david rigby

The benefits community is fortunate to have BenefitsLink as a resource. Thanks, Dave!

Absent the early retirement issued mentioned, the facts presented would produce vesting at 1/1/2017 if still employed. It appears the EE severed employment before becoming vested, so he/she is no longer a participant. Vesting will not occur at 1/1/17 unless this person is rehired. (Possible that TH vesting also applies?) P.S. You do not provide hire date, or whether this EE may have worked somewhere else in the controlled group, so I'm assuming that is not relevant. Such employment could add vesting service prior to Entry Date. For example, if hire date = 1/15/2011 (and EE worked 1000+ hours in 2011), then vesting might occur prior to 2017, but he/she must be employed.

Who is paying for the expense of this "search"?

Cash

Are there other participants in this plan?

Q: "Why is the plan written this way?" A. In order to comply with the statutes and regulations. Unless this is the Employer's (or Plan's) attorney, your reference in Post #1 and the advice in Post #6 would still apply.

Wouldn't such "rollover" have the (ultimate) effect of transferring the tax responsibility to another person?

Perhaps this is also an opportunity to consult with the big cheese, suggesting one or more methods to minimize the refund(s).

I think the original post is related to IRC 4980 transfer. Correct?

Data as of 31-MAR-15 (Tuesday) Moody's Daily Long-term Corporate Bond Yield Averages Utilities Industrial Corporate Aaa NA 3.52 3.52 Aa 3.61 3.65 3.63 A 3.71 3.89 3.80 Baa 4.50 4.48 4.49 Avg 3.94 3.89 3.92 Moody's Daily Treasury Yield Averages Short-Term (3-5 yrs) 1.05 Medium-Term (5-10 yrs) 1.58 Long-Term (10+ yrs) 2.34

Would a plan disqualification (surely an active event, not a passive one) open the door to anything else being audited?

It's possible this will automatically terminate the plan.

Does this mean all participants are HCEs?

I would say the plan should include a method, so consistency is assured.

No disagreement with mbozek's comments. However, I'll express some skepticism that ASC 710 is the correct accounting standard for GAAP purposes. I know very little about ASC 710. I'm familiar with accounting for deferred comp arrangements under ASC 715. If that is the correct standard, then your comment (post # 10) about a lower discount rate is on the right track (although I may have some doubts about a rate as low as 2%).

Well, just my opinion, but it seems pretty obvious that you cannot have a negative rate. Perhaps your plan needs a clarifying amendment. BTW, I think the plan must adopt the PPA minimum.

you have inconsistencies in your dates.

I'll give this a shot. (I saw nothing in the 415 regs.) Likely, the terms of the freeze amendment are the important guide. If the amendment did not specfy any particular handling for 415, then the common use of "freeze" is to assume it applies to all aspects of an accrued benefit. There are three Q&As in the Gray Book that you can read, and perhaps glean something. QUESTION 2013-7 Section 415: Increases in Benefit Limited by §415 after Plan Formula Freeze A defined benefit plan participant who has four years of participation service has his accrued benefit limited to 4/10 of the otherwise applicable §415 dollar limit. The defined benefit formula is amended to freeze service and compensation and remove the §415 COLA increases (such that there are no further increases in accrued benefit). Assume the participant will continue to earn years of service and participation for at least an additional six years. a) In calculating the §415 dollar limit, can years of participation include years after a plan has been amended to freeze service accruals and compensation? b) If the answer to (a) is no, does the answer change if the plan is amended to reduce the accrual rate to 0% rather than freezing service and compensation? RESPONSE a) No. For purposes of §415, “years of participation” are only credited if the employee completes the number of hours needed under the plan to accrue a benefit for the year. A plan that has been frozen does not provide for any such benefit accrual and therefore the participant cannot earn additional “years of participation.” b) No. QUESTION 2014-24 Section 415: Required Availability of In-Service Withdrawals – Normal Form or Any Form In cases where actuarial increases cannot be provided because of the §415 limits, §1.415(a)-1(f)(7) requires suspension of benefits or commencement of distributions. Further, only the commencement alternative and not the suspension alternative, is available after the April 1 following age 70 ½. Suppose that considering the life-only annuity payment form the benefit would have to start on September 1 to avoid a §415 violation if the participant elected that form of benefit. However, if the participant elects the lump sum form of payment, the benefit would have had to start earlier during the year to avoid a forfeiture. This situation occurs because the plan’s lump sum conversion basis (§417(e)) produces a more favorable conversion than the 5.5% interest rate used for §415 purposes. May the plan start benefits on September 1, or is the plan required to find the earliest date the benefit in any available form would exceed the §415 limit and put the benefit in pay status at that date? RESPONSE Early and optional form factors are not protected by §411(a) – just by §411(d)(6). So it is acceptable to cut back subsidies in the early or optional benefits because of the §415 limit. The plan should be written to limit the accrued benefit at normal retirement age (or later) in the normal form. For the post normal retirement age period, actuarial increases would be protected by §411(a) to the extent necessary to satisfy the rule in §1.411(a)-4 about reasonable actuarial adjustments. For a benefit limited by the §415 dollar maximum, the plan terms can and must limit the late retirement actuarial increase to the lesser of the plan factor or the §415 factor. Any differential would be forfeited. In the situation where the §415 three-year average compensation limit applies, the §415 limit is not increased and there is no “permission” under the regulation to forfeit any differential. For that situation, the required annuity starting date would be based on the date the benefit (in the plan’s normal form) with additional accruals or actuarial increase reaches the compensation limit. QUESTION 2014-26 Section 415: EPCRS Correction of Failure to Start Payment In cases where actuarial increases cannot accrue or be paid because of the §415 limits, §1.415(a)-1(f)(7) requires suspension of benefits or commencement of distributions. How are failures to start benefits when participants reach the §415 compensation limit (so they cannot receive further required actuarial increases and benefits cannot be forfeited) corrected under Employee Plans Compliance Resolution System (EPCRS)? For a plan that does not call for any suspension of benefits (or does, but fails to provide notices) this would apply to periods after age 65, and for a plan that does call for the suspension of benefits during continued employment (and does provide notices) this would apply to periods after the April 1 following the attainment of age 70 ½ when §401(a)(9) requires that actuarial increases be provided. RESPONSE The plan sponsor can self-correct this type of §411/§415 failure under EPCRS using an approach similar to that used to correct failures to start benefits at the required beginning date by paying back payments with interest. The back payments are not counted toward §415 for the year actually paid, but for the year they should have been paid. The interest rate used to determine interest on back payments should come from plan provisions used to determine actuarial equivalence (after considering the applicable requirements of §417(e)(3), §415(b) or any other applicable provisions) that were in effect on the date the distributions should have been made. For a plan with a variable actuarial equivalence basis (e.g., §417(e)), the assumptions used would be those in effect on the date the distribution should have begun unless the plan specifies otherwise.

This is the only relevant item I could find in the Gray Book, and I have not checked to see if there is other (later) official guidance. Gray Book 2004-42 Treas. Reg. §1.401(a)(9)-2, A-2(a) provides that except in the case of a 5%-owner, the “required beginning date” is April 1 of the calendar year following the later of the calendar year in which the employee attains age 70-1/2 or the calendar year in which the employee retires from employment with the employer maintaining the plan. If December 31, 2003 is the employee’s last day at work, and the last day for which he is paid or entitled to payment of wages, is that the date of “retirement”. Or is January 1, 2004, the first day he is not employed, the retirement date? When is the employee’s required beginning date? RESPONSE “Retirement” is the last day worked, not the definition of retirement date in the plan. What date is an employee’s last day worked is a facts and circumstances determination. The facts and circumstances are based on the employer’s practice concerning the last day an individual is considered an employee. The above Response is a summary, prepared by representatives of the Program Committee, of the oral responses to the question posed to certain staff members of the Treasury and IRS, which represent only personal views of the individuals who provided them. Accordingly, the Response does not necessarily represent the positions of the Treasury or the IRS and cannot be relied upon by any taxpayer for any purpose. Copyright © 2004, Enrolled Actuaries Meeting All rights reserved by Enrolled Actuaries Meeting. Permission is granted to print or otherwise reproduce a limited number of copies of the material on the diskette for personal, internal, classroom, or other instructional use, on the condition that the foregoing copyright notice is used so as to give reasonable notice of the copyright of the Enrolled Actuaries Meeting. This consent for free limited copying without prior consent of the Enrolled Actuaries Meeting does not extend to making copies for general distribution, for advertising or promotional purposes, for inclusion in new collective works, or for sale or resale.

I agree with 2 Cents interpretation.

IRS Publication 590-A. http://www.irs.gov/pub/irs-pdf/p590a.pdf On page 11: "Contributions must be made by due date. Contributions can be made to your traditional IRA for a year at any time during the year or by the due date for filing your return for that year, not including extensions. For most people, this means that contributions for 2014 must be made by April 15, 2015, and contributions for 2015 must be made by April 15, 2016."

Just to be cautious, the 55/10 might be applicable, but it might have a different ER reduction. Whether it is relevant in the liability may depend on level of reduction (and the retirement decrements).

OK, but I always urge someone to double-check this.

Whoa there cowboy. Not even close to "almost all", at least not in the SouthEast US.

This is tomorrow's T-shirt.