HCE Nuttyness

[Andy the Actuary]

No response requested in regards to this very sad story

You were 55 in 2008

In 2009 you made 20 gazillion so you were an HCE in 2010

In 2010, you made 20 cents so you were not an HCE in 2011

You quit in 2011 and were given an offer to take a lump sum in 2011 and even though you were told that you might not be able to receive a lump sum distribution in a later year, you declined.

In 2012 you come back and say give me my lump sum now. The Plan says no because the Plan is only 90% funded, you are a former HCE, and the Plan sponsor doesn't want to fund up to 110%.

[tymesup]

Sounds like there's a movie in there.

[Lou S.]

Or a call from an angry lawyer who thinks ERISA is pretty name for a girl but hasn't heard it is actually a nearly 40 year old piece of legislation.

[ScottR]

No response requested in regards to this very sad story

You were 55 in 2008

In 2009 you made 20 gazillion so you were an HCE in 2010

In 2010, you made 20 cents so you were not an HCE in 2011

You quit in 2011 and were given an offer to take a lump sum in 2011 and even though you were told that you might not be able to receive a lump sum distribution in a later year, you declined.

In 2012 you come back and say give me my lump sum now. The Plan says no because the Plan is only 90% funded, you are a former HCE, and the Plan sponsor doesn't want to fund up to 110%.

Do I glean from the above that you weren't a "former HCE" in year of termination (2011), for some arcane reason?

[Andy the Actuary]

No response requested in regards to this very sad story

You were 55 in 2008

In 2009 you made 20 gazillion so you were an HCE in 2010

In 2010, you made 20 cents so you were not an HCE in 2011

You quit in 2011 and were given an offer to take a lump sum in 2011 and even though you were told that you might not be able to receive a lump sum distribution in a later year, you declined.

In 2012 you come back and say give me my lump sum now. The Plan says no because the Plan is only 90% funded, you are a former HCE, and the Plan sponsor doesn't want to fund up to 110%.

Do I glean from the above that you weren't a "former HCE" in year of termination (2011), for some arcane reason?

You deem correct. See 1.414(q)-1T Q&A 4

[FAPInJax]

No response requested in regards to this very sad story

You were 55 in 2008

In 2009 you made 20 gazillion so you were an HCE in 2010

In 2010, you made 20 cents so you were not an HCE in 2011

You quit in 2011 and were given an offer to take a lump sum in 2011 and even though you were told that you might not be able to receive a lump sum distribution in a later year, you declined.

In 2012 you come back and say give me my lump sum now. The Plan says no because the Plan is only 90% funded, you are a former HCE, and the Plan sponsor doesn't want to fund up to 110%.

Do I glean from the above that you weren't a "former HCE" in year of termination (2011), for some arcane reason?

You deem correct. See 1.414(q)-1T Q&A 4

Separation year 2011 and determination year 2012 and was HCE for either separation year 2011 (No) OR any year after 55th birthday (YES). Doesn't this make them an HCE??

[Andy the Actuary]

Separation year 2011 and determination year 2012 and was HCE for either separation year 2011 (No) OR any year after 55th birthday (YES). Doesn't this make them an HCE??

Do you understand that 1.414(q)-1T Q&A 4 implies this?

[Kevin C]

Separation year 2011 and determination year 2012 and was HCE for either separation year 2011 (No) OR any year after 55th birthday (YES). Doesn't this make them an HCE??

That shows he/she is a highly compensated former employee for 2012. If you do the same for the 2011 determination year, the answer changes because he/she did not have a separation year in 2010, as long as services were provided in 2011.

1.414(q)-1T Q-4: Who is a highly compensated former employee?

A-4: (a) General rule. Except to the extent provided in paragraph (d) of this A-4, a highly compensated former employee for a determination year is any former employee who, with respect to the employer, had a separation year (as defined in A-5 of this §1.414(q)-1T) prior to the determination year and was a highly compensated active employee as defined in A-3 of this §1.414(q)-1T for either such employee's separation year or any determination year ending on or after the employee's 55th birthday. Thus, for example, an employee who is a highly compensated active employee for such employee's separation year, by reason of receiving over $75,000 during the look-back year, is a highly compensated former employee for determination years after such employee's separation year.