Mike Preston

1. My point is that it is grossly unfair to expect help with an educational exercise where known criteria have to be guessed. 2. Your technical point is correct, although it doesn't change the range in either of the calcs.

It is not "5th anniversary of participation", it is "5th anniversary of the first day of the plan year during which the participant first participated". With that change the answers to your questions are: 1) Yes, it it fine in a CB plan and, 2) Employee 4 will be credited with two years of vesting service and will vest in accordance with the vesting schedule (which if it is 3 -year cliff it will be 0% vesting).

Neither? While this question was not worded clearly, in my opinion, it stands for the proposition that 411(d)(6) protection doesn't extend to benefits not yet earned. On 1/1/2007 the accrued benefit of $1,650 was payable at age 60 without an actuarial reduction. The additional accrued benefit of $162.50 is payable at Normal Retirement Age. What is interesting is the question doesn't give you the Normal Retirement Age so we don't know if it is 61, 62, 63, 64 or 65, so whatever answer you come up with has to be correct no matter the Normal Retirement Age. Of course, this assumes that there isn't something else which specifies that in the absence of information to the contrary, there is a specific Normal Retirement. My guess is that they want you to solve the problem based on a Normal Retirement Age of 65. If there is a specific retirement age I suggest you keep it to yourself because for obvious reasons. So, once you accept the over-riding principle that 411(d)(6) protection doesn't extend to benefits not yet earned (This is an ERISA construct that doesn't extend to governmental plans. In a governmental plan while there is no 411(d)(6) protection you will find that most governing authorities provide that such plans do provide for the equivalent to 411(d)(6) protection that DOES extend to benefits not yet earned. The quid-pro-quo for this protection is that some governments reserve the right to reduce accrued or early retirement benefits, although they usually face court battles if they try.) Hence, we know that the full benefit of $1,812.50 is not payable at age 60. The only remaining question is whether the benefit payable at age 60 is based on either: 1) A + B; or, 2) Wear-away. If it was A + B it would be $1,650 + $162.50 / (1.04 ^ (NRA-60)) which is, based on my guess that NRA is 65, $1,783.56. If it was wear-away it would be the greater of a) $1,650 or b) assuming a retirement age of 65: $1,812.50 / (1.04 ^ (NRA-60)) which is $1,489.74 leading the result to be $1,650. So, if you mistakenly think that 411(d)(6) protection applies to unearned benefits you will come up with $1,812.50 (Answer = D) or if you mistakenly think that A+B applies you will come up with $1,783.56 (also Answer = D) and if you don't have a clue about 411(d)(6) protection and think that the early retirement benefit is not protected you will come up with $1,489.74 (Answer = B). But the correct answer is (C), because of A=B and 411(d)(6). Unless I have misunderstood something about the problem.

Unnecessary AFTAP?

If you read between the lines, the OP implies that the terminated participants are precluded from being paid out in the absence of the plan being terminated. I agree that a simple change to the document and an SMM would allow them to be paid out. Then if the 5% supported the HCE's 45% of pay employer contribution ($22,500/$50,000) it all works out swimmingly.

Cash in lieu is just cash whether in lieu or not.

Doesn't the inclusion/exclusion of the cash tendered depend on who is selling the stock? If the stock is being sold by the company (i.e., treasury stock) the amount paid will end up on the balance sheet of the company and to ignore it when it is material to the value of the company seems ludicrous to me. What is far more likely to me is that the purchase of the stock would include a premium of some sort. The company may not have hard assets before the transaction, but it should have, at the least, a business plan. If that plan has merit then the stock price should reflect that value. Let's assume that said value is $50,000. Somebody wants to purchase 99% of the company. What should the amount of cash be that changes hands? It depends on the price per share after the transaction that the buyer thinks is fair. Before the transation there was 1 share, valued at $49,999/share. After a $200,000 cash infusion the company would be valued at $250,000. If 199999 shares were issued by the company in this transaction then the fair-market value of each share after the transaction would be $250,000/200,000 = $1.25. Now, if I were the owner of that 1 share valued at $49,999 I would think there would have to be compelling reasons for me to go along with the scheme to issue treasury stock such that the value of my share would decrease by $49,998. Unless I were issued some sort of preference I would think the better course of action would be to liquidate the company. This can get very complicated. Mathematically, it is not hard to go through the above with a pre-transaction value of $1 for the one share of stock.

I think it counts for 415, whether adopted or not.

The IRS has never said that 100% vesting is required.

The latter. You lied about passing 410(b).

Yes.

Yes, that is one of the purposes of an 11(g) amendment.

He was an NHCE for 2016. Shouldn't be a problem.

One must be careful, though, because a document can be written to preclude this favorable result.

I don't see the controversy. Both definitions apply. ERISA. IRC. ERISA's Regulations. IRC Regulations. Joint Board regulations. ASOP's. We are all vassals in service to each.

Helped?

Finally some fealty to the regulations.

Huh?

Why do you need guidance to tell you about a tautology?

While not completely impossible for some purposes, it is very rare indeed for salary deferrals to reduce plan compensation for those who are not self-employed. While you didn't imply that either your current or prior software does that, I just wanted to make sure there is no confusion about that. As far as including the salary deferrals in the common law plan costs, again, that usually isn't done because the salary from which the deferrals are taken already are a cost on the employer's tax return and taking a deduction for those same dollars as a cost of the plan is not proper. However, note that salary deferrals *DO* count for 415 purposes.

True dat. But the OP also asked whether it switches in the year "after that" and your answer might leave somebody with the impression that, like a DC plan, something switches in the year "after that" and, as you know, it doesn't.

I think it might be 401(k)(3)(F).

I'm not sure I'd characterize it as the rules being the same for DB plans. Other than a full distribution of a participant's interest in the year which contains the required beginning date, the only way to satisfy the RMD rules is to commence an annuity as CuseFan describes. While the definitions of Distribution Calendar Year and Required Beginning Date are the same, the practical impact is materially different.

However, there is a simple answer to the very narrow question asked: the process of amending a DRO is to have a revised DRO typed up, have the revised DRO submitted to the court for approval, once approved by the court it is then submitted to the plan for a determination as to its being qualified and hence a QDRO. BUT (you knew there had to be one, right?) you have to follow the rules of your state when you go about the above. And you will find that a lawyer is your best bet for advice as to what rules apply in your state. A legal aid clinic might be available in your area to help you if you can't afford an attorney. Nothing in this message is meant to imply, and you should not infer, that I am addressing the substantive nature of your post. In fact, it is perfectly possible that the existing QDRO does NOT need modification for the reasons you mentioned and that a court will reject your attempt to have it amended. Good luck.

"...the minimum allocation gateway of 1.401(a)(4)-8(b)(1)(iv) and the minimum aggregate allocation gateway of paragraph (b)(2)(v)(D) of this section cannot be satisfied on the basis of component plans. "