david rigby

Line 6a of the 5500 was modified for 2014. It's also mentioned on page 1 of the 2014 instructions. https://www.dol.gov/ebsa/5500main.html

Highly recommended that the original poster should not care about: - the debts of estate, or - the reason the son may want to disclaim, or - what the estate tax structure is, or - etc. These are of no concern to the plan sponsor, to the TPA, etc. Rather, advice to the son (who just might be the only person to whom the plan sponsor can direct any comments) should be to relate the provisions of the plan: the plan states the benefit goes to X, etc. Let the son and/or the estate gets its own legal advice.

I'll bite. Why is response "legally required"?

There is lots wrong with it. Grammar, punctuation, possibly spelling, probably one or more omitted words, all of which leads me to caution.

I hope that is not an exact quote. Is there a plan merger somewhere in this? What does the plan's attorney say?

Perhaps your client has fallen victim to a scam. Or, a "helpful" brother-in-law.

It depends. If the VT's previously reported, then report with code D. If not previously reported, ignore them.

ERISA Outline Book. Author is Sal Tripodi.

In a plan termination, a distribution is made to or on behalf of every participant. The terms of the plan dictate what payment forms are required. Nevertheless, most plans will make payments something like this (assuming the plan is subject to ERISA): A. to retirees/beneficiaries currently receiving a benefit as an annuity, either (1) purchase a commercial annuity (i.e., retiree receives no option), or (2) offer a lump sum payment (if the retiree declines option 2, the plan may be required to revert to option 1). B. to VT and active participants, offer a lump sum. If the LS is over $5K and the participant declines the LS, the plan (probably) must provide the benefit thru purchase of a commercial annuity. If the participant is currently eligible for early or normal retirement, the plan will probably not offer optional forms (as any regular retiree would receive) because that puts this person back in category A. However, there might be some (small) differences in the communications sent to VT participants vs. active participants.

By the way, this is called "insurance".

Yes, answered many times before. (Mike might be overstating to say "gazillion", but its close.) Just as important is the advice in Post #7: check the plan document, to review its definition.

Vesting rules for ERISA plans changed with the first plan year beginning in 1989. Upon such date, the graded vesting schedule in the first paragraph of the original post would not have been permitted.

Data as of 05/31/2016 (Tuesday) Moody's Daily Long-term Corporate Bond Yield Averages Utilities Industrial Corporate Aaa NA 3.63 3.63 Aa 3.71 3.75 3.73 A 3.91 3.98 3.95 Baa 4.62 4.74 4.68 Avg 4.08 4.03 4.06 Moody's Daily Treasury Yield Averages Short-Term (3-5 yrs) 1.21 Medium-Term (5-10 yrs) 1.59 Long-Term (10+ yrs) 2.34

I am aware of one deferred annuity purchase. I believe the carrier was Mutual of Omaha. No one wants to bid on the "non-responders".

Jeepers (that is the technical term). Not sure why the IRS would ask sponsor to sign such a statement. (It seems contradictory to the best interest of the IRS.) I don't have an answer to your question, but suggest this plan sponsor needs advice from a competent ERISA attorney.

I heard that also. The speaker was Ira Cohen, now retired IRS actuary. He would know.

OK. IMHO, the proposed condition is likely to be irrelevant, in which case I suggest there is no "significant detriment". I base my conclusion on experience with many ERWs, where everyone elected an immediate commencement date. Others may have different experience. Caveat: I've seen a ERW in a government plan with some different wrinkles, but not covered by ERISA.

... but "official guidance" from the government might be different. Old story: a famous actuarial professor told his students of his testimony before a state legislature that was considering a bill that defines Pi as 3.0. Fortunately, they took his advice.

Is the ER concerned about the ERF? Many DB plans that offer early retirement use an early reduction factor that provides some subsidy (perhaps small), as compared to a true actuarial equivalent reduction. If so, that means the employee who defers receipt until 65 will forego some or all of that subsidy. The net result is that the employer's proposed condition will cost the plan more.

Likely, his age at the time of working 1000 hours is not relevant. If he reaches a (possible) entry date and has met both of the age and service conditions at anytime during employment, then he should become a participant on that entry date, not the next one.

Is this the net effect: invest in a product that mirrors the crediting rate, without regard to whether that investment has higher net admin costs/fees?

What does the plan say?

I vote for option #2. BTW, are there excess assets? If so, be careful what you do with them? If any amount is allocated to participant(s), don't forget about 415 limitation.

Seen it. Done it. IMHO, you can amend the plan to increase the allocation of excess to participants at any time prior to actual distribution. Note, this might mean you have to produce two checks to everyone, so there is additional administrative cost. Be very careful if there are retirees getting an annuity. If the plan purchased a commercial annuity for the retiree, you may be going back to the same insurer and asking if you can give them more money to provide a higher benefit, but it's likely the (monthly) benefit will not increase in the same proportion. Advance discussion of this possibility is important.

Generally, that is determined by the precise terms of the plan amendment.