Effen

I hadn't really thought of that, but I think I would argue the only comp I am considering for benefit purposes is the bonus. Therefore the actual total comp is only relevant for Non-discrim testing.

Yes. I did go back and look at one of the documents to refresh my memory and they way it is done is that the cash balance credit is a multiple of a bonus. The board pays the bonus, which then drives the cash balance allocation. You need to make sure the BOD is specifying the amount of the bonus through an annual resolution. I was very leery of this design for many years, but an attorney walked me through the arguments and showed me the correspondence with the IRS. We then implemented the plan for one of our clients and the IRS issued the determination letter.

My understanding is the IRS has backed off the argument that annual changes are a "cash or deferred arrangement". They have been allowing sponsors to use very creative allocation methods that produce the same result and have backed off. For example, you can have a plan that has a variable contribution formula set by an annual BOD resolution. As long is is a BOD decision, and not a participant decision, it is ok. Yes, the BOD can be the participant, but they need to have their BOD hat on when they decide to make the contribution. If the BOD can pay different bonuses to different individuals, and that bonus impacts the cash balance allocation, then the BOD is directly impacting the allocation. Obviously you need to do what you are comfortable recommending, and not all attorneys agree, but there are lots of plans out there with recent IRS approval letters that allow complete annual discretionary benefits, as long as it is a Board decision and not a participant decision.

I would say NRD since the participant wasn't entitled to any retirement benefits as of their MRD.

If you were married, I find it hard to believe you don't have her SSN somewhere. Did you file joint tax returns?

I agree with both prior comments - "special termination program benefits" can be significant, or as David said - they might be nothing, but you should not simply give them away without knowing more.

The prior EA exams are available on the Joint Board website. They also provide answers, but not solutions. Best option would be to download the last few exams and see how you do. That would be the best determine on how to study for the next one. You mentioned Actuarial Outpost - Is that site back up? I was down for months for some unknown reason.

It looks like it is only an IRA thing, 408(d)(8) (B)Qualified charitable distribution: For purposes of this paragraph, the term “qualified charitable distribution” means any distribution from an individual retirement plan (other than a plan described in subsection (k) or (p))—

Thanks Dave - I made the correction. P.S. Hope the PC Police don't attack you over that emoji. I have my own Chief Wahoo jacket that I will need to move to the back of my closet. I just hope at some point the English don't start protesting or I will need to move my Pirates jacket there as well.

Draper - I was going to ignore your response, but I am curious what you are referring to? The OP was about the time necessary to prepare 5500. How are sample lives relevant to the 5500 prep? I would consider sample life review to be a necessary part of the valuation process, but would not consider it as part of the 5500 process. Are you are suggesting there are actuaries who just blindly sign SBs without actually reviewing the work? To clarify my initial response - I was NOT considering the work to prep/review the valuation as part of the cost of the 5500.

I think that is what is says. You need to allocate within 7 years. If you can't allocate within 7 years due to 415 limits, then you bring in all other participants. If you still can't allocate it, then you allocate the 415 max until the plan terminates, then it becomes a reversion. I have never really thought about this before, but I think that is what is says. It would have been helpful if they would have added the phrase, "even if beyond the initial 7-yr period" to (d)(2)(C)(ii)(II), but not sure how else you can interpret it. Keep in mind these are not deductible contributions so you can allocate 100% of comp (or the $ limit) in every year. If any other participants come into the plan, I think they would also need to receive the 415 max.

Diggin' Up Bones here (any Randy Travis fans out there? ) Anyway, I was having a discussion with a colleague about the notification requirement for missed quarterlies. I maintained the position stated in this old thread that basically says if a contribution is more than 60 days late, the participants must be notified within a reasonable period of time. He countered with this IRS website https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-notices that includes the statement: "Notice must be given before the 60th day following the due date of the quarterly or other required contribution." I have searched for any regulations or notice that states this and couldn't find anything. I found lots of publications, including a DOL guideline for participant notification published in 2020, as well as guidelines from Buck and Feranczy Law - all staying with the "as soon as practical". Is this just an example of where the IRS website is wrong, or has there been an official change?

I agree with "the other admin". I see no reason to do a short plan year - it just complicates the process. However, to answer your initial question, yes, having a short plan year can significantly reduce the amount of the DB contribution in year one. I would argue needlessly, because as the other amin said, "there is generally no compelling reason to have a short plan year".

We use PensionPro and find it very workable. Fairly steep learning curve in all of these systems, but once you get them set up, thing go smoothly. They really make you think through all the steps in your process. I would caution you about having too many steps since after a while people just check the box and don't really read the task, so it looses some of it's value over time. PensionPro has a lot of really great features - it is much more than a workflow tool. It is really a data base that can hold all information on a client, including contacts, documents, communications. If you buy the whole package, you can automate a great deal of your processes. It is really powerful, but with every upgrade comes a pricing jump, and the more of them you use, the more you are committed to them for the long term. That said, our firm was acquired by a larger firm about 2 years ago and the larger firm reviewed several options and selected WorkFront to use as a pure workflow tracker. Workfront is more of a marketing tool for tracking sales, but we are pounding the round peg into the square hole, and it seems to be working ok. I am letting another office work out the kinks before we adopt it company wide. WorkFront was just purchased by Adobe, so we are hoping for some improvements. It doesn't have any of the database function that PensionPro has, but if you just want to track work inside the company, you might want to check it out. Make sure you pay attention to the licensing fees. Some charge per user, others per plan - it can make a big difference in the pricing.

I have never heard of anything like that. That wouldn't make any sense at all. Why would have to assume someone who is working less that 1000 hours in the current year would work more than 1000 in the next? Expected hours is an "assumption", and therefore needs to be reasonable - that is you as the actuary. Also, keep in mind in the end it doesn't matter what you assumed, it matters what actually happened. If you assume <1000, but he works more than 1000, the NC that you didn't recognize gets shifted to liability in the next year and he still has to pay for the benefit. Maybe amend the plan to freeze the benefit before he earns 1000 hours. Tell him to send you a letter stating he worked less than 1000, the implement a freeze. That way the liability is on him, not you. Also, make sure the plan has a 1000 hour rule. Many of our one-life plans have a 1 hour rule, not a 1000 hour rule.

You can do whatever you want, as long as it is non-discriminatory. The allocation of the excess assets is the same as an amendment to increase the benefit. You can use any mechanism you want, assuming it complies with the applicable non-discrimination regulations. If the plan has been frozen for a long time, you could have unintended consequences when trying to allocate the excess. For example, you might need to benefit current employees/participants who have no accrued benefit in order to comply with 401(a)(26), 401(a)(4), and/or 410(b). In other words, you can't just ignore all the current employees with $0 benefit because the plan was frozen before they were hired. If the plan has been overfunded for several years, you may already have a 401(a)(26) problem because the exemption for frozen plans only applies to underfunded frozen plans. (Oops - you said this was a non-PBGC plan, so that exemption doesn't apply anyway.)

You can change the allocation language, but I think there is a 5 year delayed effective date. IOW, you can change it today, it it will be effective in 5 years. DVs don't necessarily need to share in the excess. It depends on how long they have been gone and what the document says. If they have been gone 5+ years, it wouldn't worry. If less than 5 breaks, you might want to consider sharing with them. Need to check the document and let the plan attorney make the call.

Thing have been "afoot" for some time between the Academy and the CCA, as well as ASPPA. Academy likes the view from their ivory tower.

Thank you for your dedication David. Hopefully someone will pick up the torch.

Sorry, I was primarily meaning that you need to craft your language carefully to avoid unintended consequences.

Not all that uncommon, especially in hourly based plans. You should check your current definition of service and make sure it isn't already counted. Assuming it is not discriminatory, they could always amend the plan to include additional service credits from a fixed time period for certain group of employees. Be careful about including/excluding participants who didn't return to work. Maybe something like, all participants who were actively employed on 1/1/2020 and also actively employed on 1/1/21 will be granted 1 year of credited service notwithstanding the actual hours worked during that period. Probably need to defined "active", but you get the idea. We have also seen sponsors wanting to boost benefits to make up for COVID related pay cuts.

I assume the plan is still active and you are earning new benefits annually? The "fairness" is that your ultimate benefit is probably based on ALL of your service. Those initial years when you were married still count in the determination of your ultimate benefit. If the benefit formula is X% of your final average compensation, times years of service, those initial years are multiplied by your final compensation. Therefore, the value of the benefit you earned in those initial years is based on your final average compensation. Since you were married during that period, the AP is entitled to a share of the value of the benefit earned during that period. This is a very common provision in QDROs.

Also don't forget about discrimination testing. If you are granting more than 5 years, you need to demonstrate that it is not discriminatory.

Not true. It is required. It is just not required to be filed.

Are you contemplating doing something you have never done, or are you trying to confirm if you employees are taking too long? A lot depends on how serious you take them to start with. Are they something you want to be 100% accurate and completed in accordance with the instructions, or is it "government work" that just needs to be completed so that it won't bounce back? Will you charge the client if they get bounced or will you eat that time? There are people who make their living explaining how to do 5500s. They can suck a lot of time if you want them to be perfect. Are you doing full 5500 w/ audits, or EZs and SFs? Big difference in cost and auditor interaction. Are you counting time for the SB, including verification of contributions, obtaining sponsor elections, maintenance of FPB/COB? A lot depends on how you classify the time. I think your timing is reasonable for an EZ or SF, but would double or triple for full 5500 w/ audit requirements. In general, they take about 2X the amount you are able to bill for them. Also, consider posting on the 5500 board - you may get better responses.