My 2 cents

If you are assuming that the person will commence benefit receipt in one year, then your current valuation will take into account one year's worth of actuarial increases if promised under the plan and will not do so if the plan pays no actuarial increases. Say the plan provides an actuarial increase. This year's value will equal the value, discounted back for one year, of the anticipated benefit inclusive of the actuarial increase that would be in effect if your one-year-deferral assumption is met. So this year's value might be (to use my example of yesterday) equal to $108.16 [the amount anticipated to be payable if the person retires as assumed] X 98 [the anticipated value per dollar of benefit at assumed retirement date] / 1.06 [discounting back from assumed retirement date to present] = $10,000. Next year's value, if the person does retire, will be $108.16 [actual benefit amount, equal to actuarial equivalent of $100 payable now] X 98 [value as of valuation date at next year's valuation of $1 of immediate benefit] = $10,600. Nothing having been paid in between last year's valuation date and the current valuation date [relative to next year], the expected liability would be last year's $10,000 brought forwards one year with interest, or $10,600. Ergo, no gain or loss. You get the same sort of result if the plan provides no actuarial increase. You would anticipate retirement next year with a benefit then of $100 (instead of the above example's $108.16). When you perform next year's valuation, you would then value the immediate $100 benefit, and observe no gain or loss. So long as your valuation correctly takes into account whether the delayed commencement will entail an actuarial increase, you would not have any gain or loss.

I question whether the plan has to prove they were received - the plan should have sent the notice concerning approval of the DROs to the most recent address on file (especially if not in conflict with an address in the DRO or DROs). Proof of mailing is a good idea, proof of receipt is even better but the plan need not conduct a diligent search at the time of notice if the letter is returned with no forwarding address or not deliverable. They will have met their notice obligation. A requirement that the plan provide notice is not the same as a requirement that the plan ensure that the notice was received. Reasonable efforts suffice. If the participant notifies the plan that there is a formal challenge being made concerning the court orders, then some sort of delay may be acceptable, but note that unless the court proceeded without his involvement, what are the chances that there will be a reversal of issued court orders? Especially since they concern child support and not alimony.

I think that the sponsor may elect at any time to move from the standard funding target (PBGC assumptions) to the Alternate Funding Target (PPA minimum funding assumptions) at any time. Once there, you stay for 5 years. I don't think it was a limited opportunity. Bear in mind that it can work against you - the PPA funding is based on smoothed rates and the PBGC funding target is based on one-month spot rates. And in any event, you cannot use smoothed asset values for PBGC premium purposes, only market value.

1. Don't know about you, but I always (at least implicitly) assumed that the conclusion was arrived at on the basis of self-appraisal. 2. As is implied by 1, no sampling was necessary. Now if Ranger Smith had concluded that Yogi was smarter than the average bear... 3. Are you asking if Yogi broke away from his meaningless tasting to do some meaningless testing? 4. No, but I am sure that Boo Boo would have concurred out of loyalty. 5. Can we leave religion out of this?

Wouldn't the normal approach be a straight life annuity? Say annuity value at age x = 100 and at age x+1 = 98. current benefit = $100. With actuarial increase for a year, $108.16. value now of immediate benefit = 100*100 = 10,000 value now of one year deferred benefit = 108.16 * 98/1.06 = $10,000 No gain or loss (OK, I did massage the factors a bit, but they are reasonably representative of what you might see) Wouldn't a 20 year certain only form without an actuarial increase be a bit, shall we say, unfair? Plus, when would you ever see that as the normal form?

Looking for affirmation here: A client signed an election in the second half of September 2009 to add a portion of the excess 2008 contribution to the Prefunding Balance as of January 1, 2009, which was immediately used in part to cover some of the 3rd or 4th quarterly contributions (due 10/15/09 or 1/15/10) and overall minimum for 2009 (due 9/15/10). Assume that they had a proper filing extension to 10/15/09 for the 2008 5500 filing. 1. The proposed regulations gave until the filing deadline for the relevant 5500 to make such an election. 2. The final regulations, effective as of 2010, only give until the payment deadline for the year with the excess contributions. Anybody have an idea why they would have done that? Pretty much precludes (absent a standing election) grabbing any excess portions of a last-minute contribution. Or is that the reason? 3. The election made in late September 2009 to add to the Prefunding Balance as of the beginning of the 2009 plan year is thus valid. Incidentally, any word on when (if?) the IRS is going to allow standing elections to use Carryover/Prefunding balance to cover quarterlies?

The 10/15 deadline is out there and the DOL has given no indication that they will consider yielding and granting a later deadline. While we have been involved in few that have been filed yet, it is my understanding that tons of filings have already taken place. If the system is functional and there are software providers successfully working with it, why should there be any extra delays granted? Service professionals have been well-informed this is happening and have no excuse for not aiming to get things done on time. I would not be holding my breath looking for any special relief.

Brainstorming here: 1. Are the three QDROs with the same AP supposed to be additive or does one succeed the other? 2. Not much you can do if the participant does not keep you up to date on his address. He is charged with a duty to do so, and if his failure to keep your records up to date costs him, that's his fault not yours. 3. Depending on circumstance, you may need to interplead the benefits - turn it over to a court having jurisdiction, presenting the conflicting claims and letting the court make the decision. Were they all issued by the same court? If so, you might check back with that court to find out if the orders are still considered to be in effect. If they are, whether the participant is happy about them or not is not a concern of yours. Child support that the participant is reluctant to provide is why there are QDROs, after all. It might not be advisable to pay out while it is under dispute, but if courts have chopped up the participant's benefits, giving them to someone else, how much difference would it have made if the participant had received notice? If you mailed everything to the most recent address on record, have you not fulfilled your administrative obligations?

Warning - not involved with health plans, but... Wouldn't paying a bounty ("contingency fee") for identifying people as ineligible create a potential conflict of interest? Of course, only legitimately ineligible people would ever be identified as ineligible, but...

Since there would be no direct consequences if your assessment were off a bit, perhaps you could use a shortcut and show, for example, the results of the old 2I/(A+B-I) calculation, especially if there are too many transactions to do the calculation the way you normally do when there are balances.

Assuming that the plan was properly frozen and the freeze amendment also closed plan entry, wouldn't the fact that no HCEs are benefitting under the plan exempt the plan from having to provide any top-heavy accruals or pass coverage? Probably would have to pass participation though. So the plan is being audited - is there any reason to believe that this plan would have more trouble getting through an audit than a non-frozen plan? If the issue is that they don't want to rely on the current administrator, well, what can you do? Get an administrator they are willing to rely on? Go it alone? If that is the issue, then whether it's frozen or not wouldn't really matter that much.

Just because the result is not the intended one does not mean that there was any sort of "misleading" or "misinformation". There was, after all, no financial advantage to Wachovia to keeping her from naming a beneficiary. Had the IRA holder just indicated on the original form (surely there was a place to do so) that the estate would be the beneficiary, nothing could have gone wrong. Please do not suggest that this be solved by legislating more communications. Do you read those ridiculous "privacy notices" that so many organizations are required to mail out each year? Does anyone? Do you read everything your credit card issuer puts into the monthly bill mailed to you? If a requirement were added that any time an investment contract were modified, whether a material change or not, then a separate mailing had to be sent out (not just an insert in another mailing), who would bear the cost? While it may have made a significant difference here, most of us would not consider changes in default beneficiary provisions a material change (but then most of us are not both trying to keep money away from someone who would normally be considered a suitable recipient, such as a son, while at the same time persisting in leaving no written directions concerning the distribution of that money). Wills only govern assets held in the estate. Proceeds of an IRA would only be part of the estate if the estate were the beneficiary. Is it in fact known that the original contract did not contain the same default language that is there now? Did Wachovia actually say that they had changed their rules? Wouldn't "name a beneficiary or it goes to the estate" be much more likely to be unsatisfactory than the current provision? Sending the money into the estate routes it through probate court, which could delay the distribution and incur significant extra cost. Disinherited sons have even been known, on occasion, to contest wills. Much cleaner, absent a named beneficiary, to have the proceeds go to the person the deceased had married a couple of years (or weeks) earlier.

The two are no longer linked. How receivables are handled on the SF depends on whether asset reporting is on a cash or accrued basis. If the former, ignore the receivable as an asset entirely. If the latter, add the full dollar amount of the receivable contribution. On the SB, always include any applicable receivables (this has always been the case), but now they must be discounted back. If there are no receivables, they would probably be the same.

Presuming that the plan is intended to be a qualified plan, and the permanence requirement is not an issue, I would say that any allocation of excess assets when a plan terminates must be made on a non-discriminatory basis. It is not my understanding of that requirement that such an allocation is limited to employees who were participating in the plan, but would be measured on a basis taking into account the sponsor's employee population. Not necessarily across the board, but something that would be considered acceptable under Code Sections 401(a)(4) and 410. Increasing benefits only for people who had been limited by Section 415 is probably not going to fly. Please be aware that the IRS probably considers recognizing increases in 415 limits as establishing that the affected employees benefit under the plan, which could do all sorts of things (for example, subjecting the plan to coverage and participation and top-heavy accruals etc.). At the risk of being overly naive, if the enterprise is doing that well, is there nothing that can be spared for the rank and file?

There is no authority whatsoever to support the assertion that only a spouse or ex-spouse can be designated as alternate payee under a QDRO. The language from the Code that was bolded proves, indisputably, that an order that a plan make payments from a participant's benefits on behalf of children or other dependents can indeed be a QDRO if it meets the same sort of requirements that an order on behalf of a spouse or ex-spouse must meet to be a QDRO (i.e., doesn't increase the plan's liabilitiy, doesn't require payments be made at a time or form not otherwise permitted under the plan, contains adequate identifying information, etc.).

One wonders how radically the IRA agreement had been changed since the IRA was opened. Did it not call for the depositer to specify a beneficiary? Is it certain that the default order was not spouse, then children, then estate all along? One wonders if the depositer received some sort of notification from Wachovia if there was a change in the default beneficiary provisions. Seems to be too late now, but if the person was really determined to keep her son from getting anything, she should probably have made sure to designate one or more beneficiaries, to keep conflicting default rules from applying. Not being a lawyer, I would be surprised if the heirs have any realistic shot at legal recourse against Wachovia. Disinherited her son! Alas, that it should have come to that!

Some of us have learned to be a little bit careful as to what we allow ourselves to say emphatically. However, I think the general consensus here is, emphatically, that children can be alternate payees under a qualified domestic relations order.

I would be very surprised if that is the sort of situation intended to be addressed by that question. I always thought of that question as involving cash flow problems. By the way, not paying a lump sum because of funding issues (whether attributable to Section 436 or high-25 issues) is NOT a failure to pay plan benefits when due. As the plan incorporates the requirements of Section 436 and the high-25 restriction, a restricted payment is not due under the terms of the plan.

Most of our clients' plans define the lump sum in terms of the value of the accrued benefit (which is, by definition, an amount deferred to NRA), unless the lump sum is being calculated in connection with immediate retirement (and there is then a comparison of the lump sum value of the deferred benefit and the value of the immediate benefit). Conceptually, the pre-retirement death benefit, even if a mandated death benefit, is not part of the accrued benefit so the value of the pre-retirement death benefit would not be part of the lump sum, and discounting for pre-retirement mortality is appropriate. Of course, if the plan defines the lump-sum actuarial equivalence in a way that excludes pre-retirement mortality, you do it that way. Most of our clients' plans do not tie the regular equivalence basis into the determination of the lump-sum equivalent, which is the sole basis for determining values for forms subject to 417(e).

Aren't state causes of action generally preempted with respect to ERISA plans? Whether or not, how could a plan document require filing in state court? And why would the sponsor want to do so in the first place?

Payments for a dependent child's support instead of to a spouse/ex-spouse are indisputably eligible for QDRO treatment. Any sort of domestic relations order pertaining to a dependent qualifies if the terms are satisfactory. Who is Derrin Watson?

Not a defined contribution person, so some speculation about the rules here, but (a) a good way to get this person to the $16,500 deferral limit is to make a deferral rate of more than 6.7% available to everyone under the plan, doing whatever is necessary to either pass ADP or meet safe harbor rules and (b) do 401(k) plans get to count every dollar of compensation until (July in this example) you get to the 401(a)(17) limit, or must they divide the 401(a)(17) limit by the number of pay periods in the entire year and truncate the earnings that are taken into account (example - someone earns $50,000 per month and elects 5% deferrals; do you get to allow $2,500 in January or are you limited to 5% of 1/12th of the $245,000 limit under 401(a)(17) - just asking)?

Did PPA change vesting requirements for defined benefit plans that are not cash balance/hybrid plans? My understanding of PPA-mandated changes in general is that one must administer the plan as though the amendment were already adopted, once you get to the mandated effective date, even if there is a delayed deadline for the compliance amendment. And, of course, make sure the amendment, when adopted, matches the choices made in setting administrative practice based on an expected amendment. It is also my understanding that defined benefit plans would reach that deadline (in most instances) at the end of the plan year beginning in 2009, so it's too late to do it right for a calendar year plan if no interim amendment was adopted last year.

It is years now since the IRS had the authority to reject a timely-mailed Form 5558. Even when attachment of the 5558 was required, the only time when it would have been necessary or prudent to attach any sort of approval letter from the IRS is when they mailed one. If the form was filed and nothing further was heard, you had tacit approval and merely had to attach a copy (and in rare instances be prepared to show that it was mailed in time). So employers need not sit by their mailboxes waiting for an approval letter. As the extension requests for 1/1/09 to 12/31/09 plan years had to have been filed a month ago, I hope nobody is sitting out there waiting for an updated Form 5558!

Are you saying in the second example that they are electing in 2010 to "waive" the $10,000 or "apply" the $10,000? If they elect to apply $10,000 towards the 2009 plan year minimum required contribution, the 2009 valuation would stand. To do so, they would have to make the election on a timely basis (can't recall off the top of my head whether the deadline for such an election would be 9/15/10 or the filing deadline for the 2009 Schedule SB, which was probably extended to 10/15/10). I don't recall exactly what the deadline is for waiving PFB as of the end of the 2008 plan year to improve the 2009 funded status. Isn't it something like the payment or filing deadline for the 2008 Schedule SB? Supposing that the amortization factor is the usual 6 or so, wouldn't electing to use PFB be much more effective in getting the minimum contribution satisfied than electing to waive the same amount of PFB? Waive $10,000 and the minimum goes down around $1,600 to $1,700. Apply $10,000 instead and the full $10,000 is applied towards the minimum. What is the point of assuming that they did not pay the 2009 quarterlies on time as part of the second example?