AndrewM

Hi, this question was bouncing around the office last week and thought I'd ask around here for opinions. Can a DB plan sponsor in the LA fire disaster area still satisfy 2024 minimum funding and get their 2024 deduction for contributions made 9/16/25-10/15/25?

Looking for opinions and code interpretations. Takeover cash balance plan. Prior actuary was using UP-84 for post-ret AE and CB conversion. TPA taking over administration changed to Applicable Mortality Table. With the new table, the annuity equivalents of the cash balance accounts are lower, which is not unexpected. There's some disagreement about whether the change to the annuity value would be a 411 violation. While the annuity equivalent is lower, the plan document defines the accrued benefit as the hypothetical account balance, which is not lower. How have others approached this?

I really appreciate everyone's input!

Can anyone provide a code citation that defines when a participant in a defined benefit plan (CB in this case) is considered to have been paid a lump sum distribution? Date funds leave the trust, or date participant has control of the funds? Or something else? I've looked, but I'm not a very good looker, and hoping someone here can at least point me in the right direction. Even if no citation, would love some opinions on this. This is related to some mandatory cash-outs that were started the last week of Dec 2023 from a calendar-year CB plan. The Plan wired the required funds to the distribution custodian on 12/26/2023 and provided participant hypothetical balances as of 12/31/2022 (Plan Doc does not allow pro-rata interest thru ASD, just the last-day interest credit). TPA states that since funds were sent to distribution custodian before 12/31/2023, the participants are considered paid in full as of that date. We've since learned that several of the participants did not receive funds until well into February 2024 (delays in responses, paperwork, etc.). Anyone feel like they were shorted their 12/31/2023 interest credit? Thanks in advance!

The firm that I work for can't really decide how this adjustment should be made so I'll appeal to a larger audience and hope the flaming isn't too intense. 2024 calendar year plan, EOY valuation. 12/31/2024 assets $2,209,224. Before the amendment, the total maximum liability at 12/31/2024 is $2,095,478 ($1,911,601 FT + $183,877 TNC). After the amendment, the total maximum liability at 12/31/2024 is $3,465,035 ($1,911,601 FT + $1,553,434 TNC). The increased maximum liability due to the amendment is $1,369,557. After the amendment, the required minimum as of 12/31/2024 is $1,438,375, so this amount plus any interest discount as of the date of deposit is fully deductible, even if the adjusted deduction limit is smaller. Please correct me if that's wrong. If we pretend there is no reduction, the 2024 deduction limit would be $1,911,601 FT + (1,911,601 * 0.5) cushion + 1,553,434 TNC - 2,209,224 assets = 2,211,612. What we can't agree on is where the increased liability is subtracted. Our software suggests that we'd subtract the increased liability from the max FT before calculating the 50% cushion: ($1,911,601 FT + ((1,911,601 - 1,369,557) * 0.5) cushion + 1,553,434 TNC - 2,209,224 assets = $1,526,833. Discussions have suggested that the increase liability should simply be subtracted from the unadjusted deduction limit, so $2,211,612 - 1,369,557 = $842,055 (ignored since required minimum is higher). Some have even argued that there is no reduction since the FT does not increase due to the amendment, but that seems unreasonable. Would love any feedback you all can provide.