david rigby

I agree that the plans must be aggregated, but you do not have to make more than one T-H contribution to an aggregation group. If the ER contribution in the profit sharing plan is 3%, I think that covers the other plan(s) as well. Of course, all plans in the T-H group must use a vesting schedule at least as generous as the T-H vesting schedule, even if the contribution/allocation/accrual is made in only one of the plans.

Opinion from non-expert. I am assuming that you are discussing a qualified non-governmental plan. If the pension plan is, or was, ever negotiated, this is probably an item that the sponsor cannot do unilaterally without discussing it within the context of bargaining. Don't forget the issue of inactive participants. Are there any current retirees and/or vested terms who would be affected? If so, be careful who is included and how the refund is defined. For example, if an EE terminated 5 years ago and got a refund of contributions, then make sure this EE does not get another refund. I recommend advice from a qualifed ERISA attorney.

I think terminology can be important here. Most plans contain language that allows a sponsor to remove a contribution from the trust (there is a time limit) if it was a mistake of fact or if it is not deductible. Your title uses the word "mistaken" but your message implies nondeductibility. The IRS has stated that nondeductibility is not a "mistake of fact". An example of a mistake of fact is a clerical error of contributing $54,000 when the correct amount should have been $45,000. I would suggest that you review the document for the appropriate language. If it is not there, you may have a problem. In either case, review by an ERISA attorney is advisable. The process of getting the $ out of the trust should probably involve documentation of the problem, why it occurred, the exact plan provisions that permit the withdrawal, and do it all in writing. [This message has been edited by pax (edited 05-08-2000).]

May need some clarification of terms as well as timing. Did the PBGC nullify the termination or the termination date? Was the plan also frozen? If so, then the PBGC action cannot unfreeze it.

Ray makes some excellent points. My comments: To a fairly significant degree, the national debate over "retirement policy" is being affected by the concerns of those who are the farthest away from retirement age, such as those under age 40. That does not make sense to me. "Portablity" is of greater concern to the younger set right now, but those monies are probably not viewed by them as earmarked for retirement. (Sure that is an oversimplification.) Perhaps it is time to consider modifying the PBGC rules so that plan sponsors are not encouraged to hand out lump sums so freely. Perhaps plan sponsors should not have to pay a premium for vested terminated employees if the overall funded ratio of the plan is greater than X%, thus taking away a penalty for keeping the benefit in the "system". [This message has been edited by pax (edited 05-05-2000).]

Is it possible that the plan was originally effective on January 1 with an initial plan year of 10 months? Or some other change to the plan year?

I agree with comment from Kip. I have read the comments about the lump sum vs. monthly. One article gave a specific example regarding an IBM employee. I believe there must be some information missing in this example, such as the possible impact of an early retirement window, because it sounds like apples and oranges to me. [This message has been edited by pax (edited 05-05-2000).]

I think the 204(h) notice is relevant only when there is a plan amendment that creates the "significant" reduction in the rate of future accruals. The original question discussed a company merger. That does not sound like a plan amendment, or a plan merger. In fact, a company merger does not necessarily change anything about the plan, except posssibly the name of the plan sponsor or its parent company. Perhaps a bit of clarification is needed.

Several earlier discussions on this topic. Try doing a search of the Message Boards.

Kirk, should the 1099-R be for the full amount, or should it be for the correct amount, with some other form (1099-Misc ?) for the balance?

Perhaps confusion over terminology. I believe that the correct phrasing is that you cannot "take away" a vesting percent (not the vested benefit). In this case, the participant with 2 years is not covered by the special rule of IRC 411(B)(10)(B). But that does not mean the vesting % changes, just that he does not get the choice of the better vesting schedules. If I understand the new schedule as 3/20%, 4/40%, 5/60%, 6/80%, and 7/100%, then this EE will experience some "grandfathering" of his vested percent, not his vested benefit. I believe the result will be: 2/40%, 3/40%, 4/40%, 5/60%, 6/80%, 7/100%.

Does not make sense to me. Actually, it sounds like a funding method change.

You might do a search for this issue on the message boards. The other plan participants have an interest in this, so the plan probably has an obligation to try to recover. Also, you might notify the individual that the balance is not a valid distribution, so not eligible for rollover.

Pat makes a good point about QDROs and that state court judges rarely sit still with respect to interpretations. My read of IRC 414(p) (haven't looked at the regs) is to refer to "marital property" and to "spouse". However, there is probably room to allow a judge some freedom. Might be interesting if a judge does allow some freedom under those definitions. Then the other party (that is, the same sex former partner who is the plan participant) might appeal on the grounds that 414(p) does not recognize such relationships. [This message has been edited by pax (edited 05-02-2000).]

It depends. What do you mean that spouse "signed-off"? What form is the benefit being paid in? What is the normal form? Is this a DB or a DC plan?

I'm no legal expert, and doubt that we have heard the last in this tale, but my understanding is that the Vermont law does not change the definition of "spouse". Therefore, the answer to your question is "no." As I read, the Internal Revenue Code does not define "spouse", because federal law does not define marriage, and therefore such terms as husband, wife, and spouse are as defined in state law. (See the 10th amendment to the Constitution.) My comments are probably oversimplified. Any others willing to correct me or fill in the gap? [This message has been edited by pax (edited 05-02-2000).]

The first thing I do everyday is look at BenefitsBuzz. Second, I look at the Federal Register. Another good point is to organize your research. One of the best internet plans of organization is: http://www.benefitslink.com/articles/usingweb.html

Not quite. Since the amendment has a retroactive effective date, any lump sums paid during the period between effective date and actual adoption date would be subject to IRC 411(d)(6), and should be the greater of the two bases. Note that it would be hasty to assume the GATT basis will be less. My exeperience is that as age increases, the lump sum under the GATT basis gets closer to the PBGC basis. At about age 64, they are very close. Thus if you had a lump sum paid to an EE over age 65, then the GATT basis is likely to be greater.

The GATT amendment can have a retroactive effective date, but only if there are no lump sum payments made in that time.

I would interpret that language as meaning the 1971 table for males, but use the same table with a 5 year setback for females. As far as your question about sex distinct lump sums, I would be surprised if there is a qualified plan that defines lump sum equivalence with sex distinct tables. If you have such a plan, is it there a possibility that it might not be qualified anyway?

Not sure if this will help you. This is a link to IRS site for forms. Choose the W-4P and look at the instructions. http://www.irs.gov/forms_pubs/formpub.html

It seems that such a plan amendment is possible. should not be discriminatory, but if there is only one EE, that problem should vanish. As a friend once told me, "If you can hold your Board of Directors meeting in your bathtub, you don't have a problem."

I don't think so. I think your first two sentences are an answer to your question. In general, a qualified plan pays benefits upon the occurence of an event: death, disability, retirement, severance of employment. The exception is, as stated, attainment of NRA.

What a lot of hassle! Are you really saving anything with such an awkward schedule of vesting? And keeping up with such percentages seems like a pain in the .....

Call me old fashioned, but to me there is only one original of a document, and it should have a signature on it. Also, I find it difficult to understand a paperless set of "worksheets". We have had many examples of researching old files, including worksheets, and part of our analysis has been determining the date of some notes and even whose handwriting they are in. Perhaps there are ways for all of us to reduce the amount of paper stored, but there are some records where you will want to have a hard copy. One possible way to compromise is to retain both electronic copies and paper, and then after a certain time, say 3-5 years, then the paper (or some of it) can be tossed. The other way to help this issue is to print more things double-sided. Some items intended for outside distribution can be done this way, and most things intended for your own files can be. [This message has been edited by pax (edited 04-20-2000).]