jlf

You are right on target MoJo. Hopefully, the pension portability bill will become law very soon. It has the bi-partisan support of the major political players. I expect our current president or his successor will sign it into law this summer or next.

Your prior plan is liable. First present your case to the plan sponsor. As a last resort you can go to Court. ------------------ yes

Ray, I assume you would never sign off on a letter with so many typos. Why don't you treat your e mail with the same standard? ------------------ yes

Tim: The rollover rules including the definition of an eligible rollover distribution were substantially amended by the Unemployment Compensation Amendments of 1992. WHERE HAVE YOU BEEN?? Thanks to all for the in depth correction. ------------------ yes

Ray, you may want to take a look at: "DC v. DB, the arm wrestling continues". This topic is located on this message board. jlf ------------------ yes [This message has been edited by jlf (edited 05-04-2000).]

Justin: I would be ashamed, as a Trustee, to say I am against lump sum distributions because of the administrative burden of offering pre-retirement counseling. Isn't there an "administrative burden" in annuitizing? Your fiduciary responsibility is to offer reasonable choices, notwithstanding "administrative burdens". You cannot be accused of offering an unreasonable number of payout options if you offer all the options permitted under Federal tax law. ------------------ yes [This message has been edited by jlf (edited 05-04-2000).] [This message has been edited by jlf (edited 05-06-2000).]

SS gives the floor of protection you are alluding to, and rightfully so, because it is a social insurance program. The "rules of the game" change when you refer to employment based retirement programs. You apparently would do away with rollover distributions from qualified plans to IRAs and compel everyone to accept lifetime annuitization. The accrued retirement benefit represents the employee's deferred compensation, therefore, the employee should have the unbridled right to choose the method (and tax consequences) of distribution. ------------------ yes

Michael, must these distributions that begin at or after age 55 be "substantially equal periodic payments"? Or may they be sporadic? ie: $2000 one year and $zero the next. [This message has been edited by jlf (edited 03-31-2000).] [This message has been edited by jlf (edited 03-31-2000).]

I refer you to my post of 2-9-00. The non-response is deafening. jlf ------------------ yes

To clarify: NJ is not using the entire $2.3 billion surplus in the police and firefighters pension fund to improve benefits for police and fire personnel. It is using just $45 million of it. JohnA, I'm sure you recognize this. I just did not want to leave it chance. jlf ------------------ yes

To Lorne and Franklin: I was not referring to plan termination in my posted question of March 29, 2000. My question refers to a fully funded and on-going DB plan. I look forward to your informed replies. ------------------ yes

Franklin, you are right on target! This is why a DB plan is potentially a wealth builder for the plan sponsor; while a DC plan is an income provider and wealth builder for the participant. Does anyone know of a fully funded DB plan that pursuant to its plan document distributes all of its "surplus" in the form of additional benefits? ------------------ yes

Mary Warren, I can help. Call me at 1800-242-1421 press * 2524. jlf ------------------ yes

Re: Retirement Plan Distributions Q&A; by Martin Silfen,Esq. Question 246 to Mr. Silfen reads: "Are there any guidelines for choosing the best pension plan payout option?" Mr. Silfen's answer in part states "I am not aware of any meaningful guidelines. There are so many variables, including your marital status, your financial situation, your current and projected tax brackets, your life expectancy, your investment acumen, your financial savvy, your discipline, and the current and future inflation and investment environments." Assuming Mr. Silfen's answer cannot be disputed, why is lifetime annuitizing the rule rather than the exception with DB payout options? Do we all agree that one size does not fit all? ------------------ yes

Hey! Where did everybody go? ------------------ yes

I can help you. Email to me your particulars at rollovertsa@yahoo.com ------------------ yes

The 10% penalty tax became necessary because "too many" were simply abusing these tax-deferred savings plans by using them as a substitute for passbook savings. 403(b)plans have been around since 1959. These participants simply deferred part of their salaries and made withdrawals at will; with the withdrawal subject to regular tax rates. (This was a great selling feature which was emphasized by the 403(B) vendors.) This is the rational for the early distribution restrictions. ------------------ yes

John A: The economic and world landscape from 1945-1979 was quite different, to say the least, compared to the economic and world landscape from 1965-1999. I believe, therefore, it is wrong to use a salary schedule and pension payout from one time period and investment returns from another. Pax, what is your opinion? Ques: If these DB plan sponsors are solely interested in guaranteeing a fixed and or variable income for the life of their former employees why did they go to the trouble of establishing and maintaining a DB plan? Surely a fixed and variable annuity could have been funded through an insurance contract. This is exactly what the colleges and non-profits have done since 1918 via TIAA-CREF. ------------------ yes

Pax, here is the evidence you requested from P. 1, paragraph 3, of the 49th Annual Report of NJ State Investment Council for FYE 6-30-99: "The income generated by the investment of the pension funds also contributes to the funding of services and benefits provided by the state to its citizens and thus directly benefits the taxpayers of New Jersey." This proves my point that a DB plan's trustees serve two masters: one is the plan participant and the other is the sponsoring employer (public or private). If memory serves me well I believe the Supreme Court has ruled that any holdings not needed to pay promised benefits may, at the sponsor's option, revert to the sponsor or be used to pay additional employee benefits. Pax, this is all perfectly legal. John A, our hypothetical employee was earning $31,500 in 1979, therefore, your withdrawal amount or pension of $41,000 is wrong and is the reason the pension reserve is depleted after 8 years. Please re-do. Thanks. John A, it is wrong to use the DJIA as a proxy. A 70 billion dollar portfolio such as the one we are talking about does not invest all of its equity holdings in 30 very large companies. Reminder the hypo case has 60% in equities and the balance in investment grade bonds and mortgages. Please use the SP 500 and the Lehman Bros. Bond index as a proxy for our hypo investment returns when you recalculate for us. Thanks. yes [This message has been edited by jlf (edited 01-26-2000).] [This message has been edited by jlf (edited 01-26-2000).]

The DC plan I'm championing is TIAA-CREF. The public pension plans of NJ provide a cola of.6 of the cpi starting with the 13 month of retirement; and annually thereafter. It is my position, and has been for many years, that under the guise of guaranteeing lifetime fixed dollars to the pensioner the DB plan was also adopted to help finance government programs (or corporate operations in the private sector) with the "excess" earnings. I trust we all agree that this is a given. Until such time as a fully funded DB plan distributes its "excess earnings" to the active and retired participant I will consider the employer's motives in maintaining such a plan suspect at best. While I appreciate the statistical data going back to 1896, I believe going back to the beginning of the post WWII era, which began in 1945, would be much more relative. ------------------ yes

Hi out there!!! Happy millennium to all. Let's continue with this fantastic thread topic. ------------------ yes

Dear JohnA; The NJ Plans provide a 60% COLA beginning the 13th month of retirement. Make sure to have a healthy new millennium!!! Dear MoJo; Why does the employer consider the DB plan an investment while the employee must consider it a "retirement plan"?. What should the suvivors of my hypothetical employee think of the arrangement when the employee dies in-service and they receive the employee's accumulated annuity contributions with 4% interest? Up until retirement it is simply a mandatory investment plan and an outrageously bad one at that. It only becomes a retirement plan if the employee lives to actually retire. [This message has been edited by jlf (edited 12-29-1999).] [This message has been edited by jlf (edited 12-29-1999).]

To Pax, I refer you to yours of 11-23-99. How can you justify your statement that the 300K does not belong to the employee? I view such a statement to be the equivalent of financial apartheid. ------------------ yes [This message has been edited by jlf (edited 12-28-1999).]

To our CPA, Thank You. ------------------ yes

To the CPA: RE: Ray Rogers post. MY Statement: The 10% penalty is waived when SEPP start at age 45 and continue to age 50 when they are stopped. (They do NOT have to continue to age 59.5 in order to be relieved of the 10% penalty) ------------------ yes