AndyH

If anyone is still not fully convinced of my argument that the official answer (True) to question 4 is wrong, I would ask you to take a look at ERISA Outline Book Chapter 4 Section IV 2.a.5 including 2.a.5)a). The official answer is also wrong for a second reason. Even if for some reason the first plan was deemed a predecessor plan (which it is not) , it covered only salaried employees whereas the new plan covered all employees. In such case, EOY Chapter IV 2.a.2) which clearly states that only vesting service for salaried employees would need to be credited prior to the effective date of plan 2, not all employees. The official answer is wrong for each of these two reasons. The circumstances of the Revenue Ruling which I believe is being widely misinterpreted are dealt with in EOB 1.c. and 2.a.3) . They are different fact patterns with a different conclusion. Mike and Effen, I am confident this will change your opinions if you would do me a favor and look at the EOB coverage of this topic, in particular these sections. Sal's interpretation is clearly identical to mine (and others). Thanks again.

Point 2 has gotten no discussion, which is that these are not the "same employees". In the Exam question, the first plan covered only salaried employees. The second plan covers all employees. What is wrong with that? And what requires if I am wrong the plan to credit all service for all employees in the second plan, even if not covered in the first plan? Nothing IMHO.

BTW, I'm not trying to argue for something that I am uncertain about or don't feel entitled to. I feel 100% convinced that the official answer is wrong. Blinky and ata expressed my point more effectively I think. Sal Tripodi and Neff McGhie topped us all. I may have to hire Sal at this point. I'm still waiting for some more feedback before I go official with this. p.s. We haven't heard from any of our regular lawyers, oddly enough. Please join in.

Why is unfreezing the old plan the same as starting a new plan? They are two different things. Kind of like you have a PS plan with a formula you don't like but there is no condition on allocations. The "end around" is to set up a new one. Same thing here with vesting.

Effen quoted the same paragraph as Sieve, both of which are not relevant to a new plan; they are relevant to a "unfrozen plan" and to a new plan if the two plans are merged. BTW, there is a gray book question 2003-31 that says the same thing as Sieve and Effin's quote. It does not address the situation of the vesting of a second plan when the first is not terminated. The EOB does. The DB Answer Book does. This service is not required to be credited.

I must admit to being shocked at my inability to convince you'all. Please look at the ERISA Outline Book. It is copyrighted so I cannot copy and paste. Sieve's quote: Again, here's the words at the start of the Rev. Rul.'s conclusion: "The freezing of accruals under a qualified retirement plan, so that a partial termination of the plan occurs, does not constitute a plan termination for purposes of determining whether service for the plan sponsor after the plan was established may be disregarded toward vesting if accruals resume under the plan. Accordingly, all years of service for the plan sponsor following the establishment of the previously frozen plan must be taken into account for purposes of vesting." Accordingly, all years of service for the plan sponsor following the establishment of the previously frozen plan must be taken into account for purposes of vesting. If you read the full revenue ruling, all this says is that you must credit vesting in the frozen plan for all years if you unfreeze it. It says nothing about crediting of vesting service in a new plan, unless yuo later merge the two, in which case all prior service must of course be credited. For purposes of a new plan, there is no predecessor plan because the first plan was not terminated and such service may be disregarded for vesting in the new plan.

Yup, you win the bet. I looked it up and I see one very regular and one infrequent Board contributor on the committees.

Thanks tymseup. I always am interested in your comments as well. OK, now I need to find Harwood and Willie who complained that I wasted their time!

'ASPPA recently had an article about outsourcing, NIPA's website has something on Congruent." Yeah, but that was DC work, not anything certified by an actuary.

Let's remember that is not a necessary result of the plan freeze, but is conditional. See IRS Reg. 1.411(d)-2(b)(2). Agreed, but everything I read says that a termination or merger of a plan, not a partial termination (regardless of what caused it), must occur for such a plan to be considered a predecessor plan for purposes of determining whether a sucessor plan must credit vesting service prior to it's effective date. This was ata's initial comment which I remain in agreement with. FWIW, I think the DB Answer Book clearly supports a False answer, as well as the ERISA Outline Book.

Mike, anything concrete you can point me to? Thanks for your help. At this point, I remain completely convinced the correct answer is False.

Sieve, here is the conclusion to that Revenue Ruling. It addresses vesting under the first plan, and it addresses vesting if the first plan is terminated, and it addresses vesting if a new plan is established and the first plan is merged into the second plan. it does not, in my opinion, anywhere state that prior service must be credited in a second plan if the first plan is not terminated or merged. (I view a merger as having the same effect as a termination anyways). It seems to me to leave the door open to different vesting service years in the case where two plans are maintained, one frozen. The bold is my emphasis. HOLDING The freezing of accruals under a qualified retirement plan, so that a partial termination of the plan occurs, does not constitute a plan termination for purposes of determining whether service for the plan sponsor after the plan was established may be disregarded toward vesting if accruals resume under the plan. Accordingly, all years of service for the plan sponsor following the establishment of the previously frozen plan must be taken into account for purposes of vesting. If, instead, the accruals are earned under a new plan maintained by the same employer and the new plan is merged with the frozen plan, then this holding also applies, so that, after the merger, service after the frozen plan was established must be taken into account for purposes of vesting in any benefit accruals under the new plan.

Thanks for the comments. I'll re-read the Revenue Ruling because I did not get the same interpretation. I agree it quacks like a duck. And the "end around" comment is also appropriate. But all the interpretive stuff I can find says it is not a duck and the end around is perfectly legitimate. And what about the salaried only issue? Why can't previously exluded people be denied pre - Plan 2 effective date service? But I have high respect for all opinions here so this is much appreciated.

May 2008 EA2-B. The test was released last Thursday (much later than normal). If the correct answer is B, which I think it is, then I pass (assuming they change the official answer to B). I need one point.

Thank you very much. I agree completely. I think it is wrong on a second point also. If Plan A were terminated as such deemed a predecessor plan, only participants of that plan (salaried in this case) need to have prior vesting service credited, as I read the rules. p.s. Revenue Ruling 2003-65 clearly confirms that a partial termination is not a termination for this purpose.

I guess. It only took me 25 years to get around to it. It's a lot harder to find the time at this point though. Blinky, are you saying you think the official answer is incorrect? Or just that you assume your answer would be wrong? I need one point and I think this is my ticket.

I'd really appreciate informed opinions as whether the following Exam question is correct or is in error: Data for Question 4 (1 point) An employer sponsors defined benefit Plan A, which covers salaried employees only. The employer suspends benefit accruals in Plan A effective December 31, 2006. A partial plan termination is deemed to occur on that date. The employer then establishes a new defined benefit Plan B that covers all employees effective January 1, 2008. Consider the following statement Vesting service in Plan B must include all years of employment since the effective date of Plan A. Is the above statement true or false? (A) True (B) False The official answer is A (True). I think it is false because only a termination, not a partial termination or a freeze causes a plan to be considered a predecessor plan within the meaning of 411(a)(4) say the DB answer book, the ERISA Outline Book, and anything else I can find. Is there some DB-specific rule in some weird place that I am overlooking? Help would be really appreciated.

I put em in a pile with all the suspension of benefits notices that nobody can find and wait for the Sec to prescribe. It was MGB years back that confirmed (at least to my satisfaction) that no rules were ever issued by said Sec so why worry be happy.

That specific provision, and it's applicablity to single employer plans, yes. I actually couldn't get him to bite on the word "obsolete", just that the proposed reg was now considered "the authority", plus he agreed there was no automatic approval (at least for single ER plans) after 2008.

The acceptable definitions of comp for testing purposes are outlined in 1.401(a)(4), and estimated or prorated comp ain't one of them regardless of what the software allows.

Ah, an answer shopper - I read the reg as grandfathering the accrued benefit as of the pye preceding 4/07, not extending the use of the grandfathered amount beyond that. But that may be a conservateive read and I don't lunch with the reg writers! But, the language seemed to indicate that a post-employment COLA was possible even if the result exceeded the hi 3. Merlin, this is merely a reaction based upon a couple of quick reads. I'd consider it a conservative interpretation. It will be interesting to read the comments of others.

Yes, for 1/1/2008. After that, there is currently no automatic approval. This is in PPA, and it is clearer in one of the regs, plus David Ziegler of IRS confirmed it on the phone with me. This provision of RP 2000-40 is obsolete for single employer plans. p.s. The cite he gave me is Prop reg 430(d)-1(g)(3)

He's a guy that goes to the bathroom in the left field wall in between pitches. He wears an ipod during games sometimes by mistake. He likes to roll around on the field like Belgarath describes. He likes hair as Blinky aludes to. During a minor league rehab game 2 years ago, he left in the middle of the game in full uniform to get a haircut. The problem is that sometimes he's not in the mood for baseball. It lasts weeks sometimes. He'd be fun at a 7 year old kids birthday party though if you have one of those jump things.

The Yankees thought just reminded me that an option might be to sell him to the Yankees and use the funds to produce a Broadway play about A-Rod and his late night friends titled "No No Bimbette".

Trade Offers requested. Creativity encouraged. Be like Manny.