david rigby

I don't know where to get a summary either. However, if you look on the What's New page of BenefitsLink, you will find a link to some information, although it may be brief.

Yes. No, other than the current 415 regs.

Plan sponsor dissolved business in 1997 and decided to terminate DB plan. Standard terminaton. Now that we finally have all IRS and PBGC approvals, we are proceeding with distribution of final benefit amounts. But the custodian of the funds does not do 1099's. Neither do we (actuary). Since there is no longer a corporate entity (I think), who is repsonsible for the 1099's and IRS reporting? Stupid question, since the sponsor is responsible. (The plan is self-trusteed.) The practical question is what suggestion can I give the former owner of the company to get the tax forms done?

Dave is correct. In fact, I think the procedure for doing just what you ask is supposed to be outlined (briefly, not detailed) in the SPD, including the address.

Correct. However, I think the IRS permits a "wasting trust" for up to a year, thus allowing the trust/administrator 12 months to find everybody and make payment. You say that you have searched for the IRS position thru research services. Have you also called the IRS and asked? Seems like an issue on which they would have a well-defined policy.

Sorry that I do not have regs. handy. "Hour of Service" is defined in ERISA sections 202 and 203, and in IRC section 410(a)(3)©. Probably good to start with DOL and IRS regs on those cites.

1. go to the Govt. Plan Message Board. Click it. 2. Click on the "Introduction" link just before the messages begin. 3. Scroll down and see info on Carol Calhoun, who is the moderator of this message board. 4. Go to her "Employee Benefits Legal Resource Site" 5. Explore, taking note especially of the "checklist" of differences between government plans and other (ERISA-covered) plans, since church plans and govt. plans have very similar (but not identical) special handling. Carol is a very valuable resource to the users of these boards. Her website is great, and it's free. [This message has been edited by pax (edited 04-29-99).]

I'm with Wessex on this one. Only other possibility that comes to mind is whether there might be any special disability provisions that apply. Not likely, since most such provisions require some waiting period (such as five months), but thought I would ask anyway. I still don't see any facts that give rise to the question of whether his (or her) benefit is affected by the payment of the 4 weeks of vacation pay.

I'm not sure I agree with Dave. Since the hours worked are irrelevant to the comp he receives, then the regs say you credit 40 hours per week (I think). But, can the plan define the service to credit more, using actual hours if more than 40? Not sure. Certainly would be an opportunity for abuse. The usefulness of such a provision may be doubtful.

Try a search of this website or these Message Boards. Also you might try a search of the IRS website. I think you can find a link from BenefitsLink: go to the What's New page and click on "Links" at the top of the page.

The regulatory cite is part of the definition of a "safe harbor" plan design of a DB plan. Safe harbor is a concept created so that the plan is not required to prove, by some other means, that it is non-discriminatory. In other words, the safe harbor design requriements ARE the test of non-discriminiation. See 1.401(a)(4)-3(f) for special rules, including subsection (4) for discussion on Early Ret. windows, and also in 1.401(a)(4)-4(d). Contributory DB plans are discussed in reg. 1.401(a)(4)-6. Another help help may be to search this website, or the Message Boards, for references to "Early Retirement Windows".

Normally, the retiree form of benefit will not change, so that plan should probably purchase an annuity from a licensed commercial insurance company. Plan could be amended to permit retiree the lump sum option, but, if so, the retiree gets to make the choice of payment form. Don't know about rollover issue. Good question.

This sounds like an issue of personnel practices, not an issue of plan design or ERISA requriements. Of course, it is important to maintain consistency in such practices. This may boil down to: what is the definition of "retirement date"? what is proper and sufficient notice for an employee to make to retire? However, if EE was 49 and Early Retirement eligibility is at least age 55, I'm not sure how the accrued vacation time, no matter how it is paid, would have any significant bearing on the benefit. He was not eligible for Early Retirement, so HER benefit will be determined under the death benefit provisions of the plan. Probably need some more facts about the plan provisions. Also, has anyone checked the summary plan description?

For Robert, Need more facts. What type(s) of plans? How retroactive are you talking about? Are there any significant differences between the plans?

No. The involuntary cash-out limit is $3500. Recently the law was changed permitting employers to amend their plans to raise this limit to $5000, but the old limit still applies until the plan is actually amended. However, there may be something else going on here. I suggest you obtain some more facts (not rumors) and post them here for further advice.

This topic has been discussed here not long ago. I suggest that you go back to the Message Board screen. Search all message boards for such terms as "missing participants" and "locate".

Rod, That seems like an onerous request from the IRS. There may be room for negotiation. Ask; offer to do the top 5 and the bottom 5 (of the top 100). Explain the time and expense involved. See what the response is. With respect to the MEA calc, you should probably be prepared to calculate the DB portion (at least) two ways; the first is the method in the regs, and the second is (probably) based on actuarial principles. If the EE contributes (after-tax), don't forget to net this out. Good luck. Let us know how it continues.

Since payment was made in 1999, has the 20% really gone to the IRS? Even if withholding has already been paid to IRS, there has probably not been any reporting yet; that would not usually happen until the end of the year. If the plan will have other amounts of withholding during 1999, perhaps the sponsor can "net" the amounts remitted to IRS withholding account. Keep carefull records. It looks to me like the sponsor made a mistake in not allowing the participant to make an election. Are we still within the 60 days? The entire payment should be reversed (including the participant repaying the plan). Not sure if there is a problem with any interest earned on the 80%. Anyone see a problem?

Julia, I am an actuary in NC. We have a number of hospital clients, and some others who are prospective clients. I would be interested in sharing information with you. If you are interested, email me from the icon on this message. [This message has been edited by pax (edited 04-14-99).]

Usually the deaths you find are those who are not in pay status, such as vested terms with a deferred benefit. If you get a "hit" on a person in pay status, you should verify immediately. Stopping the payment w/o verifying seems like asking for trouble. I also suggest you search this website, especially the Message Boards, for more. I recall a similar discussion a few months ago.

I agree with the posting by David Dye. Definitely not eligible for any special tax treatment as if it were from a qualified plan, unless there are facts not in evidence. But let me suggest that the employer may have known it was the wrong form, but that was the only one they had, and they just neglected to type over the "R". Was the form prepared manually? If so, this may be what happened. Not sure if you really must, but it might be worth asking the ER for a letter documenting that it was (inadvertently) the wrong form. Like chicken soup, it couldn't hurt.

No single correct answer. It depends on a large number of factors, including 1. how much notice the EE gave the company of retirement, 2. how complex the plan is (such as whether the plan includes special benefits or minimums from a prior plan), 3. how conscientious the company is in processsing the paperwork, 4. how quickly the EE and spouse review the paperwork and decide on the form of payment, 5. how the first check is being paid (if using a trustee, how much lead time is needed before the check is cut). I am an actuary. In my firm, we have a group of employees who are specialists at doing the calculations of all the benefits. But each one gets reviewed by the actuary assigned to the case. Of course, we put a higher priority on those that are retiring, but a substantial percentage of these don't get to us more than 2 weeks before the retirement date, and quite a few are received in our office after the retirement date, often because the EE decided at the last minute to retire.

I don't know that particular table, but the test of "reasonableness" is the result. That is, are the results you get from using it (such as normal cost, 412 contribution, 404 contribution, etc.) significantly different from the results you would get by using a mortality table that is generally considered "reasonable"? (Yes "significant" is also a word subject to interpretation.) The answer you get to that question depends on several factors, such as how well funded a plan is, the funding method, the other actuarial assumptions, the plan design, and (especially) the demographics of the situation. A good way to start this analysis is to look at the ratio of annuity values at two different ages: immediate annuity at retirement age, and a deferred annuity at the average current age. The ratio is defined as the annuity of the table in question, divided by the annuity of the 1983 GAM, of course using the same interest rate. Look at this ratio for males and females. Then use common sense to evaluate how significant the difference is. Example, the ratio of the annuity value at age 65 between the 1983 table and the 1994 table is 1.062 for males and 1.008 for females. Thus, the significance of the 1994 table is much less for a female population than for a male population. A warning: if you are asking the question because you are trying to "manage" the resulting contribution, you should also use common sense as to the appropriateness of that action, especially if the ratios discussed above are more than 10% off (that is, less than 90% or more than 110%). That 10% differential is my personal threshold, although I prefer a 5% or less; not a magic number. Another important point is that the entire package of actuarial assumptions is being evaluated for reasonableness, not necessarily only one. If you have a set of assumptions which is "individually reasonable" except for the mortality assumption, then look at the output not the input. Barnet Berin wrote a pretty good book on actuarial funding methods a few years ago, "The Fundamentals of Pension Mathematics", published by the Society of Actuaries in 1989. The first question at the end of the first chapter is extremely interesting, where he ignores all assumptions (such as interest rate, turnover, mortality, etc.) and proves that ALL funding methods produce the same contribution for a given set of data. Thus, it is the application of the various actuarial assumptions that produce variations on contribution levels. The funding methods merely modify the incidence of the annual costs. This message has been edited by pax (edited 04-06-99).] [This message has been edited by pax (edited 04-07-99).]

Does the church pay income taxes? My understanding is that IRC 404 lets limits on the amount a plan sponsor may deduct in the determination of taxable income. To me, that means that a non-profit organization is not subject to any 404 limit.

Generally, this is dependent on the plan provisions. It is fairly common to have such provisions for disability, whether the plan is a defined benefit type or a defined contribution type. However, it is not required by any federal law. I suggest you check the summary plan description for the specific plan provisions. If you have more specific questions, just post.