david rigby

Hmm. Has anyone thought about this?

I second the concerns from mwyatt. I do not like the decrease of the funding percent (a small decrease would not be a problem, but a 10% decrease is cause for concern). Also, as I understand your phrasing, David, you are evaluating that percent by including the current year contribution. I don't think the IRS is likely to look at it that way. What are your percentages without the current year contribution?

I think the point of this is that a distribution is a right guaranteed by law (and the plan). Therefore, charging *directly* for it seems to be something the DOL doesn't like. Seems to me that if the amount is reasonable, whether charged to the plan or to the individual participant, is the same. Making all remaining participants pay for all distributions is a worse alternative.

I can't answer the questions on corporate or escheat law, but the first thing I would do is focus on two things: Is there a death benefit provision in the plan? Is there a spouse? If this is a qualified plan, I'm not sure that creditors have anything to attach, especially if there is a legitimate beneficiary. Does the bank have an attorney who can offer an opinion?

I think that depends on which table you are using. In 1.401(l)-3(e)(3) are four tables: Tables I, II, and III are for SSRA of 67, 66, and 65. However, Table IV is a simplified table that can be used in place of the other three when the plan uses a single disparity factor. Read this section of the regs. carefully, and check the document. [This message has been edited by pax (edited 03-07-2000).]

Try a search on this site, using such terms as "401(k)", "403(B)", and "comparison". Another source of information would be the website maintained by Carol Calhoun: http://benefitsattorney.com/index.html On the drop-down menu, look for the comparison between the plan types.

I'm kind a fan of the phrase, "Free Money". Have you tried that yet?

If this is stupid, please forgive. I'm not sure I understand the use of the term "uninsurable". In most states, liability insurance is required by statute, so that very high risk drivers, who might otherwise be uninsurable, must buy coverage at very high rates. Is this driver in a state where the laws are different? This raises a question about those drivers who are not so bad, but not perfect. How does your company handle the insurance for them? In other words, you may need to draw a line somewhere, if that line has not already been drawn by some precedent. The suggestions by KIP and nac seem to be viable. Do you have this in writing, for future employees as well as current? [This message has been edited by pax (edited 03-03-2000).]

I think this link will go to the current release. http://www.bog.frb.fed.us/releases/h15/Current/

I'll try. (Aren't you surprised?) Reg 1.411(d)-2(B)(2) addresses a specific situation involving DB plans: where the reduction in future accruals will (or potentially could) increase a reversion to the plan sponsor(s). Notice the word "if" at the beginning of that paragraph. My read of this paragraph is that if the reduction in future accruals has no effect on a reversion (or possibly only a trivial effect, although that is not stated), then there is no partial termination. But don't miss the last sentence of this paragraph, that opens the door to a partial termination for other reasons. Also notice the all-important phrase "facts and circumstances". I'm not sure that a money purchase plan would have a potential for reversion of assets. [This message has been edited by pax (edited 03-01-2000).]

How can the "loan plus accrued interest" be re-amortized? If you deemed it a distribution and issued a 1099R, doesn't that mean that it is no longer in his account?

Yes Christine that is what I am suggesting. In fact, I would not alter that advice at all just because the participant's retirement and/or distribution date may be imminent. [This message has been edited by pax (edited 03-01-2000).]

Chester, that is exactly the point I was trying to get at. I'm not sure that amending the QDRO makes sense, especially on a practical level. If there were a need to amend the QDRO in that situation, why not simply write the QDRO more generically in the first place.

I'm still not sure what you are trying to do or trying to avoid. Rev. Proc. 95-51 sec. 3.13 gives permission to change the valuation date to the first day of the plan year. I don't believe that your reason for making the change is relevant.

NO. If you can clarify where you heard this, or in what context, perhaps we can clear up the confusion.

rcline46, What does passing ADP have to do with being (or not being) topheavy? Answer: nothing. You are more correct to focus on the number of EES. However, note that the original question did not say 200 EEs. It said "less than 200". From the information presented, we do not know if this means 90 or 190. I too have doubts that a plan with 100+ participants is top heavy, but my original recommendation is unchanged: get a second opinion. [This message has been edited by pax (edited 03-01-2000).]

I don't think either is required. But that may depend on what you are trying to accomplish with the QDRO. If the DB plan is traditional, then it defines an accrued benefit which is (probably) expressed as a monthly or annual lifetime benefit commencing at normal retirement age. The plan defines how a lump sum is calculated, and when or if such lump sum is payable. I don't think the QDRO can change that.

No expert I , but that never stopped me before. It seems to me important that you check carefully whatever agreement(s) exist between the bank/trustee and the plan sponsor. I am not aware of trustee arrangements that also expect the trustee to provide consulting advice. As a sidebar, just how many participants are in this plan? If the plan has 100+ participants and is top-heavy, I would think about getting someone to review it. I have seen many top-heavy plans and only one had more than 75 participants. [This message has been edited by pax (edited 02-29-2000).]

First, it sounds as if you agree that you were overpaid and the amount of the overpayment. Perhaps you can work out some negotiated repayment with your former employer. If so, figure out what you can pay and over what period, and then make them an offer, perhaps agreeing to pay the net (after tax withholding) amount. Since you are unemployed, that might not be viable for you, but it would not hurt to make that offer, with the caveat that you cannot pay anything until you find suitable unemployment. Probably better than the cost of an attorney.

My understanding is that the cash balance plan of a very large bank (no. 2) defines NRD as the *earlier* of age 65 or 5 years of service. Supposedly, this plan has received a determination letter. However, let me also express an opinion: This is contrary to the purpose of qualified plans in general, which is to accumulate long term assets or to provide retirement income. Permitting in-service distributions at early ages makes a mockery of the concept of retirement planning. Frank, I would be interested in knowing the reason(s) that the sponsor wants to make in-service distributions. [This message has been edited by pax (edited 02-28-2000).]

I'm not sure I understand the question, but I'll try. Much depends on the plan wording, and on past practice. If the issue is "gray", I *always* recommend that no distribution be made to someone who has been rehired, since it seems to set a precedent that is not the purpose of the plan. Since the plan normally exists for to provide long-term capital accumulation (in the case of a DC plan) or for providing retirement income (in the case of a traditional DB plan), my opinion is that the administrative interpretations should adhere to that goal. It is appropriate to inquire as to whether this issue has come up before and how it was handled. [This message has been edited by pax (edited 02-23-2000).]

I'll try to summarize and hope I get it right. Begininng with the first day of the 2000 plan year, 417(e)(3) is modified to provide a different set of assumptions that must serve as the minimum for a lump sum distribution. If the plan is not yet amended, the amendment period has been extended to end of the 2000 plan year, but the amendment must be retroactive to beginning of plan year. However, the lump sum minimum must be the greater of the old (PBGC) minimum, or the new (GATT) minimum. This "greater of" applies to any lump sum payments made from the first day of the 2000 plan year to the actual date of adoption of the amendment.

What does the plan say? Does the Plan restrict loans to "active participants" or some other terminology?

As an addition to Carol's excellent comments above, also note that the IRS letter process also should permit lump sum distributions to be eligible for IRA rollovers.

Does anyone have a spreadsheet copy of the Mercer worksheets that they would be willing to share?