Mike Preston

Indeed.

Well, I'm not sure what you mean by "gateway issues." Certainly the individual would then be subject to the gateway minimums, if there are any. And if they exceed 3%, then getting just 3% would be a problem.

Just for clarification purposes, how do you superimpose the segment rates when using the 417 safe harbor? Assume, for illustration that you have been given permission to use a special mortality table for this calculation (I know this can't be done, but humor me). The mortality table says that the individual you are valuing will live to retirement age plus one year and 1 day and that there is no mortality prior to that. (Humor me some more.) Retirement age is 7 years away from the valuation date. Assume that this plan pays an annual retirement benefit, not a monthly one. The annual retirement benefit (which will be paid twice, once at the person's retirement age and once one year later - he is then assumed to die one day after the second payment) is $1,000. Assume that this $1,000 is fully accrued during the plan year and that there was no accrual at the beginning of the year. Hence, whatever we come up with as the present value will be part of the Target Normal Cost. Are you saying that the Target Normal Cost for this individual is: [$1,000 * (1.0531 ^ -0) + $1,000 * (1.0531 ^ -1)] * 1.0592 ^ - 7 = $1,303.45 or are you saying that the Target Normal Cost for this individual is: [$1,000 * (1.0592 ^ -7) + $1,000 * (1.0592 ^ -8)] = $1,299.79

Duplicate thread. See http://benefitslink.com/boards/index.php?s...st&p=185971

What makes you think a run of the mill terminated plan is an orphan plan?

No one knows for sure (no court case I'm aware of). However, the "inappropriate duplication or omissions" language of the 416 regs tells me that this person, not being eligible for the DB plan, is entitled solely to the 3%.

Slight clarification. Current year catchups are excluded from all tests. Prior year catchups are included (with earnings) to the extent one is using accrued to date testing.

I have confirmed, informally, that the IRS considers a rollover in a DB plan to be a DC plan within a DB plan, ala 414(k), and therefore the cite that Blinky posted is intended to cover a "run of the mill" rollover account. Kind of interesting how this is dovetailing with that other thread that deals with converting a rollover into an annuity at actuarial equivalent rates.

No one knows, at this point, whether the IRS will deflate the 401(k) limits. I think the 415 limits for DB plans are pretty safe. The 415 limits for DC plans are another matter. The SS payments that you read about deflating are due to the inflation factor applying to the Medicare premium reduced against a stagnant SS amount. That means those who have their Medicare premiums automatically paid from their SS check will see that check go down.

This may not be the only issue on the table. Of course the IRS agent should not be attempting to obviate a regulation. But once your plan is in one of these 412(i) audits, the issues can get "complicated." Litigation guidance is critical.

Well, I don't have any right now, so I have no specific reason to research it, but I could have sworn that a rollover without annuity conversion rights has no "annuity" that it can elect and therefore defaulted to account balance RMD's. Maybe I'll post it on the ACOPA list if nobody here adds to this thread.

Hope you are adequately provisioned. Once you dig into this, you may not surface for days. Dealing with 411(d)-4 is not for the faint at heart. There have been more changes to that section than to almost any other section of the regulations. First, I want to challenge your premise. The TD you reference is the one that created the first version of the final regulations (7/8/88). There were no temporary regulations at that point, so the preamble must have been referring to the proposed regulations (1/31/86). The only temporary regulations I'm aware of were published in TD 8781 dated 9/4/98 and removed by TD 8806 dated 1/8/99. Obviously something that came into existence 10 years after the preamble you reference was created isn't likely to be referencing the temporary regulations. If all you are interested in is QA3 and QA4 my source materials indicate that QA3 was inserted in to the regs in its current form by TD 8900 dated 9/6/2000. While QA4 was part of the original regulation, but was amended by TD 8891 dated 7/19/00. A full list of the -4 changes follows, with Federal Register references to the extent I have them: Proposed 1/31/1986 Adopted by TD 8212 7/8/1988 Amended by TD 8357 8/8/1991 Amended by TD 8360 9/12/1991 Amended by TD 8485 8/30/1993 Amended by TD 8581 12/22/1994 Amended by TD 8769 7/5/1998 Amended by TD 8781 9/4/1998 Amended by TD 8794 12/21/1998 Amended by TD 8806 1/8/1999 (confusingly listed as published 7/8/99) ....TD 8806 [64 FR 1125] (7/8/99) ....TD 8806 [64 FR 38835] (7/20/99) Amended by TD 8891 7/19/2000 [65 FR 44679] Amended by TD 8900 9/6/2000 [65 FR 53901] Amended by TD 9169 12/29/2004 [69 FR 78143] Amended by TD 9176 1/25/05 [70 FR 3475] Corrected on 3/8/2005 (no TD published) [70 FR 11121] Amended by TD 9219 8/12/2005 [70 FR 47109] Amended by TD 9325 5/22/07 [72 FR 28604] Best of luck unraveling all of that.

Depends on what you mean by your statement (not very helpful, huh?). But the general answer is "yes" insofar as the definition attaches to benefits that have already accrued. Accrued for this purpose means the satisfaction of all criteria to earn a benefit other than the mere passage of time, I think.

Dear critter, Your post indicates that you think your ex-spouse somehow failed to do something that was required of him. You should be aware that it is the non-participant spouse (that would be you) that had the duty under federal law to present the DRO to the plan. At least, since I'm not a lawyer, that is the way that I've been led to believe it works. If you were represented by counsel this means, plain and simple, that your attorney may have let you down. This means that going back to your attorney for advice at this point may present that attorney with a bit of a problem. You should be aware of this issue as you embark on your journey. Good luck to you.

Agreed. And we wish you an elevated e-circle, Mr. Rigby.

Of course the example is fine, it is from the regs. This concept has been discussed at many meetings. At various ASPPA conferences it has been referred to as the "DB UP" method. The regs make it seem that the method is perfectly acceptable. However, I know of no citation or even any PLR that specifically addresses it. In a purely theoretical world, your client should consider standing their ground and let the IRS rule against them, knowing that when it gets to Tax Court, there is a good chance the Court can be convinced that the Secretary should be held to the letter of the regulations. It isn't a purely theoretical world, however, so the client needs to consider the whole audit and the cost of compliance, in total, and, most importantly, with ERISA counsel guiding the whole process.

With the general caveat that a complete analysis of your question would take quite a bit of time, the answer to your question is yes. Take the example of an individual who theoretically separates from service at a very young age, say 30. If the value of the annuity at age 65 is $10,000 you can clearly see that the value of that annuity some 35 years prior to retirement must be significantly less than $10,000. If you were to take $10,000 into account for that individual when he is currently age 30, you would be vastly overstating the value of the pension. You might get some flack from some actuaries with your reference to life expectancy. It is a subject of great technical interest in many fledgling actuarial classes (at least to the professors) as to why it is NOT correct to utilize the life expectancy, per se. Instead, you must determine the present value of each individual payment (or use an actuarial technique that uses what are known as commutation functions to produce the equivalent). Your description implies that you will, in fact, be looking at each individual payment. If so, then ignore this entire paragraph.

The head chicken is no longer capable of laying eggs.

It doesn't?

They did and they both now agree that the threshold for determining whether a quarterly is required is always 100%.

Yup, as just confirmed by Carol Zimmerman and Jim Holland at the ACOPA Symposium yesterday.

I don't know what "they" said, but I can tell you the source of the confusion. Let me start by saying that I agree with the other posters here and think the written word is clear enough. However, those who think differently, as Larry seems to at the present time, base their position on the fact that WRERA made a change to 430©(5)(B)(i) such that the funding shortfall being determined is for both paragraphs 3(A) and subparagraph (A). Pre-WRERA 430©(5)(B)(i) only referred to subparagraph (A). Now, 3(A) refers directly to the "funding shortfall" (not the shortfall amortization base). Hence, if the new rule as to when to use the transition percentage is applied not only to subparagraph (A) [how to determine the shortfall amortization base] but also applied to paragraph 3(A), which says: "the funding shortfall of such plan for such plan year, minus" you have a confusion which is generated from the question: why wasn't 430©(5)(B)(i) changed to reference paragraph 3, rather than paragraph 3(A)? That is, it must mean something different from what it would mean if the change had merely said paragraph 3 [in addition to the previous and remaining reference to subparagraph (A)]. Now, before you jump down my throat for this, please be aware this isn't my interpretation. I think that if this interpretation were to be correct, the change in WRERA would have had to be to paragraph 4, not 3(A) or 3, for that matter. And since I think paragraph 4 controls the definition of shortfall for purposes of 430(j)(3)(A), I think the above argument is weak indeed. But at least we now know the source of the confusion. Hopefully, Jim Holland and Larry will address this later this week in Chicago at the ASPPA COPA Symposium.

Since it will be a cold day in Hades before the IRS considers the third segment rate to be anything close to a market rate of return for this purpose, I would say quite difficult indeed. Did you mean the first segment rate?

Thanks for the update. You have, no doubt, the collective sympathies of everybody here. Be aware that every financial institution has their own rules regarding the disposition of IRA monies. And while an ERISA-based Qualified Domestic Relations Order should be limited to qualified plans such as 401(k) plans, it is quite possible that a financial institution would "honor" such a document. Even if they say they won't today, there is the distinct possibility that the rules which govern qualified plans could be extended, someday, to IRA's on a national level. So, whether or not the financial institution you select makes it seem that history cannot repeat itself, you still might want to put them on some kind of notice.

Other than the fact that 411(d)(6) and the regulations under 1.411(d)-4 make no mention whatsoever of a protected right being created, established or linked to via any 401(a)(4) demonstration? Not a thing.