tuni88

Our small DB plan just filed its Form 5500 on October 15. So is the new annual funding notice due within 30 days?

Briefly the limits are stacked in three tiers: 1. 16,500 elective contribution 2. 3,000 elective contribution for eligible employees of certain 403b plan sponsors (5 years max) 3. 5,500 catch up for employees 50 and over. max 25,000. If eligible for #2, first 3k of contribution by employee 50 or over in excess of 16,500 must be counted toward amount in 2. Excess amounts are counted toward #3. See IRS pub 571 P 9-10 for detailed illustration of how to calculate maximum employee contribution. Also 403b contributions must be aggregated with elective contributions to all 401k plans, but not contributions to a 457 plan. Thanks. A follow-up question: Say an under-age-50 person works for two separate unrelated employers, each of which sponsors a 403b plan. Can she contribute $16,500 to each plan (a total of $33,000) or must she be careful to coordinate her contributions so that they don't exceed $16,500 combined?

We sponsor a DB plan that has a lump sum included as one of the payout options, along with a list of annuity choices, at retirement. We are contemplating terminating the DB plan and starting up a 401k plan as a replacement. An advisor has approached us and said that so long as we are fully funded (and let's say we are, cuz I think we are), we can terminate and then distribute lump sums to all the employees, who will then have the choice of rolling over their lump sum to the new 401k. I mentioned this to our actuary. He said that's not how it works, that employees can only get a lump sum upon termination of employment, and then only if they are of retirement age. So a 42-year-old, for example, would have to wait until he was both age 55 and left our employ before getting a lump sum. He said steps would be to freeze then terminate then pay (from plan assets) an insurance company to take over operation of the plan. Can both the advisor and the actuary be right?

Can someone very briefly summarize what are the '402(g) limits' in a 403b plan?

Wait, I know. Write in tuni88 in 2012. I promise the employee benefits community to act strictly on your behalf as a benevolent dictator. (Fingers not crossed.)

Those guys and gals were already shown the door, weren't they? Now who do I vote against? Alas, I'm not really "someone" exactly. I only read/study my own AFN cuz I kinda sorta know a little about them due to fact that I help administer a small plan here at work that issues them. Don't have our 2009 notice yet to compare it with what we distributed for 2008.

Yes, but, as indicated in the original post, the notice explicitly says actuarial value = market value. So, does anyone have a guess how the MV of assets could change by so much between 12/31/08 and 1/1/09?

I am a receiving a monthly lifetime defined benefit pension from a large company I used to work for and each year they send me an Annual Funding Notice. In comparing the 2008 notice to the 2009 notice I see that each of them, in the paragraph titled Fair Market Value of Assets, make this same statement: “For the Plan, fair market value is currently used as the actuarial value.” The 2008 paragraph goes on to say that as of 12/31/08, the FMV of assets was $2.763 billion and the plan’s liabilities were $2.936 billion. The 2009 paragraph goes on to say that as of 12/31/09, the FMV of assets was $2.945 billion and the plan’s liabilities were $3.384 billion. All well and good so far. The 2009 notice, on page 1 under the paragraph titled Funding Target Attainment Percentage, states that for the 1/1/09 valuation date the “Total Plan Assets” (line 2a) were $3.039 billion and “Plan Liabilities” (line 3) were $2.474 billion. So how can the FMV of assets go up by more than ¼ billion dollars between 12/31/08 and 1/1/09? And how can the liabilities go down by almost ½ billion dollars over that same 1 day period? I called the toll-free number listed in the notices and put only the first question regarding assets to them. The response was that the asset value changed for three reasons: benefit payments, company contributions, and fluctuations in market value. I pointed out that MV fluctuations didn’t make any sense since the markets are closed on New Year’s Day. It didn’t faze him. I then pointed out that probably the company was not open for business on New Year’s Day and likely wouldn’t be making a contribution that day. Also not fazed. And wouldn’t that be an awfully big contribution? No reaction. Then I asked wouldn’t benefit payments made on January 1 decrease, rather than increase, the asset number from the day before. Still not fazed. That’s how the conversation ended. (We didn’t talk about the change in liabilities -- can't imagine it could have gone anywhere useful.) So what’s going on with these numbers? Anybody have any experience with this? [Note to me: Mike 975908041701]

I blew right through the July 15 due date for our second quarterly contribution. Pay it right away first and then what? Do I have to fess up to the employees? to the guvmint?

Thanks ... I guess.

... issues of deferring the benefit payment Please briefly summarize what these are.

We are looking into freezing our small-ish DB plan and then terminating it when we have enough money in the plan to be able to purchase annuities and close it out once and for all. Our actuary tells us we're currently short of the amount needed to do that and that annual contributions will need to continue. A broker approached me and said we could buy annuities now in the name of the plan, stop making contributions, and just allow the amount on the annuities to build for a few years and then terminate. Is there likely to be a catch? I presume we'd be far over-paying for the annuities. Or something. What's this guy talking about?

If I want to view the latest available Form 5500 for our DB plan is there a way to do it on-line? A DOL website? Other?

the answer (even a ballpark range) depends on several factors. ------------------ Yeah, I know. That's why it's called a swag. Ok, I withdraw the swag request. No napkin calculations allowed - hearsay only. Anybody heard any anecdotes around the water cooler about the cost of adding a lump sum option to a DB plan? Man, you guys are serious.

Sorry, I don't understand nearly the entire first paragraph re PBGC. Accurate answer? I'm just looking for a possible range of how cheap it might be (free? - probably not) or how expensive it could get (doubles the plan liabilities? - hope not). Any of you actuaries ever made such an estimate on an actual plan? Ever done a napkin statistical wild a. guesstimate? Do actuaries do napkin swags? I don't expect the swag to be worth much more than I'm paying for it.

Our DB plan does not have a lump sum option. If we were to add one, by what percentage might our liabilities increase? What has been anyone's experience with this? Have any of you actuaries run a model on an actual plan?

We always paid early in the year so maybe that's why it was never an issue. So it wasn't our small plan size back then that mattered, is that right? We had to pay quarterly no matter our size? Size has never mattered haha? Was there EVER a circumstance in which paying quarterly was not required? How about under the new law?

Under this new pension law, are there any circumstances in which quarterly pension contributions are required for a small DB plan? Ours never has and never will have more than 50 participants. It used to be 100 participants made a difference, I think, so we paid once a year. Are we still exempt from paying quarterly due to our size?

On the advice of our actuary, we each year waive the other small previous credits we had built up in the past for our DB plan. Our pension investment guy (what a genius he is!) made a big bet that came through on a particular stock in late 2008 and, along with good results in the rest of the portfolio, got us a whopping overall return in 2009. If the gain turns out to be big enough to put us in a 100+% funded situation, will we get to use any of that overfunding to reduce the otherwise regular annual cost (normal cost) of the plan in 2010? For example, say our normal cost comes in at $50,000 and we end up overfunded by $20,000. Will that dollar-for-dollar reduce our normal cost to $30,000?

I understand that I am newly eligible to convert my traditional IRA to a Roth IRA because the magnitude of my earnings doesn't matter like it did through 2009. (I've done the math and determined that it makes no sense to do so under my particular circumstances.) But what about setting up a brand new Roth IRA to receive contributions beginning in 2010. Am I eligible to do that?

You have 60 days to do a rollover, right? How you gonna police it? Preventing people from losing their retirement is exactly what a DB plan does, no? So why add a lump sum feature?

We have a small calendar year DB plan. Do we have to pay our 2009 PBGC premium in 2009? MAY we pay our premium in 2009? What is latest possible date to pay?

No life insurance involved. I presume you concur with previous YES response.

One of our young employees lost her life suddenly this week and left a 28-year-old spouse. He's entitled to a very tiny (<$10) monthly lifetime survivor pension that starts on October 1. Or he can choose (or perhaps it's mandatory - still being studied) a rather small lump sum settlement. If he gets the lump sum, will he be able to roll it over into his IRA?

Our DB plan allows normal retirement at age 65 with 3 years of service. The vesting provision is also after 3 years. In early 2008 we hired a lady at age 67 and she got a year of service during 2008 (1000+ hours). She recently terminated employment, still with 1 year of service. She's not vested now, I think. Other than returning to work (no chance of that), is there any way she could ever become vested? (We hope not!)