david rigby

One other method is to left it float in a limited fashion, such as prescribing 3 particular days that it could be taken. For example, if you don't already have a holiday for Memorial Day or Veterans Day or President's Day, etc, then you could allow the extra day to be taken on any one of those, subject to some appropriate advance notice.

Don't forget to include the trustee in documenting the change.

As i understand the Q, the sponsor need not adopt the GATT changes for determining the minimum lump sum until the 2000 plan year (or am I off by a year?). Note that this is a change to the minimum specified in IRC sec. 417; the sponsor can always be more generous. However, if it is a new plan (hallelujah), then I think the GATT minimum should be included in the plan from its effective date. Since we are dealing with minimums, the interest and mortality basis in your lump sum definition can be anything you want (non-discriminatory) as long as the minimum amount is included. Note that as age increases, the GATT lump sum gets closer to the old PBGC definition. In fact, in some cases I have seen lately, the GATT amount is higher, usually at about age 64+.

1. Go to the What's New page of this website. 2. Click on the "Links by Topic". 3. Explore. If you cannot find what you need, I suggest you email the webmaster (Dave Baker) and either ask his help in locating what you need, or request a link. Also, there are numerous messages on the Message Boards; use the search capability. Some messages contain their own links to specific items. The IRS home page is www.irs.ustreas.gov. Be aware that "old" regs and rulings are probably not on the IRS website, but might be posted by some private website. If you are looking for recent IRS or DOL releases, you can probably get them from a website or can get the link from this website. In my office, we have a CD-Rom from BNA, hooked up to our office network. It is great, to be able to look up a reg or other cite with just a few clicks. It may be that the most valuable resource in the benefits field is the BenefitsLink website.

I'm confused. If the amount is over 3500/5000, then the sponsor cannot distribute it without the permission of the participant. If this is a DB plan, then I agree with above message: there does not seem to be a way to do a partial distribution, unless the plan had/has EE contributions. Also, be wary of rollovers and excise tax requirements (Sorry I cannot remember if the 10% early distribution excise tax is waived for disability. Even so, need to check to see how disability is defined/determined.)

I don't know, but I would like to know more about the two cases cited. Is there a link or other reference of discussion? Thanks.

I think that the Code specifically prohibits the AP from electing a J&S form of benefit (or perhaps the prohibition is when the contingent beneficiary is the new spouse of the AP). Also note that when a payee (participant or AP) properly elects a benefit such as a life annuity with a ten-year certain period, then the payee can name a beneficiary. In fact, the Plan does not care who that is since the certain period is guaranteed. Because of the guarantee, that beneficiary can name a beneficiary, unless the plan specifies otherwise.

Larry is correct. I believe the IRS regs. Sec. 1.414 discuss the various alternative definitions of comp that do not require testing. For example, using W-2 comp is deemed to be a non-discriminatory definition.

Gary, I keep handy all the original issues of various mortality table, so that when the client asks, I am able to give a valid answer as to the source or time of the data, etc. But I am not aware of an online source of these. For example, the UP84 table was originally published by the Conference of Actuaries (in 1975 I think), the GAM-83 table was published by the Society of Actuaries in 1983, etc. I am unable to remember details of source data, so I don't try, just look it up if I need it. The articles that accompany a table are sometimes lengthy, which is good because there is excellent detail about the history of the data, usually some discussion about the most recent table, other information which indicates the need for the new table, etc. In my opinion, mortality tables are one of the most important research tasks that is undertaken by the actuarial profession on a regular basis. If you read one of these articles, you will understand the care and importance that is necessary, and the substantial analysis that is done before a table is published. The articles accompanying the 1994 UP tables are an excellent example of this point. BTW, if you click on the "profile" icon on a message, you may find out more information about someone, including an email address. My profile, includes my email address.

A plan defines three things: the "applicable mortality table", and two items related to the interest rate. 1. The stablilty period; month, quarter, or year; 2. The lookback period; the first, second, third, fourth, or fifth month prior to the beginning of the stability period. Example, if the stability period is the (calendar) plan year, the lookback period is the rate in effect for the month of December, November, October, September, or August prededing the year. A new (proposed I think) reg. permits the use of averaging; for example, the lookback period could be defined as the average of the rates for the second and third months preceding the stability period. Note that the 30-year Treasury rate is the average for the month, not the rate in effect at the end of the month. Generally, the rate is not officially announced until about a week after the end of the month, so that using an early lookback period allows the plan sponsor to be able to make lump sum calculations in advance of the actual desired payment date.

No, and I don't think so. A qualified plan is permitted to define "compensation". Many plans use W-2, and many others add in deferred items such as 401(k) contributions, but the choice of definition is up to the plan sponsor. For example, we have a plan in our office that defines compensation as W-2, but not to exceed $40,000. However, if the plan is negotiated, the definition is (at least theoretically) part of that negotiation.

Another thorough answer from Carol. But let me be specific about one item she mentioned, that of avoiding adverse consequences to participants (her last paragraph). When a paticipant terminates employment and receives a distribution, there is often a desire to rollover that to an IRA. An IRA is supposed accept money only from a qualified plan. Therefore, the participants will certainly want the plan to be qualified.

Let's not make this harder than necessary. For this actuary, the date of contribution for the Schedule B is based on whatever source of information I get. If the plan sponsor gives me the date and amount, that is what I use. This is preferable because it affords the opportunity to check the bank/trustee statement to confirm that the actual deposit is what is expected. Some plan sponsors do not specify such information, instead preferring to let me read it from the trustee statement. If that amount is not what I expect, then I call to confirm. If the posting date is later than the due date, or different than expected, I call to confirm. Note that sometimes this reveals a mistake of posting, such as the trustee posting a company contribution to a DB plan account when it should have gone to the DC plan account, or vice versa, or a similar mistake with a benefit payment. The telephone is quite valuable in such cases. As far as the Q about due dates, normally a contribution is made FOR a particular plan year. It may also be noted as for a particular tax year. If a sponsor mails the contribution on September 15 (calendar year plan), obviously it will not be posted by the trustee on that date, but I record it as having been made on time. When the plan year and the sponsor fiscal year do not coincide, it is a good idea to educate the sponsor about the importance of: 1. making the contribution at least a little ahead of its final due date, and calling you (the consultant) at that time to let you know, and 2. designating the plan year that each contribution applies to. If the sponsor has a history of "pushing the envelope" on due dates, careful communication is advisable. This may (but not necessarily) give both the sponsor and the consultant some flexibility with regard to which tax year a contribution is deductible. Communication with the auditor (if applicable) is a good thing also.

Go back to the Message Boards screen. There is a message board specifically devoted to governmental plans. Try posting your question there.

As MWYATT has pointed out, if he can afford it, he could probably have a deductible contribution (per year) of about 100K to 150K, to fund the maximum benefit for a DB plan (currently an annuity of 130K per year). This is a perfect example of how and when a DB plan is far superior to a DC plan; that is, establishing a plan "late" and being able to fund substantial amounts. [This message has been edited by pax (edited 03-11-99).]

Follow-up to mwyatt: Are you saying that if all prior "employment" was under Sub. S and there was no comp paid, only Sub S dividends, that we could still count the prior "employment" as service for the 415 DC fraction and the 415 phase-in? Or perhaps, because there is no comp, then it does not matter since 25 % of zero is zero. Come to think of it, maybe it is not relevant for the DC fraction. Does that affect the 415 phase-in? My question originates in the assumption that, because there was no comp, then there is no "employment relationship". Where is my logic flawed? Thanks. [This message has been edited by pax (edited 03-08-99).]

I'm not an expert on 457 plans (try the Government Plans Message Board), but if you can contribute $400 per month to that plan, it will dwarf the $2000 annual IRA limit, so you get to save more. Can you do both? Remember the adage: don't put all your eggs in one basket.

What if question: What if the prior employer had been a Sub S, and the individual had taken Sub. S dividends but no comp?

I'm having trouble being sympathetic here. A qualified plan should specify this issue. Either way, the plan should state it. Most of the documents in our office specify that no benefits will be paid until the participant has retired, died, terminated, become disabled, etc. (or some similar language). The purpose of such language is to remove all doubt. If benefits may commence at NRD, you want to spell it out to remove doubt. I'm surprised that the prototype did not include this, or at least an option to spell it out. IMHO, in the absence of anything, I would assume that payments are supposed to commence after a severance of employment, because that is what a plan is for (speaking in general).

There is a Q&A column on BenefitsLink entitled ERISA Q&A ... Q&A 20 posted there (click) might answer your question. [Note: This message has been edited by Dave Baker]

When a participant terminates employment and has a vested (deferred) benefit, the sponsor must notify participant by the time of filing the 5500 for the plan year following the plan year of termination. Example, assume a calendar plan year, so that the 5500 is due (with extensions) at 10/15 following close of plan year. If EE terminates on 2/25/98, then the notification to EE must be made by 10/15/2000. If EE terminates on 12/15/98, then the 10/15/2000 due date also applies.

Interesting comments above on escheat and whether the non-distributed participants put a plan in an audit situation. Both good points. Perhaps, if a particular plan sponsor has much of these, the plan should be amended to accelerate the payment date, before the terminating participant "leaves the area". If you use the forfeiture route, be sure that you keep good records of the amount, date, SSN, vesting

what is the plan year? How often does the plan specify that benefits will be revalued? Your 60-day comment is not correct. For example, if your account balance is over $5000, then the plan cannot pay it out to you without your permission (that is, the plan probably has some procedure for you to "apply" for benefits). Try reading your Summary Plan Description (SPD) for help on when benefits are paid.

Do you have anything in writing from when you were "medically retired"? If so, you may have an address. As an alternative, do you have a Summary Plan Description (SPD) from the pension and/or profit-sharing and/or other plan(s). If so, that will have an address. I recommend that you write your inquiry, noting that you expect a response within 30 days. There may also be some information at an AA website (not likely, but worth looking).

A bit more background please. Are you asking about a distribution on plan termination, on retirement, on termination(vested), lump sum payment, spousal consent, direct rollover, etc.?