Calendar year plan. Plan document definition of actuarial equivalence specifies the mortality table for converting to optional annuity forms as the mortality table per 415(b)(B), ©, and (D). At at 12/31/08 that table was the 1994 GAR table, but after WRERA on 1/1/09 that table is the applicable mortality table for 417(e). For benefit calculations, does that need to be handled like an amendment to the AE definition, doing the calculation under the old and new definition and taking the greater result? I hope not, otherwise any plan that defined it's annuity conversion mortality table as the 417(e) table would now be in a perpetual state of annually "amending" the definition of AE.

(I am remembering that the IRS said a plan document that had automatic increases to 401(a)(17) and 415 is an annual amendment as far as they are concerned ........ wrt the Schedule R question regarding any amendments increasing benefits during the year, and creating amortization bases, although they backed off the plan amendment base issue and eventually allowed the change to be part of the G/L.)

Are quarterlies required for 2008? The section in the 430 is 'Reserved' since it refers to the prior plan year shortfall base (which of course in 2007 could not possibly exist). I know this was covered before but can not put my hands on the cite.

Thanks in advance for any and all comments.

I was looking around for a QDRO checklist, and I found one that was a combo QDRO/EDRO checklist. I ahvce never heard of an EDRO, and no one in my office seems to have heard of it eitehr. A search of Tripodi came up empty, too.

I Dogpiled "EDRO" and I found out it means "Eligible Domestic Relations Order." And it seems as though it only pops up in some publice employees' plans. So is it a PERS-specific kind of QDRO?

Can a company who had a 401(k) plan with employees change to a "one-person" plan?

The employer has let everyone go. The only people left are the two owners and their spouses. However, there is one terminated participant who still has assets in the plan. It is my understanding of a "one-person" plan that they have no other employees other than the owner(s) or owner(s) and spouse(s). Since that's all there is now, could they switch it to a "one-person" plan? My next question is, if they can, how will this work for filing Form 5500? Their assets are well below $250,000. However, they have filed Form 5500 in the past, since they did have other employees. Can you go from filing Form 5500 to not filing Form 5500?

Thanks!

There doesn't seem to be much discussion of governmental DB plans, but maybe some of you are aware of guidance on dealing with this.

I have a governmental plan determining annual expense on a GASB 27 basis. They make a single annual contribution equal to the recommended funding contribution each year. However, during 2008 they switched from an off-calendar year to a calendar year fiscal year creating a short fiscal year ending 12/31/2008. The result is that during the short fiscal year they have made a contribution sufficient for 12 months which presumably will result in a net pension asset. It seems one approach toavoid this would be to reduce their next contribution (i.e. plan and fiscal year 2009) so we can say that the difference is due to timing differences. We are trying to avoid this since funding levels have dropped due to asset performance.

Is there any way to rely on the fact that the excess contribution was made during the short fiscal year and avoid establishing the NPA?

I've been told that a qualified plan definition of compensation cannot include voluntarily deferred compensation under a nonqualified deferred compensation plan. I do not see any support for this position since I do not believe voluntarily nonqualified deferrals are considered "employer contributions".

For instance, would deferral into an excess benefit plan reduce compensation for purposes of the qualified money purchase plan?

Hi Everyone,

BTW this is my first post! I am fairly new to the business (3 years) and I love it. I am trying to learn as much as possible and it seems like there a lot of very knowledgable (and generous) people on here. Sorry if this has been discussed already, I promise I tried to search first. Anywayyysss...

We have a new client and this is the first year we are performing testing for them. They use the prior year testing method, so I requested a copy of the 07 test. I received it and noticed that the ACP test has percentages over the plan limit. The match formula is 50% of first 6% (so 3% max) and people received up to 3.5%. Does this make test results invalid? I know that when I perform testing, I check for this like this and make sure they get corrected and I use the adjusted number on the actual test. I look forward to your thoughs...

Thank You

George

An employer sponsors a DB plan and a 401k profit sharing plan.

The DB plan provides a formula of 10% per year for the owner and an accrual of 0.5% per year for the employees.

The 401k profit sharing plan provides an allocation of 7.5% for each NHCE to meet gateway.

On a combined plan basis the plans pass the non discrimination tests.

Based on the above facts, does the above appear to be a reasonable non discriminatory plan design?

The IRS is just reviewing the DB plan and claims the plan formula is discriminatory.

Any suggestions on how plan sponsor should submit fopr determination with this type of plan design? That is, somewhere report that the plans meet discrimination on a combined plan basis. I don't work on plan determination process, so without researching the plan determination forms, I am thinking it would have a section to indicate plans pass on a combined basis.

Interested in comments.

Finally, what if Db formula provided 0.5 to NHCEs and offset DC value? On the basis that the plan passes general test and is of course not a safe harbor offset plan? Just another perspective for consideration.

Thank you.

I have an HSA HDHP plan from a previous employer, which I am now enrolled in through COBRA coverage. A tentative new employer has offered me a position but does not offer health coverage, so I will continue with COBRA until it expires. The new employer, however, mentioned that in lieu of a group health plan, they offer their employees a $200/month non-taxable "reimbursement" to cover the premiums employees pay on their own individual plans. Would this non-taxable "reimbursement" in any way restrict the amount of money I would be able to contribute to my HSA for the year?

Thanks for your help.

Many of you are old enough to remember the IRS's "actuarial audit project" from the early 1990s. At that time the Service opened audits almost all small defined benefit plans which had NRAs prior to age 65 and attempted to disallow deductions for the "excess" deduction (over the amount allowable if the NRA had been age 65). The benefits community (including the then-ASPA) banded together to fight the IRS. IRS lost the first 2 court cases and immediately dropped hundreds of audits that had been opened.

A similar thing is happening now. IRS has opened hundreds of audits of clients in various welfare benefit arrangements. We have known of IRS's dislike for these arrangements for some time (at least since 1995 when Notice 95-34 was issued). Then IRS upped the ante by labeling some of the plans as "listed transactions" [419A(f)(5) and (6) arrangements].

One welfare benefit plan stood up to IRS, hired a former IRS litigator and pressed for a court date. The IRS blinked and dropped the whole case.

Another plan, whose promoter IRS officials dislike intensely, is scheduled to have 3 cases go to court this June. Recently the IRS made a very reasonable settlement offer to avoid going to court.

Apparently the IRS is afraid that they will have to drop the whole project if they start losing cases in court. So they are avoiding court in hopes of intimidating taxpayers into paying taxes they don't owe and keep the audits going as long as possible.

IRS auditors are desperately trying to make up excuses why amounts in the welfare benefit plans should be taxable today. For example, for a client who made contributions in the 1990s but nothing in the past 7 years, the IRS offered to treat the plan as a split dollar arrangement (although our WBP has nothing in common with a split dollar arrangement), making the accumulation value of the insurance taxable to the client in 2005.

Is anyone else having experience with these arrangements?

I have only a passing familiarity with Corbel's documents, but have a question involving a plan using such documents at this time.

On Monday, the Supreme Court issued its decision in Kennedy v Plan Administrator of the DuPont Sav. and Investment Plan, Docket #07-636, settling a Circuit dispute as to whether a waiver of benefits violates the anti-alienation rule. The Court said no, it does not, provided that the plan document permits it, the waiver is made per the plan procedures, and the waiver does not designate who the successor beneficiary will be.

In my brief review of the Corbel document identified, I have found no spot where there is provision for waivers of benefits.

Does anyone know definitively if there is or is not?

PPA and proposed regs provide that benefit restrictions if a plan's AFTAP is less than 80% apply to benefits in excess of "the monthly amount paid under a single life annuity (plus any social security supplements)". Does a Social Secuirty Level Income Option that is elected by the retiree satisfy the exception of "social secuirty supplement"? Can a plan with an AFTAP between 60% and 80% pay this without comparing to the lesser of 50% or the PBGC guarantee?

Related but separate, for the first 3 months of the plan year, before the AFTAP certification is prepared and before the plan is subject to restrictions, can an otherwise restricted benefit where payment is delayed for administrative reasons until after the first 3 months (but the annuity starting date is during the first 3 months) be paid?

Late last year, we revisited a pension plan whose 2008 retirees were not offered the 75%J&S option. We offered them the option to elect the 75% and the difference from original election would be reconciled. A participant originally elected to not withdraw employee contributions and take the 50%. Now participant would like to elect 75% and withdraw ee contributions. Would there be an issue with this?

Is the Cycle C deadline to file an application (e.g., postmarked with the post office) this Saturday or next Monday?

Client previously had traditional defined benefit plan using a standardized prototype document. Plan is converting to a cash balance plan using an individually designed document. Client is in Cycle C.

1. Do the EGTRRA good faith and Mandatory Distribution amendments, whcih were adopted by the prototype sponsor, have to be readopted as part of the restatement to a cash balance plan?

2. When submitting the cash balance plan for a determination letter should all prior prototype adoption agreements be submitted or just the most recent (GUST) adoption agreement with the IRS Opinion Letter?

I have a plan that is cross tested/Safe Harbor. Several participants do not meet the last day hour requirement and have been given an addtional percentage to meet the gateway. The client wants to move one of these employees to another group with a higher percentage. Can they? My thought is that he is ineligible and is only receiving the minimum to meet the gateway.

My firm prepared to meet participant disclosure requirement regs and service provider disclosure regs the DOL was supposedly going to finalize before 12/31/2008. Now both are on hold. What are others doing? Still doing the disclosures? Wait until when and if new regs are issued? I am interested in hearing from others!

non profits who maintain a 401(k) are subject to full Non Discrimination testing, correct? If so, then what is the benefit of having a 401(k) as opposed to a 403(b)?

Thanks

My mom lives in San Diego, CA in a duplex that she owns outright. I live in Northern California and I don’t get the chance to see her that often. She is getting older, and I am worried that if she dies, I won’t get any share in the duplex that she owns; which I helped her to renovate 10 years ago.

I have a sister and brother and we haven’t talked about this yet. They live in Arizona and New York but I am guessing all would be based on California law.

“The best education in the world is that got by struggling to get a living.” - Wendell Phillips

I'm in the process of assuming a case, the actuarial work of which was peformed on the Datair system. I do not use nor am I familiar with Datair. I note that for a distribution in 2009, the display sheet I received specified the 2008 Applicable Mortality Table whereas I believe it should apply the 2009 Applicable Mortality Table. Any comments?

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