Mike Preston

There is no requirement to have the test fail in order to do an -11g amendment, after the end of the year, to cause a special allocation with respect to the prior year. While it is unusual to do so unless you think the tests might have failed, there is no requirement to prove that the tests have failed.

Not a bit.

OK, I'll bite. Why does TH status matter in this case?

I believe so. I'm assuming that the terms of the plan have not changed since the publication of the regs.

Re-queue it!

Ms Behave: I think the goal here is to refine your search a bit because your broad request is a bit difficult to respond to. A couple of random thoughts: The QDRO provisions most of us in the business are familiar with come from Internal Revenue Code Section 414(p). That section of the code has been amended from time to time and I don't have a resource which easily provides what that section looked like in 1985. Further, the IRS has never issued regulations under Section 414(p). They may have issued proposed regulations at one point, but again, I don't have a resource at my fingertips here that would identify the existence of proposed regulations under Section 414(p). So, your reference to the regulations governing QDRO's may be a bit difficult to establish, if in fact no "Federal" regulations exist. However, there are a number of other avenues you might look to. First, the DOL may have issued something. Again, I don't have anything going back that far. I know the DOL (and the PBGC) have issued booklets attempting to inform the public about pensions and divorces, but I believe those booklets were first published after 1985 and, further, they don't really rise to the level of regulations, anyway. Second, the very name we are dealing with ("QDRO") means an order which is qualified in STATE court. Hence, the particular state you are in has a significant bearing on how a QDRO can be constructed and worded and unless we know that state we are hard pressed to provide any information on what guidance may exist. My understanding is that many states have absolutely nothing in the form of regulations and only an attorney familiar with case law in that state would be able to give you information. With all that said, there are some issues which are generally treated the same from state to state. If we had a better idea of what the issue is or issues are that you are concerned with, we might be able to provide more information. However, as I have stated here many times, if you are here it is highly likely that whoever you are dealing with (or one of their representatives) is here, too. So please don't put something on this publicly available website that you think may work to your disadvantage at a later date. Hope this helps.

Kim, not sure how relevant rounding is in your example, because whether 59.5 or 60, the result is the same: not top-heavy. The rule is that one must be more than 60%. It is not "equal to OR more than 60%".

No.

No. No. By definition if the document says yes, then mandatory withholding should apply, shouldn't it?

Let's see: dx = Lx - L(x+1), which of course I agree with. But I would write that as: Lx - Lx+1 Third opinions welcome.

Other than reading the regulations, which are pretty detailed, I seem to recall that there is a 1 year lookback for balance outstanding. Was that removed?

No need for me to explain. We'll let the Supremes do that!

You are right, he is wrong. How's that? Gateway rules call for 7.5% unless he can show that the ECAR for the HCE's is no more than 25%. Highly unlikely. Just because you aren't an actuary doesn't mean you aren't able to tell your client that a 3% interest assumption and a 9 year setback on mortality is likely to be challengable by the IRS (you didn't specify the mortality table, so I guess A37 with 9 year setback is reasonable ). If you really think it doesn't work, just one bit of advice: decline to work on said plan.

Did you mean that dx?

And watch the LaRue case.

abanky, I'm not sure what question you are asking. If you are asking what method I'm using to come up with the number, the answer is: "I do it two ways: an excel spreadsheet that has as its underlying formula a series of cells which replicate the formula that would be used based on commutation columns and an excel spreadsheet that caculates the present value based on first principles (discounting each monthly payment)". Does that answer your question?

My first principles worksheet and my commutation worksheet come up with the same number.

Just in case anyone is interested in additional checking, here are my APRs for immediate life only annuity at various ages based on 4.85%/5.02%/5.09% and 2008 Applicable Mortality. I concur to 3 decimal places (it may be consistent with my program to more decimal places than 3, I just stopped checking at 3 decimal places).

For immediate life annuity at 65 using 4.85%, 5.02%, and 5.09%, I get 143.51 (5 decimal place rounding: 143.50854). Using 4.85% (and my old Fortran program), I get 145.61 (same); using 5.09%, I get 142.66 (same). Might as well round out the calculations, using 5.02% I get 143.51 (five decimal place rounding: 143.50961).

I suppose the only impediment would be the potential for the AP to have the court aggregate the two. Never seen it happen, but that doesn't mean it is impossible.

I may not be able to get to this today. Post a followup if too much time goes by.

Without the consideration of other assets? You asked whether it "could". Now you are asking whether it "would". That is dependent on the attorneys and the clients. For the sake of discussion, suppose the participant's pension benefit represents all joint assets, they were married on the effective date of the plan and divorced as of 12/31/2006 (the close of the plan year). If the participant's accrued benefit was $5,000 on 12/31/2006 why would the alternate payee be entitled to more than 50% of $5,000 payable at the participant's NRD if the participant continued to accrue benefits after 12/31/2006? Because that is the law in California. See my other recent post for a list of cases. But your question is answered by the granddaddy of them all: see the Brown case.

3/31/07 Plan Year Participant defers $20,000 in September 2006, and nothing else in the Plan Year. Only $15,000 of deferrals are taken into account because $5,000 exceeded the 2006 statutory 402g limit. That $5k is a 2006 catchup because, as of 12/31, the 402g limit had been exceeded ADP Test fails for 3/31/07, requiring $5,000 in refunds, all reclassed as catch-ups. This $5k is a 2007 catchup because it is available. 3/31/08 Plan Year: Participant defers $20,500 in September 2007 (as mentioned above). Only $15,500 of deferrals are taken into account because $5,000 exceeded the 2007 statutory 402g limit. But at this point, the 2007 catchup is all gone, so the plan sponsor must send $5,000 out of the plan due to it being a 402g violation. 3/31/08 ADP test fails, requiring $5,000 in refunds, all reclassed as catch-ups. That's ok, the 2008 catchup limit wasn't invaded above, so it is available. Participant defers another $20,500 in September 2008 As with the point above, $5k must be refunded because the 2008 catchup has already been used.

I guess the cryptic nature of the posts has me confused. Care to lay out the numbers? When you say that: 3/31/07 Plan Year: Participant defers $20,000 in September 2006, and nothing else in the Plan Year. ADP Test fails for 3/31/07, requiring $5,000 in refunds, all reclassed as catch-ups. Does this mean that you took into account the entire $20,000 and then determined the refund should reduce his deferrals from $20,000 to $15,000 and then because that was $5,000 treated it all as 2007 catchups? Or are you saying that you treated $5,000 as catchups for 2006 since the $20,000 was made in 2006 and therefore you took into account only the net of $15,000 and then determined the refund should reduce his deferrals from $15,000 to $10,000 and then because that was $5,000 treated it all as 2007 catchups? Which is it? Participant defers another $20,500 in September 2007, and so has deferred the max under 402(g) for 06 and 07. 3/31/08 Plan Year: Participant defers $20,500 in September 2007 (as mentioned above). 3/31/08 ADP test fails, requiring $5,000 in refunds, all reclassed as catch-ups. Participant defers another $20,500 in September 2008 Sem question.

I just ran your last scenario through my spreadsheet and it seems to require a refund for the 3/31/2008 plan year because the dollar amount of deferrals that is taken into account as of 3/31/2008 in the ADP test is the full $20,500, not the $15,500. Yes, there is a $5,000 catch up available, but it is taken into account by the amount in excess of the 402(g) limit and hence there is nothing left to allow the exceess ADP deferrals of $5,000. Is your scenario the same as Buckaroo's? Should we just start this whole thing over again? I'm willing if you are.