pookah

This highlights the issue with "termination dates". Is it the last day I worked or the first day I didn't? That's why (and I think I indicated earlier) I essentially agree with Tom (although I wouldn't gift my pay, but might not work a whole day). The big lesson when advising clients is to have significant terminations occur either the day before or the day after the end of an accounting (or other significant) period to avoid the semantic ambiguity. When advising sponsors, make sure they consistently document dates, but with a mind to the effects of placing it on one side of the line or the other. In response to jpod's post #12, the question is what if you wanted to be retired in 2015, not 2014? Is it what you consider yourself or what others do? Again, based on responses (whether ultimately correct or not), I'd say just go to work on the 2nd. As another question, what if you left work on 12/31, but died on 1/2?

Is there any guidance out there? I would argue that in 2014 I worked all the work I could. At no point was I retired. I suggest the calendar year in which I retire from employment (which is the regulatory language) is the first day that I don't work after that. My dilemma is that I can find no source that defines this one way or the other. That's what I'm looking to find. I am not looking for a straw poll or consensus. Short of that, is there any reason why this is not a reasonable position to take with regard to the IRS? To respond to GMK, I think your health analogy actually supports my theory--12/31 was my last day of employment; 1/1 was my first day of retirement. [My advice to clients is to avoid the question and come in to work and retire on 1/2. Unfortunately not everyone asks me before the fact. I would their required beginning date to be in 15 months rather than 3.]

Employee is 72. His last day at work was 12/31/14 and he worked a full day. He did not go back to work in 2015. What is the "calendar year in which the employee retires from employment"? 2014 or 2015? I don't find any support anywhere, but I would contend that in 2014 he was still working. In 2015 he was retired, making his required beginning date 4/1/16. Thoughts? Support?

The way I read 20 CRF 1002.262, "The employer is not required to make its contribution until the employee is reemployed.", while the employer is not required to make its contribution until then, it is not precluded from doing so earlier. The question is whether a contribution is required unless the employee on uniformed leave returns. §414(u)(1)(a) says that any contribution shall not be subject to any otherwise applicable imitation of §§404(a), 404(h) and 415, among others if such contribution is required by reason of such employee's rights under chapter 43 of title 38, United States Code, resulting from qualified military service. What if the employer chooses to roll the dice in the interim. Does it help (or make the argument) if the employer provides some modicum of differential pay (as commented by Peter, above?

A plan has an employee on leave for uniformed service. The plan would like to make current contributions to her profit sharing account while she is gone and also include her for testing purposes (she was a critical cog to testing). I can't find anything to preclude an employer from funding a person on leave's account currently and if they do so, is there any reason not to include that participant in 401(a)(4) testing. Thanks

Plan allows for 1 year, age 21 with dual entry dates 1/1 and 7/1. Sponsor, in February, acquires a related business with 100+ employees in an assets purchase. Plan is amended to credit service for vesting and eligibility with acquired company. For this year's ADP testing (the year of acquisition) may we test the group of acquired employees (with appropriate service) separately as otherwise excludible (or some other classification) or must we test them all together or, alternatively, do we have a choice? To me, the regs seems ambiguous. These employees were able to defer during the acquisition year, but only had imputed service for eligibility purposes. Thank you.

OK, I have another permutation. This is in regard to imputed service. Plan allows for 1 year, age 21 with dual entry dates 1/1 and 7/1. Sponsor, in February, acquires a related business with 100+ employees in an assets purchase. Plan is amended to credit service for vesting and eligibility with acquired company. For this year's ADP testing may we test the group of acquired employees (with appropriate service) separately as otherwise excludible or must we test them all together or, alternatively, do we have a choice? To me, the regs seems ambiguous. Thank you.

That doesn't really help because it applies to a DC plan without an annuity option and if there is no other DC plan (other than an ESOP). In this case the DC plan does have an annuity option. Been down that road already. I thought it might have to do with an exception to "immediately distributable", but I didn't find anything there either.

I've had the same situation. DC plan with J&S is terminating and one participant won't sign distribution election. I've had a dickens of a time trying to find authority for forcing an annuity buyout if the participant doesn't respond. It seems that this must be allowable since otherwise a participant could hold the termination hostage. Can anyone give a cite? Thanks

OK, so if I run across a document which fails 409A because the payment option is not specific (lump sum or installments over not more than 8 years). Can this be cured? If some amounts are granted in 2008 and are 20% vested, but not paid until termination of employment or death, perhaps we have 20% of the 2008 grant subject to taxation in 2009. Can we redefine the payment terms? Can we terminate the plan? Can we confine the damage?

Suppose a non-PBGC DB plan terminates with less than 100% funding. Assets were allocated per section 4044 of ERISA. Suppose the same sponsor subsequently established a new DB plan. What benefit is credited under the prior plan to each employee under the new DB plan? Is it the benefit previously accrued or the benefit previously paid? (If an employee had a $10,000 annual benefit accrued under the plan, but was paid the equivalent of a $6,000 benefit do we take $6,000 or $10,000 into account in determining what the current plan's 415 limitation is?) Is there support for your conclusion? Thanks.

To clarify my original post, I am aware of what the regs say. Does anyone think that the regs overreach the statute?

1% of pay in a cash balance plan. However it looks like all CB plans are being questioned now.

I know this thread is old, but it may need reopening. Recently we've gotten responses from the IRS questioning whether a particular plan provides "meaningful benefits". Although we can reply and argue the 'facts and circumstances', I wonder whether there is any merit to the argument that the Regs represent a case where Treasury has overstepped its bounds. I don't see any refererence in the statute to requiring a "meaningful benefit". If there is a DB/DC combination, should the service, under 401(a)(26), require a higher level of benefit in the DB plan albeit at the cost of a lower benefit in the DC plan? I suppose a corollary would be that you could not set up a DB plan covering all employees if the benefit level to each was sufficiently small. Does anyone have any insight?