mwyatt

So I assume that any early vals done using these rates will probably need to be redone later this year when some other piece of legislation comes into being changing the '06 rates to another basis...

What we have been keeping track of are the various "milestone" amendments (GUST restatement, EGTRRA, MDA, whatever else rolls up the pike) on our database, with variables for when they are sent out and when we receive the signed amendments back from the clients. One could create fields or notes for any extra amendment comments that you wanted to make per client, although we haven't pursued this yet. One of the advantages of creating your own is that you can decide what is important to you and add features fairly quickly. Just put your Mr. Spock ears on first though, as you need to think logically about the easiest (and most robust) way to handle situations. Relational database approach is the way to go, as you can add separate databases on the fly (keying off plan type, sponsor type, etc.) to create some pretty custom reports.

We used the database to generate standard "boilerplate" amendments (see the Mandatory Distribution Amendment). We used Lotus Approach for the database software, and entered the text of the amendment as a form letter. We then edited to put in the appropriate variables (plan name etc.) into the text. In this instance we were generally amending most of our plans to lower the threshold to $1,000, the amendment read that way, although you could introduce a variable depending on the appropriate election. You can have conditional language put into a form letter to cover differing elections. One thing that I always remember is the 80/20 rule (ie, 80% of your time is spent on 20% of the exceptions). The database approach to the amendment was invaluable as it covered most of our plans' amendment elections. Where a plan was to select a different amendment, we could focus on that, rather than having to waste time looking at the other 700 plans that went with the straight boilerplate. With the database we were able to "soup to nuts" generate the cover letter, amendment, resolution, SMM, invoice, and mailing labels, all in sorted order for assembly. If you are at all familiar with database software, look to form letters; you can do much more than just simple letters with this approach. Clearly you wouldn't use this to generate the EGTRRA restatement, but for simple amendments it was a real timesaver.

WRT to the SSA issue, in ongoing plans I've only seen (in my admittedly small plan focused world) annuity purchases for immediate annuities, therefore no need for SSA reporting.

We went through this about 3 years ago, looked at the various products out there (our admin software is ASC, and they offered a package that we didn't really feel offered the flexibility that we needed), and came to the conclusion to "roll our own". Took about 2 weeks of scrubbing our existing various spreadsheets for data integrity and some mapping, but ended up with a relational database that has proved very powerful and handles annual administration logging, invoice history, and plan amendments (literally pushed a button to generate all of the Mandatory Distribution amendments for example). If you have some database prowess, you may come to the conclusion that the best package is one you create yourself.

Thanks Pax. A little confused why if these rates are out they weren't contained in a Notice issued in December as in past IRS practice. Will definitely bookmark those IRS links (and thanks Andy for the spreadsheet!).

Thanks Andy and himt4.

Been looking all around and can't find any evidence that the IRS has yet released the Nov 2005 30-year rate and the Dec 2005 CL rates. Looks like the prior release came in the early part of November, but nothing on Checkpoint in December. Anyone know these rates yet?

No UBTI from .dot com, but sure as heck shattered profits and portfolios, which was more my point.

The plan even better was a DC plan with many other participants. Outcome wasn't so good, to say the least (MRD were the least of the problem of blowing $300k on a snake-oil scheme).

A little story that might illustrate the practical problem of trying to hop on a burning bandwagon. We had a client who in the mid-80s was talked into a scheme where the plan would provide the downpayment for folks who could afford the mortgage but didn't have the 20% necessary to purchase real estate in what was the white hot real estate market found in Massachusets in the mid to late 80s. The kicker was when the property was sold, the plan would split the gain 50/50 with the mortgagee. Made great sense when everything was going up 30/35% each year. Fast forward to '93, when I was given this elaborate book of all of the holdings (around $300k invested in down payments) and asked to provide a value to this "investment". Problem was, the holdings of the plan were in essence second mortgages, and every property's assessed (not the town tax assessment, but current real estate assessments) value was well under the payoff value of the first mortgage. Without going too deeply into actuarial principles or fancy financial analysis, my comment was that at the current time the value of the investment was $0, due to the fact that the property was worth less than the first mortgage. Can't squeeze blood out of a rock. Be careful of jumping too fast on tigers. Bet money this client was clamoring in '99 to load up on .com stocks...

In a nutshell: 1) Terminate the DB plan 2) Lump sums, if so elected, rollover to the DC plan. There is no other way...

Working on a proposal for a new 1-person DB plan effective for 1/1/2005. The sole participant (obviously a 5% owner) attained age 70 1/2 in 2004. NRD would be 1/1/2010 under the Plan. Trying to get a hold of the MRD calcs for the individual. No past service benefit is contemplated (so no AB @ 1/1/2005). Am I correct that under annual approach, MRD that would start @ 1/1/2006 would be 12/31/2005 AB reduced for early commencement and that adjustments for additional accruals would only have to be made annually?

Drops out of funding yes, but I presume that your document provides for full vesting on death, so you will carry some sort of liability for the deceased.

I only question the stability of the population given the low number of people in the plan and the dramatic shifts in percentages that follow by the addition/removal of one individual.

50k from a statutory perspective, but you have to check to see what the document says in case more restrictive as to what is available for loans.

Conceptually, an actuarial increase for late retirement isn't really giving anything more to the participant; it's only compensation for receiving fewer payments in the whole scheme of things. I would argue that a pure actuarial increase wouldn't (and shouldn't) be affected by a freeze amendment. As far as the year by year comparison with the benefit computed as if ARD is NRD, you'd obviously reflect the freeze amendment, so eventually your future adjustments would just be by your Late Retirement increase factors.

Hate to complicate this, but the 2004 forms switched to Illinois (Carol Stream), then the 2005 switched to Detroit. Baltimore was last used for 2003. Haven't heard any complaints from the PBGC though (I'm sure we sent out at least some of the calendar year '04 premiums to Baltimore).

Not too painful (if I recall, it asks during setup whether you want to import settings from IE). One toolbar I'd recommend, especially if you're a Yahoo user, is the Yahoo toolbar. It gives you links to Yahoo areas obviously, but the real feature I think is great is the ability for the toolbar to manage your bookmarks/favorites on Yahoo's server, rather than your computers. This has obvious advantages, especially if you have a significant number of bookmarks saved and you use multiple computers (home/office etc.). This is available for IE and for Firefox.

Both plans were Title IV covered, both were fairly simple (1 100% owner). My problem with this "sea change" (her language, not mine) is that the language is fairly simple and introduces a common sense term of rank and file employees which unfortunately doesn't seem to come up too well in my Checkpoint searches of the Code/ERISA. I'll let you all know what happens on Monday. My Relius contact was basically shaking his head over the phone...

As an update, talked to Relius to see if they'd heard anything about this; they hadn't. Got a voice mail today from the IRS agent; said she had talked to the reviewer and he would be calling with some sort of "backup material" on Monday. Really puzzled by the amendment, especially what she was asking for - what about the NON rank and file who aren't owners? Is the IRS now saying that they can be shortchanged on termination - kind of goes against the PBGC regs. Also doesn't address spousal consent on the waiver issues - PBGC was real big on getting this with the waiver... PensionsinParadise, hope you're right and I've run into a DC background agent (of course that will make it more fun to resolve the issue for sure).

We have a plan currently in for review on plan termination. Our case has a 100% owner and his two kids as the sole participants. Plan was underfunded on a termination basis so we had the owner execute a waiver (I know, not the correct language, more like agreement to not take full benefits) as we have on other cases in the past without question. The IRS reviewer (we in MA, IRS in CA) came back recently and said that there had been a "sea change" on the part of the IRS with regards to these waivers. She was requesting that the waiver be rescinded and in its place that the plan document be amended (her language) to "provide that rank and file participants be paid in full prior to the owner". Note that she was NOT stating that the IRS would no longer go along with the concept, rather that the plan be formally amended rather than the waiver be executed. Has anyone else been running into this recently? Not sure where to start on their amendment as her language doesn't look entirely appropriate (what is a "rank and file" employee under the Code - what about HCE nonowners). Any guidance would be appreciated (BTW, turnaround time on these term DL apps has been recently running over 12 months before initial contact).

The noted vesting discrepancy is one thing on the list to the new client tomorrow (Columbus day is an observed holiday up here in New England - albeit leaf peeping in driving rain wasn't quite what folks had in mind for the extended weekend). The real concern I have here is that about $80k of these forfeitures were reallocated already in 2003 and 2004, with an additional $24k popping up from forfeitures for 2004 distributions. Looks like, if this was indeed a partial termination (and hence these forfeitures should never occurred due to full vesting requirement), that one either has to undo the $80k in prior allocations or the sponsor would need to pony up the $80k plus earnings to get the prior distributees back to whole. I know for sure that no action will be taken on reallocating the $24k currently in the forfeiture account until this is resolved one way or the other.

Pax: Of these 34, all but 2 terminated on two distinct dates during the 2002 year. Potential cost of monies forfeited due to this population: $104,000. From the face of it, something happened on these two dates. Wondering if the liberal eligibility and vesting might mitigate circumstances? BTW, also in review said national payroll company seemed to be very inconsistent with vesting percentages used in distributions during 2004 (lower percentages @ 3q '04 than shown on their same report for 4q '03). Not exactly brimming with confidence of the prior TPA's ability to recognize a partial termination in progress...

Just looking at a new (to us) plan established in 2001. Facts and circumstances are as follows: Plan established in 2001 with immediate eligibility; sources include employee deferrals and an employer match on deferrals. Plan amended beginning of 2002 to get rid of match. Our population available to us solely focused on people with account balances as of 12/31/2003 (calendar year plan). Based on this population (which I think makes the circumstances WORSE), there were 53 participants hired in 2002 and earlier; there were 34 participants terminated in 2002, mainly on two specific termination dates. Thanks to the large payroll company previously doing admin, reallocated forfeitures on the 2001 match were identified as a separate source in their accounting (presumably reallocated in future years based on current year comp); these totalled around $104,000 by end of 2004. Looks to me like a partial termination occurred given 34 out of 53. Any comments?