Andy the Actuary

Good luck. I've found as long as client has solid history of timely filing, IRS is forgiving.

Once saw a profit sharing plan that "defined" the contribution as a percentage of before-tax net income.

1. Try www.freeerisa.com to determine if they have record. If so, it was filed and you can send them copy and refer to the website. 2. ASSUMING that filings have always been timely, reply to IRS with your story that have always been timely and that due to massive changes in personnel, copies of forms cannot be located. Include signed form with present date, tell them your client is dating in good faith rather than backdating, and ask that the IRS accept.

(1) If a terminating participant was eligible for for early retirement, did the lump sum include the e.r. subsidy? (2) If so, how many of these were eligible to elect lump sum payment? Since the lump sum was only available to employees hired after January 1, 2001 and the plan was frozen 8/2003, it is hard to believe that other than de minimis ($5,000 or less) lump sums were paid and they would have been exempt from providing relative values. If on the other hand, my supposition is incorrect and there were a fair number in category (2) -- i.e., eligible for e.r. with lump sums exceeding $5,000, consult a benefits attorney as there may be special hoops to jump through. The plan may want to go back to affected participants with the disclosure and the opportunity to switch elections, which would include for those who received a lump sum payment, repaying the lump sum with interest. The concern would be about taking no action is that the disgruntled former employee sought an attorney who uncovered that appropriate disclosure had not been given. However, it would not be surprising given the cost/risk/disruption issues if many employers would handle this by simply choosing to start giving the relative values comparison.

The IRS just extended the due date of the SSA until practitioners can get certified in preparing the form.

The Big Screw, age 62, owns and operates ScrewYa Corporation (SYC). SYC employees 1,000 NHCEs. Benefits are accrued over the the employee's working life time. And it just so happens that all employees are age 40 and were hired at age 20 when the Big Screw started SYC 20 years ago at his age 42. There has been no turnover or new hires. The Plan provides for lump sums to be determined using a 2 1/2% lump sum interest rate and The Big Screw's accrued benefit is just such so that under all the hoops his 2 1/2% lump sum at age 62 is exactly the maximum 415 benefit. So, The Big Screw retires and immediately the Board of Directors, of which The Big Screw is chairman, amends the Plan to modify the lump sum interest rate to the 417(e) rates with, of course, the accrued benefits at the time of amendment lumped sum on wear away basis to 2 1/2% and let's just assume SYC is such a great place to work that all keep working until the grandfather wears away. So, The Big Screw -- the only HCE -- has his benefit determined using 2 1/2% and 1,000 NHCEs have their lump sum computed using 417(e). Any comments (other than I just have too much time on my hands)?

More facts are needed and your question requires legal counsel that's been through this kind of situation. How was the merger of A and B affected? Did B buy the stock of A or only the assets of A. Were A and B related prior to the merger? Was A's plan merged into B's plan and that is the plan to which the employee is referring? If not was A's plan terminated or is it still alive (perhaps frozen) and being maintained by B? How does the plan language define employee and years of service for vesting? What, if anything, was provided in sales agreement between A and B. Are these single employer plans? Are they negotiated, and if so what does the bargaining agreement(s) provide?

Follow the wording of the plan amendment that froze benefits.

This helps immensely. Thank you. a.t.a.

Would appreciate direction on where to locate the following: (a) How many single-employer ERISA DB Plan there are (say as of the end of 2009). Breakdown by company size would be highly desirable. (b) How many of these are frozen © During 2009, how many terminated I've done Google searches, the IRS, DOL, PBGC, and GAO and more likely than not ran right past what I'm looking for.

You tell me how great my mind is: I misplaced my Medicare Card and further can't remember to which foot my left baby toe is attached.

(B) is a legitimate choice but may likely follow the law of "no good deed goes unpunished" because it assumes this lands in the hands of someone who is able and pays care and attention. I see there system being confused that two 5500s were filed. A plausible © would be to contact the IRS/DOL and seek their guidance, to which I wish you good luck. I'd go with (A) because then at least if it is kicked you have an audience and you can offer up (B) and your explanations.

It is advised you seek competent legal advice and not rely upon bulletin board comments in your situation.

The National Academy of Social Insurance writes, "The Social Security legislation of 1983 achieved the important goal of remedying a short-term financing crisis and keeping the program solvent. But for the long term, it scheduled far more in benefit cuts than in new revenues for the 21st century. Those benefit cuts are only beginning to be felt. People reaching age 65 in 2025 will get retirement benefits for the rest of their lives that are about 19 percent lower than they would have been without the 1983 reductions." Whine, whine, whine. 42 years advance notice seems more than adequate. Moreover, the SSA each year mails to prospective recipients a history of earnings and projected benefits. Nothing has been swept under the table.

Had the designers of 8955 been responsible for negotiating the WWII peace settlement, we would still be at war. Am I missing something or does the draft of 8955 look remarkably similar to what used to be SSA? 8955 is possibly the most costly-to-design form of the 20th century. While I'm whining, I'm also tired of 3 page consulting and society newsletters on this pathetic ordeal. With about 1/2 as much effort, we could have wiped out pellagra and beri-beri.

As an aside, the Plan would have to provide for a Retroactive Annuity Start date election.

Would not use original paperwork since it does not show correct benefit amounts and optional forms. The election packages I prepare show all optional payment amounts as of the intended BCD. The election packages state that either (a) the package is invalid if not returned within the designated time or (b) in the case of a normal or late retirement where the Plan does not provide the right to defer, that payment will made under the automatic J&S if the package is not returned on time. Generally, allow 30 days for participant to return paperwork and if end of 30 days allows payment in the targeted month, then would wink. I.e., would send out paperwork on June 10 for July 1 payment date and allow for return say by July 20th and so could make payment in July. This is a practical good faith approach without i's dotted and t's crossed. Don't know that anyone will go to pension prison. Nonetheless, I will not be surprised if there is not universal agreement with this approach and if some don't deem me a menace to pension society. If uncomfortable, then would send paperwork now for August 1 payment date.

Haven't seen the plan but commonly the participant would get the great of 30% FS (at amendment) versus 28% FS (at termination). I.e., this is a wear-away formula with the accrued benefit grandfathered. To advise appropriately, you'd need to provide the plan language.

Drinks are on me. Received an email from IRS that they are refunding the $64.25 PTIN application fee.

First, we are talking about minimum amortization. Generally, the issue of what is appropriate is in the hands of the client and auditors. You will not find the word "actuary" if you search a pdf of FASB87. Now, to answer your question, I've always counted frozen actives as actives since they still have a future working lifetime. While it does not justify the correctness of this practice, no auditor has ever commented negatively.

Include both to satisfy 401(a)(26). You may have different benefit formulas to suit the owners needs since there are no discrimination issues. You can keep the 1,000 hour entry rule just in case they expand the business to include a non-owner employee.

Even if you can exclude the service, how would you explain to employees that they have to start over on the vesting schedule? This can only breed ill will.

Thanks Ace, A.t.J.

You would not have 401(a)(26) issues because 401(a)(26) makes no distinction between HCEs and NHCEs. However, for 410(b) purposes, you will have issues because owner's mama will be a 5% owner by attribution and hence an HCE and the Plan would cover only HCEs.

Sounds more like IMPOO rather than IMHO !!! Joker