RCK

We have always looked at all the facts and circumstances, and when we decided to treat it as a partial termination, amended the plan to say that. If we decide that it is NOT a partial termination, then we don't amend, because we are applying the plan as it stands. I have a great example of how we have done this, but I have to dumb it down a little bit to keep from giving away too much information. So we bought a company that had let's say 40 locations. We kept 30, and over the course of about a year closed 5 and sold 5. So the people who worked at locations that we kept--no change in vesting. For the ones that we sold or closed, we looked at the close or sale date for each location and 100% vested anyone who was still employed at that location 30 days before the transaction date for that location. We probably could have drawn the line at the transaction date, but decided that the definition of affected participants should be extended to those who, hearing that the location would be closed, terminated before the closing. So in our case, no single transaction constituted 20%, but the big picture did. In crosseyedtester's situation, there is a lot of gray area here. Certainly if you want to vest all those people, that is probably not a problem. RCK

The interesting question for me is what happens if the employer puts $16,000.14 in Box 12 of the W-2. RCK

Keep in mind that you can have different answers for each potential kind of service--eligibility service, vesting service, credited service, vacation service, service award service, mountain top meditation service, etc. RCK

SoCalActuary: "us" is publicly traded with 50,000+ employees in various subsidiaries. Nearly all the subsidiaries are 100% owned by either the parent or a subsidiary of the parent. No individual ownerships are material. vebaguru: I don't know that the 50% controlled group standard is or what it means. RCK

We have a bunch of operating units participating in a 401(k) plan and a DB plan. To date, nearly all those units have been 100% owned by us with a few stragglers that are in the 90% range. But in any case, all well over 80% and therefore part of our controlled group. We are on the verge of an acquisition which would result in an operating unit that we own 75% of. Our preference would be to treat these people like everybody else, and put them in both existing plans. The Plans as they stand have well in excess of 120 participants. The new location would have (say) 50. So based on my research from searching threads here, calling my auditor, and reading code would give me the following implications: We now have multiple employer plans. We need to amend each plan to include the new location, and make the plan a multiple employer plan. We should get a new IRS determination letter. We would file a single 5500 for each plan. We would include in each filing two Schedule T's--one for the controlled group, and one for the new location. We would not need a new audit, and there would be no impact on the plan's financials. Questions that I have not figured out yet, and could use some guidance on: Do we have to perform separate ADP/ACP tests? What about 415 and 402(g) limits if someone transfers in or out of this location? What else am I missing? RCK

I'd vote "no"on any filings. This is not a prohibited transaction because it is between two plans, not a plan and the sponsor. So I'd transfer funds in such a way to make both plans whole, including making sure that the reimbursement to the first plan is coded as a negative benefit payment. I'd document the transaction in my files, including the interest calculation, and call it good. RCK

I agree with Archimage--they go to the same address. You might be thinking about the 5558, which does go to a different address. RCK

I agree with your original inclination--fix it going forward. I would include some documentation in the file of the first fixed filing, explaining the correction, just to be safe. RCK

This all seems like too much work to me. I'd just offer the self directed account to all participants, pass through the cost of that feature to anyone electing it, and hold my breath. Assuming that the recordkeeper is going to charge an extra $200 or so for this feature, I'm thinking that no body but the Doc takes "advantage" of it. Or to be a little safer, I'd do some informal focus groups to see if anyone else would be interested. RCK

The generic answer is always "what does the plan say?", but in this case, it should be "what does the promissory note say?" RCK

Maybe in the interest of efficiency, we could each just post the punchline from our favorite shaggy dog story: WDIK: Its chess nuts boasting in an open foyer. Belgarath (from a different thread): Rudolf, the red, knows rain, dear. RCK: Its a knick knack, Paddywhack, give the dog a loan. RCK

I have not had time to dig out a cite on this, but am pretty sure that the amount of income is the loan balance on the date of default (including the cure period). Note that the default date is the date that the first payment is missed, but the "cure period" runs through thre end of the following quarter. So in your case, that means the balance on September 30, 2004. RCK

You might have him check with his contact at the plan to see if they will settle for a copy of each divorce decree, showing that neither spouse is entitled to a portion of his government benefit. As long as they are not REALLY rigid, that might do it. RCK

I must be missing something here. IF you are able to test the plans separately, because you are able to pass coverage separately, why wouldn't you have 20 in the Plan 1 test, 200 in the Plan 2 test and 250 in the Plan 3 test? RCK

I agree with AndyH. As far as the plan is concerned, you contributed nothing, and are receiving a $160,000 lump sum distribution. Most of us would take that deal. From the plan's perspective, you are entitled to an accrued benefit based on your earnings history and the benefit formula. And the lump sum value of that benefit is based on the plan's definition of actuarial equivalence. That calculation would have no connection with your expected $200,000. If you have anything in writing describing the deal as you think it works, you might want to go back to the employer, and ask them to change definition of actuarial equivlaence behind the lump sum factors so that you can get closer to what you think that you deserve. RCK

Plans can be written either way (the ones that I work with operate the way that yours seems to). It's going to depend on what exactly the Plan document and the Summary Plan Description say, and to a lesser extent, any other written documentation that you have. I'm not sure if the fact that you are dealing with a safe harbor plan matters or not--maybe someone else can help there. If nothing else, review the SPD's claim for benefits section, and file a claim for benefits. RCK

OK, pax might have overstated it a little ibt. But to an objective(?) third party, now that the Curse of the Bambino is over, the Red Sox have moved from the hapless loser category with the Cubs to the overspending to ruin baseball category with the Yankees. RCK

Nancykev, Because you posted a question, I was assuming that something special happened at 20 years of continuous service. But you did not really say that. So, is 20 years of continuous service special for some reason? It would not be for any of the plans that I currently work with. RCK

jevd: I believe that the Red Sox Nation has turned in early the last two nights and believes that the Yankees are in the World Series. RCK

SoCalActuary: If you are approaching this as a pure business decision, I vote with several others--RUN. You can't possilby bill all the time that it is going to take to fix this. It looks like it is going to require completely new valuations going back 4 years, plus all the prohibited transaction filings and discussions with the IRS. If you want to do this out of some sense of professional responsibility and can view the whole project as essentiallly pro bono work, then by all means go for it! And if you are going to be the new Actuary, and can find a predecessor, you will want to double check Precept 13 of the Actuarial Standards Board Code of Conduct and your responsibility to disclose the problem. RCK, FSA, EA

You people on the coasts (that includes Atlanta) just don't get it. This could be a Fly Over World Series, or a Mississippi River Series--the Twin's pitching vs the Cardinal's bats. RCK

Do I have a cite for this? NO, unfortunately. Do I have experience with it? Yes, unfortunately. And we treated it as a prohibited transaction until the trust was made whole. In our case, a late contribution of 1999 was deposited in 2000 and we filed 5330's for 1999, 2000, 2001, and 2002 (when the missing interest was restored). In your case, I think that you have prohibited transactions for 2000, 2001, 2002, 2003, 2004 amd 2005 (if you're not careful). Those are based on the sponsor's tax year--not the plan years. RCK

We outsourced 5500 preparation to a small consulting firm. He is trying to print on his Dell, and did try the HPiiiSI drivers. Since that did not work, he's going to a different location that uses HP printers, and can print there. I was hoping to save him the trip. RCK

And Curt Schilling will be a deserving runnerup for the AL Cy Young award. But Johan Santana of the Twins is in a class by himself. RCK

Disclaimer: I am technologically disadvantaged (I remember punch cards) My provider is telling me that Relius' Form 5558 won't print on a Dell printer, even using a HP print driver. Since my extensions have to be filed tomorrow, I'm getting a little nervous. Anyone else having that problem? RCK