Message Boards Digest

February 6, 2023

Here are the most recently added topics on the BenefitsLink Message Boards:

Josette created a topic in Defined Benefit Plans, Including Cash Balance

Actuarial Equivalance

"Defined Benefit plan. Actuarial Assumptions for all purposes (not just lump sums) : mortality rates = applicable mortality table. interest rates = applicable segment rates. The stability period is the calendar year. Normal retirement age = 65 and NRD = 9/1/2015 Participant's actual retirement age = 73 with a commencement date of 3/1/2023 Benefits were frozen before the participant reached age 65. The plan states that benefits are actuarially increased with interest and mortality from normal retirement date to date of actual retirement. Assuming the life annuity at age 65 is $1,000 per month, what is the monthly amount beginning at 3/1/23? I have seen at least 3 methods -- based on the 2015 rates, based on 2023 rates. or based on a different rate for mortality and interest for each year. As an aside, how would you determine the lump sum at age73? Do you start with the first five years or year 9? Of course these rates should match the rates used for any optional form."

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KimberlyC created a topic in VEBAs

VEBA Restatement for New Trustee

"I have a client who acquired companies with two very old VEBAs. The VEBAs are trust documents and received favorable IRS determination letters on their Section 501(c)(9) status years ago. The VEBA trusts have been amended from time to time to appoint successor trustees. The client plans to move all retirement and welfare trusts to a new financial institution. The new trustee insists its standard trust document must be used for the VEBAs and will not agree to incorporate or even attach the old VEBA documents that received the IRS ruling. The new trusts are boiler plate and contain no description of the original VEBA members or benefits (e.g., retired union employee; retiree health benefits). The new generic trusts state the trust document plus the employer's welfare plans constitute the entire VEBA. I am concerned that the original IRS letters will no longer govern the VEBA's tax-exempt status if there is no provision of the original trust left and no description of eligible members or benefits in the new trust documents. Note that the employer maintains a retiree health plan document, but the VEBA funds only certain members' (union) benefits. The new trustee insists obliterating the old document will not affect the VEBA's tax-exempt status. I appreciate that a VEBA can be amended and that a new IRS ruling should not be necessary simply to name a new trustee. However, i feel that the original VEBA documents that received the favorable IRS letters should at least be incorporated by reference ( at least to the extent they don't conflict with the new trust provisions). Any thoughts? I have considered amending the original VEBA trusts to incorporate the new trust documents (essentially doing through the back door what the new trustee won't allow through the front door)."

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PaulL created a topic in 401(k) Plans

Prior Year Testing Question

"I have a plan that in 2021 had 1 eligible NHCE that did not defer, and that person terminated employment in 2021. In 2022 there are no eligible NHCEs. Even though the ADP Test is based on Prior Year testing with the 2021 NHCE ADP% of 0%, can the test can still be deemed to pass because only HCEs are eligible/participating in 2022?"

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Jakyasar created a topic in Retirement Plans in General

Income Determination - Multiple Schedule C's

"Joe owns 3 LLC taxed as sole-props. Joe is over age 50. Joe never had any employees. Let's call them LLX, LLY and LLZ Joe has a DB (no minimum required contribution for 2022) and 401k/PS plan. Only LLX and LLY are the sponsoring/adopting employs. LLZ never adopted either plan. 2022 net schedule c income figures are given as follows (assume after adjusting for 1/2 se tax): LLX: -$20,000 LLY: $22,000 LLZ: $100,000 Because only LLX and LLY are part of the plans, only their income can be used and therefore total income that is available for 2022 is $2,000, am I correct? Because there is 401k deferral election in place for maximum deferral, $2,000 would be deposited into the 401/PS plan as part of 2022 deferrals. So, the $100,000 in LLX is all taxable. Ouch. How about the following? Start a 3rd plan i.e. a new profit sharing plan and put in $20,000 (I know, 3 plans to deal with) and merge the new plan into the old 401k/PS plan in 2023? This would be option 1 which is my favorite. However.... Let's push it further (based on a previous conversation we all had), start a new 401k/PS plan effective 12/29/2022 with PYE 12/31/2022 and full year limitation year (LLZ has been around since 2020). Now we can put away $20,000 of PS and $25,000 ($2,000 was deferred in the old plan) of 401k for 2022. What are the flaws you can detect here?"

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Edie created a topic in Distributions and Loans, Other than QDROs

Distribution of NYCER Pension Benefits Upon Death

"Thank you all for answering my previous questions in 2019. However, I’ve returned since then with a new discovery on the topic. Previously, I questioned if my mother was entitled to my fathers NYCER pension after death without a DRO. Today, I would like to know If my mother is entitled to my fathers NYCER pension if she WAIVED her ALL her rights on the financial affidavit during there divorce? My mother signed her divorce decree stating,” she DIDNT want anything from my father”! The judge stated,” They both leave with what they own in there current possession! Any advise??"

1 reply so far   |    Click Here to Add a Reply

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