Mike Preston

What you have described is illogical. A QDRO is an order of the court. If the court wants the money to come out of the plan, then they have to authorize it by way of the QDRO unless the participant is otherwise entitled to a distribution. So, if they want what you describe, check to see if the participant can get at the money without a QDRO. If so, then part of the divorce decree should instruct the participant to make a withdrawal and turn the money over to the ex-spouse. But that isn't a QDRO.

Balderdash. To think so would mean that the language of the regulation, above, is to be read with a very strange prism. What part of "uniform" do you think should be interpreted to mean "uniform except in certain circumstances"?

In a Vol Sub plan, the answer is yes. That is, if an individual receives nothing then that individual does not need to receive the gateway. Bear in mind that the IRS takes the position that if you have ANYBODY in your plan that receives nothing who can, if you decided otherwise, receives something, then you have effectively named that person out of the plan for that year and your 410(b) tests must be done without being able to rely on the average benefits test. Usually, this isn't a problem. But if you are trying to exclude more than 30% of the NHCE's it could become one.

I need a wav file of the above and I need it NOW! Hop to, Tom.

I have a series of questions that I typically ask. Here are some of them. You can make up your own once you understand where this is going: 1) Is there a group or are there multiple groups of NHCE's that you particularly want to benefit? If so, to what extent? 2) Is there a group or are there multiple groups of NHCE's that you particularly do NOT want to benefit? If so, how upset will you be if they turn out to be the least expensive individuals to increase? 3) To what extent must there be uniformity in the increase in order to avoid employee relations issues? The corrolary to this is how important is it to minimize the expense associated with passing the test? 4) Would you rather see an allocation to certain HCE's be less than originally intended than see increases to NHCE's? If so, who amongst the HCE's can we look at receiving less? By the time you get the answers to these questions, you have a pretty good idea what path the client wants to follow. This really doesn't take much time, unless the client decides to take a lot of time answering these questions! Also, make sure you have run all of the tests properly before even going to your client. The system really should be able to tell you whether you have passed or failed based on both the accrued to date tests and the annual tests without much additional work. Somebody looking at the output who is familiar with how these things work should be able to tell you whether a simple restructuring will likely pass, even if it really is failing now. I will resist the temptation to delve into the psychology of firms that set up plans like this and do not have the internal expertise necessary to do a minimally comptent job. Then again, maybe I won't. I'm sure others will say it with much more emphasis.

Was one of these messages edited in a way we can't tell? Reed, what makes you think this is a prototype?

I'd love to, but it isn't going to happen this week. Bump it next week, ok?

Hey, Jamaica Boy, that one is taken!

I think you need to go back to the source and ask. They might already have taken what you are going to take into account into account thereby making inappropriate for you to take it into accunt, since they have already taken it into account.

You might want to consider having the employer make a 3% QNEC for 2007. He could then leave 5% of his deferrals in the plan for 2007 and the QNEC would satisfy the top-heavy. This may not be allowable under your doc, though, and it is too late to add any language to beef up how you might treat 2007. Even if it *is* allowable, you certainly wouldn't be able to use that 3% as part of the consideration of prior year percentage when determining 2008. That is, you can't count the QNEC as support for 2007 ADP *and* 2008 ADP.

It looks to me like you are correct. So, if I were you I'd ask the accountant for a source that backs up what he is saying. Of course, you could offer to have an ERISA attorney look at it to see whether there is anything you are missing.

Huh? The guy is saying that the amount he wants to fund, at age 52, is the full, unreduced value of 1/10th the dollar limit, payable as a lump sum at age 62. Repeat: the lump sum payable at 62 is what he wants to fund at age 52. Surely you missed this point to be questioning what is the appropriate amount to fund. I know you well enough to know that has to be the case.

I would say that I have even more questions, but my conclusion is that in the confines of a terminated plan, there is nothing that can or should be done. At one end you have a participant that was somehow hoping to get benefits ($800/month) that they weren't ultimately entitled to. At the other end, you have an unfortunate cascading of events: not only does the anticipated benefit entitlement disappear ($800 to $100 is very close to disappearing), but you also have the paid out benefit from the management plan being based on the $800. But, if I wanted to look further into this, I'd see what the paperwork was that surrounding the distribution from the management plan. My guess is that it is drafted in such a way as to cast the final distribution in concrete.

I would need one thing clarified first. Are the years which are no longer being counted in the determination of the offset also no longer counted on the front end of the formula. Are you sure there is an underpayment involved? Might it go the other way?

52

And you see how easy it is to create a non-uniform NRA so that you can use 65 as your testing age.

It might be deductible, but it would not satisfy minimum funding (8 and 1/2 months after the end of the plan year which ended 4/30/08).

It doesn't, but a "precise" range estimate is, in a word, kind of silly. The only purpose of the range estimate is to state which portions of the law the plan is subject to. Saying 79% doesn't get you anything more than saying 60% to 80-%. If you want to say 79% there is nothing stopping you. But it doesn't get you anything, either, does it?

Not sure how to respond. I think I made my position clear. Why isn't it 65 for anybody who's 65/5 would be 65 and 66 for anybody who's 65/5 would be 66, etc.? That section is trying to say that if you have a series of uniform NRA's and the employee is eligible for an earlier one, you still use the later one for testing. It does not mean that if one employee's 65/5 is 66 and another employee's 65/5 is 67 that you use 67 for both. Clearer?

Laura, I thought, although I may be misremembering, that 403(b)'s were not qualified plans, and because of that they are specifically excluded from all 401(a)(4) non-discrimination testing. Do you have a cite that says it should be included?

Don't you have to be an applicable defined benefit plan for that? Is there any evidence that the OP's plan is one of those?

The decreased annuity is the deciding factor.

I think you have to use the $165,000. Otherwise you have assumed a benefit that is, shall we say, "wrong"? Strong letter to follow. I think it depends on your assumptions. If you are assuming that an individual is 100% likely to take a lump sum and the lump sum payable from the plan is $165,000 (no matter how one gets there), then your valuation needs to reflect that.

Yes, you are on the right track. I assume you are using some sort of age adjustments/rounding in your descriptions, because I can't match your numbers very closely. But, as to the general statement that you have a db plan (which just happens to be a PEP) with an accrued benefit of $130 payable as a lump sum which evaluates to $X under the plan's definition of actuarial equivalence and $X+ under the required 417(e) definition, and therefore you must pay $X+, I concur. Were you thinking that because this is a PEP that there was a way around the normal rules of 417(e)?

Is the PEP sponsored by a government or governmental agency?