david rigby

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).]

Well, my guess is that the quote from that PLR is taken out of context. See Rev.Rul. 95-51, esp Sec. 4.02(2) for references to an Unfunded becoming negative. Note that it states "approval is granted". Thus no specific method is required, just that a change of some type must be made to avoid an unreasonable funding method.

Caution. Focusing on "termination date" is shorthand that may not be correct. The correct emphasis is the last date on which the EE had an hour of service. Not hard to imagine that the last hours date could precede or follow the the term date.

I'm a bit rusty on this, but I think that if you have FIL and get a zero UAL, then you have more than one choice: 1. switch to Agg., 2. switch to any other method that is valid, 3. fresh-start the UAL under the EA method (this is equivalent to switching from FIL to FIL). I don't think you are *required* to switch to Agg. method.

If the plan is frozen, it might not matter what you call it.

Looks to me like the AP gets the continuation of $500, but it could be something else. My understanding is that where the QDRO is silent, then you should not impute any benefit. If the benefit has commenced, then the form of payment should be fixed, not subject to change. The way you have described it, this is what I would interpret: P has retired with a 50% J&S form of payment of $1000 per month, with $500 continued to AP upon death of P. During P's lifetime, P has assigned half to AP. When P dies, then P's $500 stops and the assigned $500 also stops. But now the survivor $500 begins to AP. Thus, AP sees no change and the plan has not paid out more in total actuarial value. But, be careful that my summary is truly applicable under the terms of your QDRO. Special request: I believe every QDRO should explicitly address all possible happenings, which would include: P dies first, before benefits commence, AP dies first, before benefits commence, P dies first, after benefits commence, and AP dies first, after benefits commence.

To Lorne, there is extremely common language in plan documents that addresses plan termination. This is what the "standard" reference meant. To Lorne and Frank, if you know what is good for you, stay away from this message thread. [This message has been edited by pax (edited 03-29-2000).]

I don't think so. See 414(p)(9) and 401(a)(13). But don't overlook 414(p)(11) special language for govt. and church plans. [This message has been edited by pax (edited 03-29-2000).]

I don't think so. See 401(k)(4)(A).

Here is a link: http://www.bls.gov/

I don't understand the comment above: "The statute does not permit you to disregard service prior to the effective date of the plan, except for vesting purposes, ..." Please explain. [This message has been edited by pax (edited 03-23-2000).]

Governmental Employers are exempt from many ERISA and Internal Revenue Code requirements. The primary ones are: · ERISA Title I, Section 4(B)(1) · ERISA Title IV, Section 4021(B)(2) · Minimum Participation Standards IRC § 410©(1) · Minimum Vesting Standards IRC § 411(e)(1) · Minimum Funding Standards IRC § 412(h)(3) · Top-Heavy Plans IRC § 401(a)(10)(B)(iii) There is also an exemption under IRC 417, but the reference is more difficult to list (it's from the explanatory notes in ERISA) so I have omitted it here. Of course, the absence of such regulation means that state laws still apply, not that I am an attorney, but this is exactly what several attorneys have told me. Also, Carol Calhoun, a frequent contributor to this site, maintains an excellent reference: http://benefitsattorney.com/ [This message has been edited by pax (edited 03-22-2000).]

Unless the plan specifically mentions service prior to the plan's effective date, then it is probably ignored. Most plans also state that service prior to effective date is used only if the EE is employed on the effective date (or possibly the day before).

I think the difference is whether the EE is employed on 1/1/76. I would love to hear from others, to see if my explanation is too oversimplified.

From what you have related in your immediately prior message, I would say that no pre-76 svc counts for anything. It is the word "continuous" that stands out most to me, particularly in the following: "Defines eligibility for employees not employed on Dec 31, 1975 as age 25 and 1 year of Continuous Service with the initial eligibility computation period as beginning on the date of hire (or re-hire)." Your last comment about pre-71 service is interesting. Look carefully at that reg, especially the first sentence of 1.411(a)-5(B), and then subsection "(6)Service before effective date". My read of that subsection is that the service prior to 1/1/76 need not be counted if the prior plan would not count it. Therefore, my focus would be on whether the prior plan as of 12/31/75 would have counted the pre-76 service. It looks to me like it would not, since he was not actively employed at 12/31/75, unless he was vested under the vesting provisions in effect at 12/31/75.