Leaderboard

This is pulled straight from the committee report: Provision: The corridor on interest rates would remain at ten percent through 2019. The corridor would increase by five percent per year through 2023, at which point the corridor would remain permanently at 30 percent. The provision would generally be effective for plan years beginning after December 31, 2015. This proposed reduction in required pension contributions would, purely at the discretion of employers that choose to take advantage of this pension funding relief, result in those employers having more taxable income (because the contributions that they elect to defer are tax-deductible when contributed). This is estimated to increase revenues as compared to the budget baseline. It is also estimated to result indirectly in increased Pension Benefit Guaranty Corporation (PBGC) premiums because employers that, purely at their discretion, choose to take advantage of this funding relief would have a larger base for purposes of computing the variable rate premium on underfunding. Nothing we didn't already know, but Congress cant plead ignorance when they put in their reports that they are knowingly allowing employers to underfund their plan and consider it to be a good thing because it will increase PBGC revenue. All they mention is the increase in PBGC revenue. No mention of the larger increase in long term liability caused by the underfunding. Just disgusting...

T-H rules provide minimums (benefit, vesting). If the plan is more generous than the minimum, then it automatically satisfies T-H. Don't worry, be happy. BTW, I think that all plans must include T-H language even if all other plan provisions provide something better. (am I remembering that correctly?)

While maybe in theory you can defend the idea the employer gets to choose every year as a practical matter I don't think you should do it. I have heard short discussions about how much flexability the rather loose ESOP rules give you regarding changes to distribution methods at various ESOP related conferences. The general consensus seems to be while you can change -- changing too often opens you up to too much risk of charges of discrimination and so forth. I would add in the now over 20 years I don't think I have ever seen the need to choose and change year to year. I guess you might have finally found that fact pattern but a well crafted distribution policy combined with a good repurchase study ought to allow you to find a method that should work for the plan sponsor. If you have want to give more details maybe you can get insights from this board on ways to meet the sponsor's goals. Lastly, you can go over 5 years on the installments if the balances are large enough. A rarely used part of the law but it is there.

Wait you expect the SSA to actually update their database? We've had it happen on occasion. Very frustrating. Especially if it is a long dead ex-client or terminated plan.

How are loans of terminated participants dealt with normally? Does the loan become due in full or taxable income? If so I would treat it that way. I would not pay it off with funds from the employer as this would seem to compound the error being a potentially prohibited transaction.

I'm unaware of a "maybe notice" provision for the safe harbor match. My understanding is unless an amendment removes the safe harbor match for a year before the year starts, it's required by plan document. You can stop a safe harbor match but you have to give give 30 days notice to participants and you are subject to testing. I'm also unfamiliar with the concept of the safe harbor notice itself being an amendment to the plan but I'm not saying that it is not possible.

For #3, check the plan document. The cashout threshold may be as low as $1,000. Many plans lowered it to $1,000 after the auto-rollvoer rules came out. They didn't want to deal with the hassle of setting up IRA's. Now with the proliferation of companies that welcome these small rollovers, and the ease with which an agreement can be set up, it's reasonable again to have a $5,000 cashout level again. But not everybody changed back. And this bears mentioning, as I've seen it come up recently: Check the plan doc to see if unrelated rollvoer money counts or doesn't count toward the threshold.