AndyH

I think the key is "no less rapidly". So if $70,000 transfer, "ratably" over 7 years is $10,000 per year. So *at least* $10,000 has to be allocated each year. Just my thoughts... Makes sense. If literally true, it would be an additional condition beyond those in Effen's last comment.

One question I have always wondered about. What does "ratably" mean within the context of II below? © Allocation requirements (i) In general In the case of any defined contribution plan, the portion of the amount transferred to the replacement plan under subparagraph (B)(i) is— (I) allocated under the plan to the accounts of participants in the plan year in which the transfer occurs, or (II) credited to a suspense account and allocated from such account to accounts of participants no less rapidly than ratably over the 7-plan-year period beginning with the year of the transfer.

Another factor is whether the person is Male or Female because the lump sum will use a unisex table and unfortunately life itself will not.

"It just seems like there a lot of these offers out there all of a sudden, and being of a generally cynical mindset, it got me to wondering if such things are generally a bad choice for participants, or no way to say." Nothing wrong with the additional option if the participant is fully informed, but what they may not be informed about is that the mortality tables used to compute lump sums are expected to change soon, and the result may be an increase of 5-10%, all else being equal. This is why windows are hot now. But the sponsor in that case might not offer a lump sum in the future (if such a routine option does not exist), except possibly at the time of plan termination because it may be cheaper, or necessary, for them at the time of termination. So the possibility of a greater lump sum at the time of plan termination is a potential downside to the participant, especially in a plan that is likely to terminate soon (e.g. a frozen plan). p.s. my comments are within the context of a non-cash balance plan.

We weren't all invited to your party?

Sure. You lose tax free growth of the $10k. The 10% earnings are taxable. Your loan payments are paid with after-tax money and are not deductible. You lose tax free grown on the reduction of your 401k deferrals. Plus what David said.

Thanks for the comments.

4044 says employees get a share of excess if there is a reversion to the employer. There is no reversion here IMO.

Maybe this belongs in the termination thread, but it's so obscure that I think there is a better chance of somebody here having an informed opinion. DB plan with excess assets terminates. Plan had mandatory employee contributions years ago and many of those with employee contributions remain as participants. Employer wishes to transfer 100% of excess assets to a qualified replacement plan. Must part of the excess assets be allocated to employees with mandatory employee contributions or may all of the excess be transferred? There will be no asset reversion to the employer. ERISA 4044(d) seems to require a prorate excess allocation based on employee contributions in the case of a reversion to the employer, not a transfer to a replacement plan. Is this required under some other provision of the law? Is a transfer to a qualified replacement plan a reversion to the employer for this purpose?

This is very helpful thanks David.

Not yet, but we will soon. And to be clearer by small I meant smaller. Both plans are subject to audit.

A small DB plan was merged into a larger one as of 12:01 a.m. on January 1, 2016. I have no idea why the documentation said this, but it was done intentionally with professional advice. Participants were told the merger was occurring as of 12/31. Can/should I file a final return for 2015 for the smaller plan?

I'm just happy that 6/6/16 has passed without incident.

From my limited experience with such issues, I don't think the contract can require separation from service unless the plan sponsor has agreed to be engaged on an ongoing basis to verify this, or the insurer is willing to accept the participant's representation. And some sponsors would not want to do this. And since the contract is no longer a plan, I don't see any issue with the in-service pension.

Congratulations.

Thanks for the comments. There are valid arguments for both approaches IMHO.

So you're getting out of this business voluntarily? (Does anybody ever get in it other than by accident?)

Separate but related question: In connection with a plan termination, some participants (actives and vested terms) were annuitized through a group deferred annuity contract (purchased in 2015). Would you report the vested terms as code D? Anybody as Code A?

It depends what the plan says. It could have said that the "rule of parity" applied in which case if you weren't vested when you left and your number of years of breaks exceeded the number of years of service, then you lose your prior service credit.

Yes REA 1985 I believe. That's why it was apparent this was not an ERISA plan.

Is this a governmental plan? If so, it's not subject to 411 so the normal rules don't necessarily apply.

Fiduciary responsibility?

Yes, Let me count the ways.

I was raising a question as to whether the IRS had indicated if any further restrictive regulations are to be forthcoming as a followup to Notice 2015-49 which hinted at future regulations. Second, I am wondering what the circumstances are that would cause a retiree (or is it a beneficiary?) to receive a period certain annuity and subsequently choose a lump sum and whether such circumstances raise any issues with spousal consent or the ASD rules.

Is it clear that the IRS will not prohibit this lump sum payment?