Guest pension222 Posted October 3, 2002 Posted October 3, 2002 How does one go about converting a traditional DB plan to a 412(i) plan? The plan in question only has 1 participant and a few hundred thousand dollars in assets. What must be to exempt the plan from the Schedule B filing requirements and everything else that 412(i) gets you out of? It seems to me that the plan would have to buy an annuity that would cover at least the benefits accrued as of the conversion date. Does anyone know of anything from the IRS that covers this? Thanks.
david rigby Posted October 3, 2002 Posted October 3, 2002 Forgive for being picky, but let's ask why first. Is this prior thread relevant? http://benefitslink.com/boards/index.php?showtopic=15668 I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
Guest pension222 Posted October 4, 2002 Posted October 4, 2002 I was asked what steps need to be taken to convert a regular DB plan to a 412(i) plan. Honestly, I had never thought about this before so now I'm curious about what needs to be done. The prior thread involved (trying) to use a 412(i) plan to soak-up excess assets. It doesn't really address the issue of taking an existing DB plan with accrued benefits and assets and convert it into a 412(i) plan. I'd really like to hear from someone who has done this (if it has ever been done). I know that a lot of folks in the actuarial community have a real dislike for the 412(i) concept, and I agree that it is currently being abused by some who are trying to cram insurance well in excess of that allowed by the incidental death benefit rule all in the interest of generating huge commissions. To me, this is just plain wrong. I also believe that perhaps there may be circumstances where 412(i) makes sense but only if it is done right. In light of this, I'm trying to figure out just what doing it right means. I've never been involved with a 412(i) plan and I've found almost no written guidance. I find it difficult to advise for or against something unless I understand what is is I'm rendering an opinion on so any help would be appreciated. Thanks.
david rigby Posted October 4, 2002 Posted October 4, 2002 Fair enough. You might start with the IRS regs. under 412(i) http://www.access.gpo.gov/nara/cfr/cfrhtml...26cfrv5_00.html A search of these Message Boards may be useful as well. I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
david rigby Posted October 4, 2002 Posted October 4, 2002 http://www.taxlinks.com/rulings/1994/revrul94-75.htm I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
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