I know there have been previous discussions about how the MVAR is calculated on the message board. I don't want to rehash those discussions. I do, however, have a few more general follow-up questions.

First, the IRS is apparently about to release a TAM on this very issue:

Posted by: Mike Preston Oct 30 2006, 12:47 PM

Yes, the TAM was issued. It is being redacted and will be posted on the COPA website soon, if all

goes according to plan.

Does anyone have the address for "the COPA website" or know whether the TAM has been released (or what it says)?

Second, I don't understand why there are so many different opinions on this issue. For a plan that permits lump sum payments, some actuaries say that the MVAR is based on the 417(e) lump sum. Others say (as recently as yesterday I had a discussion with an actuary who falls into this category) that the 417(e) lump sum is irrelevant to this determination and instead the MVAR is based on the normalized lump sum (i.e., the lump sum calculated using a "standard interest rate" and a "standard mortality table" as those terms are defined in Treas. Reg. Sec. 1.401(a)(4)-12).

When I review Treas. Reg. Sec. 1.401(a)(4)-3(d)(1)(ii) in order to find out what the IRS thinks the term means, it appears clear that "[t]he employee's most valuable optional form of payment of the accured benefit is determined by calculating for the employee the normalized QJSA associated with the accrued benefit that is potentially payable in the current or any future plan year at any age under the plan and selecting the largest (per year of testing service)." I cannot find any language in the definition of MVAR as set out in Treas. Reg. Sec. 1.401(a)(4)-3(d)(1)(ii) to suggest that if the plan provides for a lump sum distribution, then the MVAR is something other than "the normalized QJSA". What is going on here? Why are there so many different opinions on this issue? The language in the Treasury Regulations seems clear enough. Why do some actuaries ignore it or contend that it has been amended in some way. If amended, where and how?

Any thoughts are greatly appreciated. Thanks so much.

I am having a bit of a brain cramp on this. Can anyone point me to the correction method for when the plan document does not match the sponsor's original intent, and the sponsor has been operating the plan all along in violation of the plan doc? I know it involves a retro-amend & vcp submission but I am having trouble finding it in either of the rev procs (2003-44 & 2006-27). Thanks in advance.

If a participant took out a loan in 2004 and now wants to refinance that loan and take additional money out, can the term of the loan be for a new 5 year period? No loan limits are being exceeded dollar wise.

So for example if the the loan taken in 2004 was taken for a five year period - so the loan would be paid off in 2009, has a current balance of $4,000.00.

Now December, 2006 the participant wants to refinance the existing loan and take out an additional $5,000.00. Can the loan be amortized over a new five year period - loan being for $9,000.00 paid off in 2011?

Thank you.

Is the addition of the two new hardship reasons under the final 401(k) regulations optional or mandatory? I should know this, but I'm blocking tonight.

A company with stock publicly traded can make the safe harbor contribution in company stock correct?

The buyer is the successor employer and hired all of seller employees except two who will be working for buyer as independent contractors. Buyer is assuming COBRA obligation (buyer has a health plan, seller has terminated their plan). Buyer's plan excludes independent contractors. Under 54.4980B-9 Q&A 6, an asset sale is a qualifying event with respect to covered employees unless the buyer is a successor employer (it is) and the employee is "employed by the buying group." Are the independent contractors treated as "employed by the buying group" thus there is no qualifying event or must they be offered COBRA?

Thanks for any help.

I just completed my analysis of the proposed amendment to 415 under PPA.

The language has a critical error and should be corrected before it is approved by clients who

wish to terminate their plan.

A plan terminates 12/31/06 and the one HCE is at the 415 accrued benefit limit at 12/31/06, but distributions are obviously not made until 2007, does anyone think that the 2007 415 limit would then apply to that persons benefit?

Personally, I do not think so because the plan is terminated and all benefit accruals have ceased, but, I would like to be wrong.

The employer is terminating the company's 401(k) plan. One participant has over $5,000 but refuses to sign any paperwork regarding distribution of his account balance. I don't know why. Since we cannot cash him out (over $1,000), would we treat him as we would a lost participant, showing that we went through the steps to locate and pay him but to no avail. Then, having done that, just set up an IRA for him, roll his money over to that institution, and be done with him?

Thanks

I have a cash balance plan in which the interest credit is 6% per annum. If I were to calculate a lump sum for a vested terminated employee in 2006 using the required 417(e) rates and then reacalculate the lump sum in 2007 using the 417(e) rates, the amount in 2007 is lower than the amount determined in 2006. Is the 2006 lump sum now a minimum? Or, is the lump sum the amount calculated in 2007? The AEQ asumptions are the 417(e) mortality and interest, one month lookback and one plan year stability period.

Where in the code does it address changing from prior year method to current (or vice versa)?

Or was it a Rev Rul?

Can someone point me in the right direction?

I know this is a stupid question, but:

We have a Profit Sharing Plan where the owner has been taking miminum distributions since he turned 70 1/2. He died in calendar year 2006 and had taken a portion of his minimum prior to his date of death, and his beneficiary took the rest this year.

We report the deceased participant's information on the 2006 1099-R, correct? What code do we use on the 1099?

Thanks for your help ;-)

Does an employer have to allocate GAP period earnings on a 2006 excess deferral which is distributed in 2007? Is this now a requirement under the new 401(k) regulations or is it still optional based on the plan language?

A client had a SARSEP plan, into which they deposited deferrals and employer contributions for part of the year. They then discontinued the SARSEP, and started a Safe Harbor 401(k) plan with a new comparability profit sharing allocation. They would like to make a profit sharing allocation for the year also. Are the contributions to the SARSEP plan considered in 401(a)(4) testing at all?

An employer plans on making a profit sharing contribution for the 2006 plan year. However, the plan will merge with a related employer's plan as of 1/1/07. Is it okay for the employer to make this profit sharing contribution after the merger of assets? It seems a little odd to be making a contribution to the merged plan on behalf of participants of a plan that no longer exists.

We have a situation where a participant unfortunately has late-stage cervical cancer. She is not able to hear, comprehend or communicate in any way according to her doctor. She is unmarried. She has a sister who apparently had an adversarial relationship with her. Who would be the approporate person to make decisions regarding her benefits? She is eligible for early retirement and also has a death benefit. Can we accept a distribution selection form from her sister? We want to handle this the right way and wish we could communicate and satisfy the participant's wishes, but we can't find out what those wishes are. Can anyone point me in the right direction?

It seems to be my week - NOT!!!

An auditor for one of our plans has requested the following, and they maintain that they are provided this information from 'many' TPA firms:

1. Participant information in an electronic/downloadable format;

2. 5500 information in an electronic/downloadable format; and

3. Access to participant documents (such as enrollment guides!) and other correspondence on the web.

Are other auditors asking for information this way, and is anyone actually providing information this way?

Lets say on 1/1/06 an active participant over age 65 received a lump sum based on an accrued benefit of $7,600/mo. life only. The lump sum was paid, based on the 417(e) rates in effect. The amount was $912,000.

The participants 100% comp limit was $8,000/mo. and using 5.5% also produced a lump sum of $912,000. Therefore, even under the post PPA 06 method, the lump sum was permitted.

It is now a year later and the participant has "accrued" an additional $300 under the terms of the plan.

Question 1 - is it possible to pay this $300 as an annuity w/out violating the 415 limit or because the participant received a lump sum equal to 100% of comp, no additional accruals are permitted?

Question 2 - If 3 years from now the participant increases their compensation limit to $18,000, how should I value the previous lump sum that was paid? Would I roll it up using plan factors, 417(e), 5.5%, none?

Searched and searched and searched! no luck.

Sole prop establishes a 'solo' 401(k). Does not yet have to file 5500-EZ.

I know he needs to get a Federal EIN, but when? When he first needs to file the 5500-EZ?

If sooner, I need a cite cuz a broker is fighting me and I can't find anything other than instructions to the EZ!

Can someone help?

If the entity is a sole proprietorship or a partnership and they make an election to defer the maximum allowed by law by 12/30/2006, when does the deferral have to be deposited by - the due date of the entity's tax return?

Thank you.