david rigby

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).]

I don't think so. Assuming you are referring to a plan under IRC Sec. 423, it is not a "qualified" plan nor is it a plan of "deferred compensation". The new 5500 for 1999 is here: http://www.dol.gov/dol/pwba/public/pubs/forms/fm99inx.htm

My experience with such contracts is limited and indirect, but if the appropriate language is not already included, I would be inclined to look elsewhere. Inclusion of such language seems to be a no-brainer.

Not sure if the annuity purchase is relevant. Generally, a qualified plan is intended to pay benefits after some severance of employment: retirement, termination, death, disability. The primary exception is attainment of Normal Retirement Age (defined term in the plan). If the EE is over NRA, then the plan can probably amended to commence benefits. What kind of plan are we discussing? Might be possible to define NRA to accomplish your goal, but then that might create other problems.

Agreed, subject to the issue of a "significant" reduction in accruals. But part of your question is whether the SPD can serve as the 204(h) notice, whatever the time of distribution. I'm not sure, but skeptical about that. Perhaps others have experience with this issue.

Not sure. My understanding is that if the plan is being amended *during* the 2000 plan year to adopt the GATT minimum for lump sum distribution, then the minimum is the greater of the pre-GATT basis or the GATT basis for all distributions made between 1/1/2000 and the actual adoption date of the amendment. After the adoption date, then the GATT minimum applies.

Do you have access to The Actuarial Digest? Current issue (I got mine just a few days ago) is their annual issue devoted to software vendors.

I agree with Tom. The 3-year rule applies to a change in vesting schedule. It is Sec. 411(d)(6) that would provide guidance on a change in NRA, with the net effect that any EE who is a participant at the date of change should not see his/her NRA increased with respect to benefits already accrued. Note that NRA is not the same as NRD. The former is the date at which 100% vesting must occur without regard to service. That is why ii is part of the statutory definition of minimum vesting requriements. See sec. 411(a)(8). NRD is the point at which the benefit is payable. (Yes, that is an oversimplification.)

I agree with Steve. As he points out, the ER has apparently aplied an administrative interpretation. It may be perfectly reasonable. For example, it may have been the intention, but the drafting of the plan language was inadequate. Prior language or prior administration may be a guide in making such interpretation. Also, the use of the table is important. If the definition relates to lump sum calculations, the interpretation should obviously be a unisex one. However, if the plan is defining the actuarial assumptions to use for determining top-heavy status, then a different interpretation may be reasonable.

Haven't looked in a while, but I think that earnings thru the year of age 64 is used. Indexing is thru age 62. I recently saw a notice that the SSA has an online calculator.

I agree.

Depends on many factors. Many large plans do not allow an unlimited lump sum option. Many small plans do, especially if it is a "family" business. The most obvious (to me anyway) difference in this is that your investment strategy may be affected. That is, the traditional design of a DB plan pays monthly benefits to retirees. Thus, the trust continues to hold the money for investment. The trust/plan sponsor also bears the risk of bad investment and reaps the reward of good investment. If you pay out the entire value of the benefit at retirement date, then you are increasing your cash flow, and removing potential investmetn return. In U.S. qualified plans, the interest rate required to value the lump sum will usually be less than the long term exepcted rate of return. Thus the plan may pay out a lump sum that exceeds the true actuarial value of the monthly annuity. On the plus side, the lump sum is easy to understand and communicate. Few plans offer a partial lump sum option. [This message has been edited by pax (edited 04-07-2000).]