Mike Preston

Huh? It takes over plans because they are in danger of becoming MORE underfunded if the PBGC doesn't take them over. Many of PBGC's takeovers are voluntary on the PBGC's part. That is, the PBGC is the instigator, rather than being passive and waiting for bankruptcy. Of course, the OP didn't give enough information to determine what is going on in this case.

If you could promise me a Cubs-Red Sox World Series, I'd gladly pull for the Red Sox in the final game tonight against the A's. Then, of course, I would be pulling for the Cubbies. But something tells me the Yankees would just crush the Red Sox, if given the opportunity. Could the Red Sox fans really cope with that? Would you really want THAT on your conscience? Wouldn't be a good time for the Life Insurance industry. I'd be watching the stop-loss limits if I were a reinsurance carrier. No increases to those with a New England policy base! ;-)

Yikes, indeed!

Usually there is somebody that your firm would rely on for advice in this area. That person might be internal or external. Have you run this by them? That person may very well come back with the advice that the client sort through the issues with ERISA counsel. But, then again, they may take a look at the Marital Settlement Agreement, note that same was provided to the Plan Administrator, determine that the Marital Settlement Agreement has all the information in it necessary to establish a QDRO (I know, I know - unlikely at best) and bless the whole transaction. Then again, they may not.

It means, I think, that the Red Sox are, theoretically, going to forget their past adversity and go forward, to the best of their ability. Which I sincerely hope that they are unable to do! Go Barry!

The timeframe for deposit is before the due date of the tax return. This is typically 8 and 1/2 months after the end of the fiscal year, not 9 and 1/2 months. Of course, it depends on the entity. If a coporation, then 8 and 1/2 months is correct. If a sole proprietor or a partnership, where appropriate extensions have been filed, then 9 and 1/2 months is correct. The original question wasn't asking about deductions, though. However, in addition to the question Katherine asked, we need to know the limitation year of the plan, too, in order to give a correct answer. Typically, the only limitations on deposit (without concern for which year amounts are deducted in) is the impact of the 415 limits. That can be tricky in the case of a plan with a limitation year that doesn't correspond to the plan year. It can also be tricky if the fiscal year doesn't correspond to the limitation year, whether or not the limitation year is the same as the plan year.

Why would the fractional rule violate the accrual rules? Why would application of the fractional rule, which results in an increased accrued benefit, not establish the participant as benefitting under 410(b)?

Most plans have language in them that allows for owners and partners to have their "earned income" treated as "plan income". In other words, your plan probably already includes language that does what you want.

Yes. "This section applies in lieu of Rev. Proc. 2003-44 to eligible plans that satisfy the requirements of this section, including plans for which determination letters would not have been required had the plans been timely amended to comply with GUST. For example, this section applies in lieu of Rev. Proc. 2003-44 to a standardized M&P plan that has not been amended to comply with GUST by September 30, 2003 (the end of the plan's GUST remedial amendment period), provided an application for a determination letter for the plan, including payment of a compliance fee of $250, is submitted by January 31, 2004. Rev. Proc. 2003-44 applies to late amended or filed plans that are not eligible plans or for which determination letter applications are not filed by January 31, 2004. "

No.

The plan document formula has nothing to do with the testing under the ABT. Nothing. Whether the formula is comp-to-comp, or integrated or new comparability doesn't matter. You are free to run the ABT on the basis that you want to, whether that includes imputing permitted disparity or not. If you impute permitted disparity, you must do so in a manner that is consistent with the test. If you are testing on contributions you would use the x% up to 5.7% rules associated with a defined contribution plan. If you are testing on benefits you would use the permitted disparity factors associated with the retirement age (testing age, actually), which in all likelihood is indeed 0.65%. But just like the DC rules, don't forget the "no more than 2 to 1" rule, so if an individual has a DB accrual rate of 0.5%, the permitted disparity factor can't be 0.65%, but instead would be limited to 0.5%.

PLASTIC ENGINEERING & MFG. CO. v. COMMR., 78 TC 1187, 06/30/1982 P was incorporated on Sept. 15, 1974, and elected to report its income on a fiscal year basis ending Jan. 31. On Sept. 30, 1974, P adopted a defined benefit pension plan with a plan year ending Sept. 30. Prior to Jan. 31, 1975, P made contributions to the plan equal to the normal cost of funding the 12-month plan year beginning Sept. 30, 1974. P claimed deductions for the full amount of its contributions on its return for its first, short taxable year covering from Sept. 15, 1974, through Jan. 31, 1975.Held, the requirement that services actually be rendered concerns only the fact of rendition and not the amount of services performed. Held, further, the contributions having been paid within the taxable year, and services actually having been rendered by each participating employee, petitioner is allowed the full deduction claimed.

Contact that administrative office of the collective bargaining unit, I would think.

While the regulation mentions that you must provide enough information so that the recipient can measure the impact of the reduction (which would imply that a benefit statement that identifies the numeric impact of the amendment would be sufficient see Q&A 11 - 4), it also states in Q&A11 - 3 that you must provide a narrative that includes "a description of the benefit or allocation formula prior to the amendment...".

If one submits, the IRS issues an LOD (hopefully). The IRS may, or may not, ask that an amendment be adopted _after_ the LOD in order to satisfy qualification requirements. For example, during the submission process, the IRS may approve a proposed amendment. If they do condition the LOD on such an amendment, the Plan Sponsor has 91 days after the LOD is issued in order to adopt the amendment. The authority for that is 1.401(b)-1(e)(3). In fact, if memory serves, the RAP is extended pursuant to that section whether or not the IRS requests that an amendment be adopted after the issuance of the LOD. Whenever a deadline revolves around the RAP, the 91 day extended RAP applies in the case of a plan that receives an LOD. I think there is an example in the ABA Q&A's where an individually designed plan was required to adopt an amendment before 2/28/2002 (the end of the GUST RAP for individually designed plans) but had not done so. Nonetheless, the LOD was issued something like 1/15/2002 so the Plan Sponsor could adopt said amendment up through 4/15/2002 (or thereabouts). Maybe somebody else can find it.

There are no specific rules that I am aware of. The amount of the deduction, per entity, depends first and foremost on whether the specific amount can be tracked. If it can, I suggest that is the way to do it. However, in cases where overall compensation limits come into play or where the contribution is determined in a way that doesn't allocate a specific cost to an individual (such as a DB plan) the only thing I have heard the IRS say is "do something reasonable." That, of course, means different things to different people. :-(

Correct, I missed the self correction part and was only responding generally with respect to EPCRS. Demographic failures are not eligible for SC. However, it is not 100% that a demographic failure exists until the testing is done.

I agree with MGB that if you don't have a 411 violation, you don't need 7805(b) relief!

A failure to recognize the existence of an ASG does not mean the plan automatically fails one or more qualification requirements. It is perfectly possible for the plan to still pass 410(b), 401(a)(26), 401(a)(4) including ADP testing, etc. However unlikely that may be, it is nonetheless possible. Now, if what you are saying is that the plan did indeed fail one of the qualification requirements I agree with you that correction of a qualification requirement is what EPCRS is all about.

However, if you have a current letter of determination, the plan should be eligible for 7805(b) protection. I would amend the plan to provide for a benefit that, going forward, does not violate 411, grandfather the existing benefits and submit for a new DL highlighting the issue.

I agree that redirection of the participant's funds should be allowed. Redirecting the non-participant spouse's payments, however, seems inappropriate.

QDROphile, I'm not aware of any requirement to have the document identify the methodology. I am aware that 87-13 requires consistent treatment. It has been a long time since I read 87-13 cover to cover, though, so I may not be remembering everything.

See my post in that other thread.

See IRS Notice 87-13, Q&A 15. The plan can apply a "first in - first out" philosophy, which will essentially make all distributions consist of the pre-87 after-tax contributions, if any, before distribution of any other amounts, or it can apply the pro-rata rule to all distributions. Whatever the plan decides upn must apply to all participants in the same manner.

On the up-and-up? Or on the sly? If the latter, you might want to apply for a job. If the former, you can get prior 5500's from either FREEErisa.com or directly from the government. Try the company's website, as some companies post things like SPD's. Also, you could try contacting the HR department and seeing if they would be willing to send you a copy of the SPD. However, there is generally no duty to send the SPD to anybody other than participants (there are some exceptions, such as with collectively bargained plans). If you are looking for financial information, such as what funds are provided and so-forth, that information is generally not available. If that information is provided it will typically be to a reputable firm doing some sort of research, on the basis that it will be kept confidential, not attributed directly to the company when the research is published and where the results of the research will either be provided to the participating company free, or on a reduced fee basis. You could also try scouring the world for current employees of the firm and ask them for their SPD, benefit statement, etc. Seems like some reporters are pretty successful at getting information this way.