AndyH

There have been many discussions of this subject here. My understanding, which to my knowledge nobody has disagreed with here, is that such payments would not qualify for rollover treatment because they are part of a series of payment extending over more than 10 years. This is because the unrestricted amounts should be similar to life annuity amounts, i.e. being paid over the participant's lifetime. Just one opinion, but it has yet to be disproven as far as I know.

Isn't it true that virtually any offset is permitted by the code if it passes the applicable tests, e.g. 401(a)(26), a(4), etc.? But there was a point in time that this probably referred to 401(l), yet I don't recall a "family offset" offset option being available under 401(l). So I think that this says whatever one argues it says. Gary, how about SPD examples? Any?

Right. Pre-retirement death is the issue. Thanks for the comments. A downside to doing this is the issue of beneficiaries, collecting designations, changes, missing designations, etc. With REA only, none of this is necessary, which is why hearing the experiences of others would be helpful.

Large plan with REA (J&100%) death benefit for married participants but no death benefit for unmarrieds wants to address perceived inequity and is looking for suggestions. Plan is sponsored by a University. Plan has no lump sum provision (over $5,000) except that the REA death benefit is available as a lump sum if under $10,000. Two options might be paying survivor portion of a 10 C&C and also paying 50% of the PVAB to a beneficiary. Any other ideas? What might be typical of a large plan unmarried death benefit that wouldn't drive HR bonkers with paperwork? (Non-union) Thanks for any suggestions.

Yes, agreed. Gary, I think you found a one footed dinosaur (the only one of it's kind). I've never heard of such a thing. It would seem that the plan is setting ambiguous requirements that are outside of mainstream regulation.

gkaley, I have asked enough confusing questions here to know one when I see one. If you would break down your question a little simpler, many here would be happy to help get you an answer. What Tom told you was of course correct, but it apparently did not answer your question, so please try again. And relative to the subject matter that you are referencing, it is likely that there is one answer, not two. Or at least one pretty unified opinion.

Of course, in virtually every way, but it might be more correctly phrased as "does not qualify for the protection of 404©", rather than in violation of.

Wow, Blinky, I just used my new Dave-Baker-given power to zap my incoherent message from yesterday along with your (correct) comment that my message made no sense! What power! Tom, how do you control yourself? Next thing there'll be a movie and action figures.

Understood. But then for the QDRO to be valid it must somehow translate assets to benefits, it would seem. And how else but through the plan's actuarial equivalency definition if the QDRO is silent on the matter? Perhaps the QDRO should have said this. But it would seem that some connection is needed in order to prevent, for example, a 415 violation. So, in response to the original question, my two cents says that the actuarially equivalent benefit to the assets distributed must be the amount considered to have been paid.

Who determined that the DRO was a QDRO and when? I may be stating the obvious, but how can a QDRO assign something (assets) that doesn't belong to the participant? How can that be a QDRO? Again, this is perhaps too obvious, but is there still time to declare the DRO to be invalid? And what happens if the administrator receives a bogus DRO and does nothing? I'd have to brush up on that stuff but I'm sure that QDROphile knows these answers off hand.

Somebody is asking me the following question about a problem takeover plan that is being redesigned. Plan provides that participants get the greater of two formulas, one that is a target benefit formula that by itself would be exempt from the gateway, and a formula based on age that meets the smoothly increasing, broadly available exemption. All participants get the greater of the two. Question: Is this plan subject to the 3/1 or 5% gateway? I say yes, because even though each component would be exempt, the combined plan would not be a safe harbor so the mutliple formula exemption for safe harbor plans would not apply, and the gateway regulations seen to preclude restructing into component plans to aboid the gateway requirement. This of course assumes that the plan could not pass the general test on a contributions basis. Opinions?

the latter.

Interesting point. I had noticed that only last year and was thinking that 83 Blended was now a standard table. But apparently that is no longer true? Strange.

Why, because his answer one year was the complete opposite of his answer the following year, so you've always got a 50% shot of being in compliance?

Well, we've got a Preston too, to defend all those "one Doctor only" class Doctors. Just email Mike. I'd love to be a fly on the wall in such a discussion on this subject between our Mike and a typical IRS auditor.

I don't think may of us will find this surprising. I think it is surprising why this hasn't been raised before by the IRS. It's been raised a number of times as a potential issue on this board. I think Blinky was the first to raise it.

Yes, that's the way I read the regs. Everything talks about "the plan". Clearly the 5% isn't being contributed to "the plan", but "the plan" can be defined as the aggregated plans if you choose to permissively aggregate.

I think that you would need to permissively aggregate the plans to use the 5% from another plan toward the gateway and the ESOP cannot be permissively aggregated, so I think the answer is no.

So is this an old "[new] wave plan"? I'm equally in the dark about what that is, although I did see if defined somewhere once. I'm playing on words about the document. What does the document say about the gateway rules? Nothing? The answer to the original question is probably yes, but I'd want more specifics about what the plan says and what tests are failing.

We do age weighed plans on ASC and have to edit the annuity rate tables to make the post-65 annuity rates the same as 65 because that is what our documents call for. So I would not "rely" on what "relius" spits out.

Employee contributions to private sector DB plans must be after-tax, whereas Employee contributions to 401(k) plans may be pre-tax. For that reason, plus some TRA'86-era (if I recall correctly) aggressive regulations, private sector DB plans that require or allow employee contributions are nearly extinct.

I'd like to hear other opinions, but as far as I know both methods are valid for a cross tested plan, but I would suggest using a factor not later than normal retirement age for an age weighed ps plan, because then the actual contribution is affected, not just the test result. If, for example, NRA is 65, and you use the actual factors, the contribution for a 66 year old would be less than a 65 year old, which is arguably discriminatory. A safe harbor target benefit plan is required to continue to use the NRA Annuity Rate for people past NRA.

Well, that is logical but I don't think it helps. The limitation year is 11/1-10/31. "Section 415 Compensation" is defined, but it is just a normal definition, without specificity of which period. There is a section "Maximum Additions" which is normal 415 language, referencing 25% of "Section 415" compensation. The end of the "Maximum Additions" paragraph contains the following "This section shall be administered in accordance with Code Section 415©, which is incorporated by reference." So maybe the document intends that a preliminary contribution be determined as of November 1, but that is subject to a recomputed 415 limit for the 12 month period beginning 11/1?. I guess that is the only way this could work. But we don't think that such adjustment has been done in practice. If it were, a participant could get a benefit statement touting their November 1 contribution, then terminate 11/2 and get restricted to 25% of one or two day's pay. Sounds like a cutback to me. Otherwise, the 11/1 date has the same effect as a 10/31 calculation except that minimum funding is extended a full year.

You don't need to even do that. See 1.401(a)(4)-2(b)(4)(vi). You just need to meet simple conditions and the multiple formulas can still result in safe harbor status.

Archimage, you do understand that the 3% SHNEC must be ignored for purposes of determining the maximum integration, right? Those two don't mix.