Mike Preston

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?

Nah. Warnings on things which are a little like whack-a-mole are a good thing. I don't think I've met anybody who said that they interpreted the Code the way the IRS published in the Notice. The only issue where there appears to be disagreement amongst practitioners is whether the sneezing applies both to the regular 150% limit (obviously it does) and the 100% limit inherrent in 404a7. I've seen some folks I respect line up on the opposite side of the fence from me. Not that my side is unpopulated. Just that there is a scattered opinion on this one issue. On my side are those folks who believe that the 100% UCL minimum referenced in 404a7 is NOT reduced by any CL attributable to amendments for HCE's within the last x (2?) years.

Ah, yes, 87-16. Only 20 years ago. Should be fresh in everybody's memory, don't you think? First of all, on a practical level, you go by what is on your W-2. If your W-2 doesn't have the box checked, then you should be ok. You should check with your employer to ensure they aren't planning to issue an amended W-2. If they are planning on doing that, perhaps you can talk them out of it with the information you've found out here? As has already been mentioned, the rules are somewhat convoluted. But in certain circumstances they are clear. To really understand what the answer to the question is, you need to know a whole bunch of information which is typically only available to the employer. As such, it is their responsibility to tell you what to do, and they do that by checking or not checking the box on the W-2. So, let's knock them out a few at a time. 1) In the normal course of events, with a contribution being made in 2007 for the 2006 year, you would be treated as active for 2007 and not for 2006. 2) An exception occurs if the contribution for 2006 was because the contribution was required due to the fact that the plan was "top heavy" for 2006. In this case, the IRS considers the required contribution to be something that the employer should have known about and therefore you are stuck with treating the contribution for 2006. Only your employer would know if this is the case. If it is, they will be planning on re-issuing the W-2's and you are stuck. If so, you have until 4/15 to take out your contributions from the IRA without suffering any penalty. 3) Another exception occurs if they already made a contribution for 2005 in early 2006, thereby making you an active participant for 2006 even if they didn't make the contribution in 2007 you mention. If this is the case, though, they should have been aware of it and already marked your W-2, so I'd be surprised if this is the case. Hopefully, this is enough information for you to go back to your employer and find out the real skinny.

I'm just going by memory here, since I don't have time to look it up in detail, but I think your employer has an option of treating the contribution for 2006 or 2007 purposes. Whatever they decide they end up creating a precedent which is not supposed to be changed in subsequent periods, but that is not a completely hard and fast rule; just that the IRS is concerned about flip-flopping. Sorry I don't have time to do more. Maybe this will jog somebody else's memory that can pull a cite easier than I can at the moment.