1. Freeze the plan, specifically freezing the accrual of benefits and freezing the participation of the plan. Note that vesting is NOT an issue here. 2. Terminate the plan. This can have the same effective date as (1) but, if something happens to void the termination, it will not change the fact that the plan is frozen. If the plan amendment that froze the plan specifically mentioned 100% vesting, you are probably stuck, but of course you will want the advice of a competent ERISA attorney. Also, remember that ERISA requires ambiguities to be resolved in a non-discriminatory manner, and that generally this will be in favor of the participant. Most plan terminations that I have seen had only a small percentage of the total benefit affected by the 100% vesting, so "giving in" on a question such as this was not a major point.

Why is it that so many questions can be answered "Yes and No"? Let's be a bit careful about Sec. 4.04(3). The reference to 5% states that this applies to the prior year. That is, it appears the new actuary is expected to reproduce last year's funding standard account as done by the prior actuary and the net charges to FSA should not be more than 5% off. I do not read this to state anything about the total liability, but only about the funding standard account. Yes, a very small difference in the full funding calculation could have a strong leveraging effect on the funding standard account. However, to me, "net charges" is the sum of all charges and credits applied for the year. I think it is all items in the funding standard account except for the credit balance. Any other opinions?