david rigby

There is also a publication by the American Academy of Actuaries. Try this http://www.actuary.org/pub/actuary.org/sta...00/cashbook.pdf

Also, if you are trying to create a benefit of 100% of comp, refer to IRC 415(B)(3) for the defintion of comp, and refer to IRC 414(B)(5)(B) for the "phase-in", that is, the 100% applies where the employee has at least 10 years of service.

The 2000 covered Compensation is contained in Rev. Ruling 99-47. http://www.benefitslink.com/IRS/revrul99-47.shtml Do you get the Enrolled Actuaries Report? Look in the November issue (each year) for the covered compensation table and the limits for the following year. Also, Carol Calhoun maintains some of these on the site http://www.benefitsattorney.com Just click on the drop-down box and choose the item that says "Section 415 and other inflation-adjusted limits."

Great discussion! I agree with Tom's analysis. The essence is contained in T-7 of the regs. BTW, there is a reference in T-3 to IRC 7701(a)(46). That subsection is titled "Determination of whether there is a collective bargaining agreement." Fear not, the reference appears to be pointing out that the collective bargaining unit must exist after 3/31/84.

Actually the SOP 92-6 was issued (I think) by AICPA, not by FASB. I searched the FASB website and came up dry. Then I searched the AICPA site and found it, but it seems to require a password. Any other ideas?

I am looking for a copy of AICPA Statement of Position (SOP) 92-6, Accounting and Reporting by Health and Welfare Benefit Plans. Can anyone steer me in the right direction? Paper is OK, but online is better. Thanks.

Don't forget about top-heavy rules. There may be other ways to help you accomplish your goal of providing more meaningful benefits to younger employees, but the addition of a 401(k) is probably the simplest. Your actuary should be of help in reviewing the alternative plan designs.

As I understand the facts, the Plan is doing exactly what the law says is permitted (not required). That is, if the break equals or exceeds the service, then the plan can ignore the pre-break service. The exception to this is if the pre-break service gives rise to a vested benefit by itself. Another avenue to consider is where you were during the 9-year break. For example, if you were employed in another company that was "related" to the first company, then you may get vesting service (but not necessarily benefit service) for that period. Internal Revenue Code section 411 details the requirements for vesting. Please re-post if you have follow-up questions.

I agree with comment about amend instead of replace. There might be some good reasons to terminate the existing plan, such as prior violations of statute or regulation, so that the new plan is not "contaminated" by these problems. But if not, then adding the 401(k) feature to the existing plan is much easier, cheaper, and quicker.

Interesting comments by Greg. But Senator Harkin's committee assignments can be found at his website by clicking on "Legislation".

sorry to be so uninformed, can you help me identify which regs are relevant here? DOL? IRS? thanks.

Seems to me always advisable to address the issue up front. He may be misinformed about something. At any rate, getting the questions out in the open is probably a good idea, especially since others may have the same questions. My experience is that most EEs do not understand how DB plans work and my think of them more as "accounts" thus giving rise to "expecting more" especially at the younger ages.

I would look for some other mechanism. Could you change the funding interest rate or mortality table in a small way that might help you? But don't be greedy in this regard.

I have never seen such an increase applied to VT's before commencement date. I have seen several COLAs where the plan sponsor did or did not make a distinction between those who retired and those who were VT's. When the sponsor did not make such a distinction, it was usually because the data was not good enough to positively identify these groups. Other sponsors keep careful track of these groups and have given different benefits.

I believe that Steve's example is a demonstration of how to arrive at a "reasonable" assumption. If the plan establishes some maximum (which might be both annual and lifetime), then that is a starting point. I suggest looking at the history of the index (CPI or whatever is referenced in the Plan), probably at least a 10 year history.

Correct, but don't forget that top heavy testing might be on the basis of an aggregation group, in which case the T-H minimum might already be provided. Also, don't forget T-H vesting applies even if the contribution already meets the T-H requirements.

I think we just discussed this a few days ago. Try a search.

Correct. But be careful about the 25%. Notice the word "equal" in IRC 4980(d)(2)(B)(i). This is different from the "not less than 20%" in (d)(3)(A)(i).

DB termination under standard provisions. Participant could not be located and was handled under the PBGC Missing Participant program. Now, as we are allocating excess assets, he shows up. My review of the MP instructions is that the Plan *can* send the allocation of excess to PBGC, but I do not see any requirement to do so. My opinion is that we should pay the excess directly to participant (with properly executed form) since that is much simpler and avoids having the PBGC track down 2 payments. Any comments?

I agree with Steve's synopsis. I think there is some flexibility with respect to the assumption for those future COLA's, but recommend defining a method, such as looking at 30-year treasury rates, etc. Of course, the plan may establish some mechanism for this already. Be consistent in the application of the method. Write it down.

I find it easy to believe that it is silent on bonuses. But LCARUSI is right: what is the definition of comp in the plan? Many plans do not mention bonuses because the definition of comp is "all comp". In this case, a bonus would be handled the same as other pay.

Agree with Greg. I don't think the union can be a sponsor of the plan because the union is not the employer, can't do salary reduction, etc. It sounds like the company is just avoiding the subject.

Good question. There have been some earlier discussion threads on this topic. I suggest you click "search" (see the top of this page) and search using the word "minor".

Not to my knowledge. The 204(h) is not about termination. Other employee notification is appropriate in that case.

It happens all the time. My experience is that this ususally falls into the area of "administrative practices." I suggest looking for precedent(s). Another perspective could be to review the reason that retroactive payments are required. For example, if the delay is due to the ER being slow about processing the paperwork, then the procedure might state that interest will be paid. But if the delay is because the retiring employee simply did not return the paperwork (J&S election, etc.), then the procedure might state that interest will not be paid. Of course, it is possible that both of the above situations apply to some degree. For the specific situation you describe, you may have to include other factors to decide if interest is appropriate. One suggestion: if you pay interest, it is much hassle to use a variable interest rate. I suggest just picking a rate and sticking with it, such as 7%.