AndyH

As Bob Neumeier might say "And what exactly is wrong with that? Great line. I've got to remember that one!

duh and smokin qualify IMO

Thanks for the information. The situation I referenced was a high school teacher in Rhode Island who was at or near 70. My understanding is that it was a voluntary plan. I know it was not a DB plan. A lump sum was available-at 80% of the annuity value. Or it could paid out over x years and balance would earn 2%-one of those typical old annuity roll-out deals. I recall that he for some reason had not been in that contract for that long, maybe 10 years or so, and I thought that was part of the problem. Are you saying that it is not possible for this fact pattern to have been with TIAA-CREF or are you saying that it might have been depending upon the school system's contract and the particular sales person/sales agreement?

Joel, the situation I described was a teachers annuity and I do not think that I had the company wrong but I do not have the information to prove it so I will not push that any further. I have only my recollection. Perhaps you can explain how these work. When a teacher participates over their career and wishes to retire, is a lump sum option typically allowed? Is there a difference between the "annuity value" and the "contract value" or the actual amount available to be withdrawn? My recollection is that withdrawal was possible over a series of years without penalty. And does it depend upon the number of years of participation? How do the teachers annuities work with TIAA CREF at retirement age other than the option to convert to an immediate annuity?

Very interesting, thank you Mr. Burns. And, joel, I checked out their prospectuses and they are consistent with your comments. The situation that I experienced may have related to an older or different type of contract, but there was a surrender charge of some 20% of the stated contract value for a lump sum withdrawal but no such charge for an annuity conversion. Perhaps things have changed.

Yes, and your 457 points are valid, so I would grant you that condideration should be given to matching a non-ERISA 403(b) with a qualified plan if 415 is an issue. Otherwise, I think the reduced 5500 and lack or an an audit requirement are strong considerations. At least until the no-MEA sunset provision re-awakens in 5 years or so. Then, nighmares.......

I don't think that you could merge and discontinue the DC features through election forms. In such case that would consititute a rollover, not a merger. And it would be voluntary, certainly not involuntary. Involuntary would cause a 411(d)(6) cutback or two.

I must generally disagree. I have been recently converted to this way of thinking about these programs. If the entire arrangement were a 403(b), most of what you itemize would still be true (no ADP test, etc.). And you would have no audit and no audit fee. And your 5500 would take 2 minutes to complete. But you would lose the 415 double limit, I agree. But you could make up for that in a 457 if necessary. You would lose the benefit and cost of a Favorable Determination Letter. I would consider that a plus on balance. A non-profit sponsor is not concerned about the deductibility of it's contributions we must remember. The rules would be a bit muddier, no question.

I guess, but as a practical matter, this would make little sense. You would need to retain all of the defined contribution features of the PS plan, i.e. the investment risk and reward. You could perhaps do this and retain the PS money as separate accounts such as rollover contributions would be treated, but then what would be the point? What would the objective of this be?

Who are you/us? What is your role? Who is the Trustee? Why don't they help?

Why?

joel, I take exception to your referral. I have first hand knowledge of a 72+ year old retired teacher who would have been charged a huge load to withdraw his money at age 72 or 73 in a lump sum form. He was a teacher for some 30+ years. I saw the statement. My recollection (it was a few years ago) was that the charge would be 20% to 25%. He didn't mind; he'd just be annuitized! I knew he was being ripped off.

OK, this gives me a chance to vent about our "trained" help line officials. About two years ago I had a client get a DOL rejection letter about the Schedule B item alluded to here (first year of plan, enter last year's Funded Percentage). The program had defaulted to 0%. Actually, this client had two new plans with the same issue. I responded with a letter that there was no correct answer but that was rejected. Then the second plan got the same form letter. I called DOL and after several transfers was told this question was a PBGC or IRS matter (I don't recall which) so I was told to call another number at that agency. I did that and was bounced around as usual. Finally I got sent to the person who was "handling" these inquiries, and he actually seemed to understand that "last year" didn't have a funded percentage. He told me he had a lot of these questions and that he "had a call into Washington". I kind of wondered where he was in that case (India?), but anyways I gave him my phone number, address, etc and he assured me that I would get a call within 5 days. Never got a call. Never responded to either rejection letter. Never heard another word about it. Never answered 0% again. Maybe "Washington" never returned this guy's call. But I wonder what the programming cost was to stop that flood of form letters.

Mr. Burns, if you can point me to an immediate annuity with a top rated insurer with no surrender charges after 5 years and a 1% commission then I would be interested in looking at that. I would of course want to know (or determine) the implicit investment return assumption because that could very well hide a commission or profit.

Why is a multiemployer deficiency only 5%? Is the UAL plan in the news a multiemployer? That ought to start a discussion.

yes, unless your plan has language to the contrary.

In defense of duh (solely because I like the name), he prefaces his comments as "if he is looking for the most flexibility". In that regard, I agree with his comments. But the point about outliving his investments is of course valid and would be of interest to the engineer (they are the only participants who read SPDs). Some of the other ones are as well, although to a lesser degree in my admittedly annuity adverse opinion.

Why do you disagree? It is limited to the SLA so it is part of a series of payments extending beyond 10 years.

It seems to me that if the "partial lump sums" are $50,000 or less, and the life annuity is also $50,000, then the partial lump sums are part of a series of distributions over more than 10 years (unless of course the life expectancy were less than 10 years), making them ineligible for rollover treatment. If instead the partial lump sums are more than $50,000, then I would think that the accrued benefit would need to be reduced. Just my take. I've dealt with this before as well so am always looking for a new ideas. Same problem exists with restricted payments it seems to me.

David, would you mind elaborating on your thought? How are you arriving at payments over a period of less than 10 years (that might extend a 415 limit)?

Not a problem. I'll simply explain that Blinky the 3-Eyed fish says it is perfectly fine and suggests use of a banana in your tailpipe if you persist. Then I'll call one of the lawyers here on Benefit Boards (perhaps "Lawyer in Black") to bail me out of PBGC prison or the rubber room, whichever they decide is more inappropriate.

For what it's worth, I tried this approach based upon these comments. I guess I'll have a problem? http://benefitslink.com/boards/index.php?a...indpost&p=83026

Blinky, what do you mean by saying that "there isn't the 5 year break in service forfeiture rule" for DB plans?

Thanks, Ken. Now would you kindly tell us what it means?

How is a non-vested participant paid their vested benefits? Should that say partially vested participants? And, I am told that it is the 5 year lookback schedule that mwyatt mentions that causes the IRS reviewer to focus on this issue. But then again, we are in the same IRS district.