Mike Preston

This brings up an interesting issue. Should the actuarial standards, which require clear communication and such things as explanations if the information is likely to be confusing (serious paraphrasing, so don't hold me to the literal terms) apply to what are generally referred to as "internal" communications? I have never felt completely comfortable with such a requirement. But this scenario makes a powerful argument that they should. What would you argue for given your experience?

Very funny, Tom. The calculation of an "annuity purchase rate" is not very complicated, but it does involve a fair amount of number crunching. Many people have spreadsheets that allow one to enter the mortality factors (the probability of death at each age) into a column on a spreadsheet and then, given a specific age and a specific interest rate, determine the appropriate annuity purchase rate. Their spreadsheets will all require updating once the new rules which require multiple interest rates come into effect. I have an Excel add-in that allows one to enter a simple formula into a cell and have that cell populated with an APR. Something like: =slaapr(65,"83IAM-F",8.5%) and the cell is then populated with 115.38701 (you can round to two decimals if you prefer). I talk about the add-in only to describe how I have implemented the generation of APR's for my firm and to note that there are other alternatives than the typical approach of including a mortality table in each workbook.

But you said it was a year end valuation. Now, you have described a beginning of year valuation. Very confusing. Bottom line is that the CPA that is asking you to stick with the originai numbers is a buffoon and should be s%$t-canned. Take the issue to the managing partner because if you reported that the original valuation was only a "projection" and was based on "estimated assets", the fact that the CPA ran with those numbers as final is a clear indication that the CPA is an incompetent boob. Strong letter to follow.

Right.

There is no substitute for non-layman's terms here. Pass a4 both with and without. Think restructuring.

Seems like you have 3.5% for the gateway. Is that enough? Is so, I think you are fine. As long as the document allows a 1.5% QNEC and a 3.5% NEC.

Of course you can credit vesting faster than the statutory and regulatory minimums. Can you demonstrate to the vendor that your methodology will always result in more favorable vesting? If so, you should be fine. Of course, if somebody other than you is responsible for calculating the vested percentage, there will be programming roadblocks to implementation. Throw enough $$ at the problem, though, and you should be fine.

Actually, instead of hiring somebody, it sounds like your plan was set up through "DST Systems". They are the ones to call, because it looks like you have already hired them!

It is wrong to define net SE income as some number reduced by 401(k) deferrals. Hence, the 50% figure is a misconception. Net SE income is subject to FICA taxes. Isn't our nomenclature confusing enough without modifying definitions on the fly?

ERISA lawyer time. I seem to recall something that says the employer ends up designating what year a contribution is for predicated on the tax return it shows up on. Once it is designated for 2005, I wouldn't want to be the sole person advising the client that it was "OK" to undesignate it for 2005 and then designate it for 2006. It may, in fact, work out that way in some circumstances, but I would think opinion of counsel would be invaluable here.

Not needed.

Agreed.

John, is it now clear after Blinky's response? I was just trying to point out that Blinky's description, while generally accurate, needed to be expanded just a wee bit to include a contribution made pursuant to an -11g amendment, whether or not such amount is treated as an annual addition for the prior (corrected) year or not.

Remember the special rules on aggregating certain governmental plans. Sorry to be so cryptic but I don't have the time to look up the cite.

Not sure I agree with this. Presume a plan and fiscal that are the same. No extension. -11g amendment made on the last day allowable, well past the 30 day rule that would normally apply to determine whether such a contribution is treated as an annual addition for the current year. I'm not sure what to call it, but I'm not comfortable saying that an -11g amendment in such a case is precluded.

;-)

Is this a trick question? If the plan is not top-heavy then there is no minimum contribution due under that section. If there are only HCE's employed, then any allocation is considered non-discriminatory. About the only thing you would need to worry about at that point would be ancillary issues such as age-discrimination. But if you are asking whether you could create two groups, one for the owners and another for everyone else and then make a contribution to the first group, but not to the second, I don't think that would be a problem.

How does one participate in a plan, work more than 1000 hours and not accrue a benefit? I'm willing to listen to the long story.

In what sense? If you are talking about the credit to the funding standard account, no, I think you still get that (silly as that may seem). It is unlikely, but I guess not impossible to have a situation where it applies in this manner. If you are talking about establishing a maximum deductible contribution, yes.

Agree. The regs on 401(a)(9) state exactly what you have stated.

In general, (1) affects everybody and (2) only affects those who are receiving large amounts.

For good reason. Don't we need to know the basis upon which the new interest rates will be calculated? I don't think the government has disclosed what it intends to do, yet. But I could be wrong.

Everything J Simmons has said is pretty much right on. So step back a bit and try to get a handle on the big picture. Your husband's pension is in the middle of a dispute between multiple parties. You have, at least, in no particular order, your husband's ex-spouse, the ex-spouse's attorney, your husband, the judge, and you. There are so many possible alternative resolutions available, none of which will likely make all parties happy, that you need to decide early on in the process whether you want to be pro-active in this process or not. The more pro-active you want to be, the more it makes sense for you to engage family law/ERISA counsel to guide you through the maze. Keep in mind that it is not entirely clear whose side of the brewing controversy between your husband's ex-spouse and the plan you and your husband should be on. Assume, for a moment, that the plan digs in its heels and wins. No changes to the existing benefits are to be made. At that point, what happens to your husband (and by extenstion, you) ultimately shifts to the family law court. Can that court, in light of the plan's position, pursue a course of action against your husband that you would rather avoid? If so, does it mean you should be teaming up with them to see if the plan won't allow a change? Or is your husband in a position where the family court really has nothing it can do other than sink its teeth into the pension? In this case, it might be argued you should join forces with the plan and argue for no changes to the pension. Nobody on BenefitsLink is going to be able to properly guide you through this process. In almost all cases the right thing will be for you to engage counsel and determine your course of action from there. What the folks here on BenefitsLink *can* do is let you know the types of things to ask for so that your attorney's job is made easier (like the information J. Simmons asked you to get from the plan regarding its own policies and procedures). In my experience, family court judges feel they have broad lattitude to fashion a solution they feel is appropriate. They don't generally take kindly to being told that this lattitude is limited. Sometimes when it is made clear that their hands are tied in one area, they fashion an alternative resolution which is much less satisfying to one, if not both, of the parties. Good luck and if you feel like keeping us informed, I'm sure many, myself included, would be interested in hearing how things end up. You might not want to disclose too much about what your strategy is likely to be before things are settled, though, because this is a public forum. At some point in the proceedings your husband's ex-spouse or her attorney may find their way here. So don't put anything here that your attorney, should you engage one, would be unhappy you disclosed. Take care, mike

The timeline is a bit confusing. Retirement took place in August of 2006. There was an acknowledgement of some sort with respect to the QDRO also in August of 2006. I guess the key issue was whether your husband's ex-spouse or her attorney put the plan on notice that a QDRO was in the works before his benefit commenced. If so, it is an entirely different kettle of fish. Assuming that the plan was *NOT* put on notice prior to the commencement of benefits, your husband's ex-spouse is likely going to face an uphill battle getting anything from the plan. We know that the ultimate decision will be in the hands of the plan administrator and the courts, but my guess is that *if* the benefits commenced properly, the plan will not allow a change. Any kind of change. Not willingly, anyway. A court could force a change, of course. But I keep coming back to the fact that the decision will first be in the hands of the plan administrator to allow or reject If the plan *WAS* put on notice, I think the court will argue for turning back the clock and doing things the way they should have been done pending establishment of a QDRO once notice was properly given to the plan. What that means, exactly, is dependent on the terms and policies and procedures of the plan. Can you describe the events in August, 2006 in more detail?

mjb, you out there? Do you still think that the "new" pub 560 is wrong?