Effen

I am sure someone else will chime in, but are you permitted to change eligibility for current employees? In other words, the requirement was 21/1 when you hired them. Are you permitted to change that to 21/2 after they have been hired? That feels wrong, but that doesn't mean it is.

No, there was no new guidance issued that I am aware of. 2018 expected compensation should be a reasonable expectation. Generally, that would be 2017 w/ a salary scale adjustment, or pro-rata adjustment if they worked less than a year. What is the basis of your question? What would you like to use?

Be careful of the disability provisions and make sure it really is a J&75 currently. If the P is younger than NRD and is receiving a "disability" benefit, this might be an ancillary benefit and not part of the "retirement" benefit. It is common that the disability benefit is paid until NRD, at which time the participant makes an election of their retirement option. Participants rarely understand this, so make sure you are reviewing the plan document. Make sure the QDRO addresses both benefits. If he is beyond NRD, the only option is to have a portion of the benefit previously elected to be directed to the AP. My opinion is that you can't change the form of payment once the payment has commenced.

What Larry described is not the way I typically see it. Most of the firms in our area, and the local ERISA attorneys, still charge on an "as needed" basis. That means there is a fee to restate the document, or amend the document, whenever a restatement or amendment is required. The advantage is that you are only paying for the service when necessary. The disadvantage is that you have a relatively large legal bill every 5 to 6 years. Larry - under your structure, what if the client leaves you after 5 years of advanced payments? Do they get that back, or is that considered "support"?

Maybe i misunderstood. Generally, in a "contributory DB" plan, the employee contributions are paying for a portion of the DB accrual. There is normally no need for separate accounting, except if the person terminated non-vested - in which case they receive the value of the EE contribs, with interest determined at a stated rate. I have also seen a minimum "return of ee contribs" for death benefits, but again, no need for separate accounting since the benefit is determined based on a stated interest rate. Also, a word of caution if you aren't familiar with multi-employers - because the contributions are negotiated, and sometimes considered part of the "total package", union members think of them as "employee contributions" when in fact, they are "employer contributions". In your situation, how are the "separate accounts" considered in the determination of the participant's benefit?

I don't really know, but I think #3 deserves more thought. I don't think you can convert the DB Plan into a DC plan, but you should be able to spin off the EE paid portion of the DB benefit into a new DB plan, then terminate that DB plan. You can also talk to the PBGC and see if they have any ideas. I have found them to be helpful when you are just considering options.

Due to anti-trust rules, we are not permitted to discuss fees on this board. Ask your accountant or other professional advisers for recommendations, or just search the internet for other actuaries in your area.

Again, look at the 2015 2016 5500 and see if there were deficiencies. It would also tell you the benefit formulas in effect at that time. This really doesn't make sense. Why would you start a plan, and then not fund it. Even if no contribution was required in year 1 and 2 (which seems highly unlikely), why would you pay the administrative costs to set it up and then not fund it. The only logical explanation is what Cusefan (what is a Cuse, and why are you a fan?) describes - that is, maybe they set up the plan and then didn't have the cash to fund it, so you should see unpaid contributions in year 1 and 2.

You are correct that you don't fund based on vested benefits. You stated the "funded status is over 100% in 2017" and which would imply they either actually made contributions (and the AFN is incorrect) or no contributions were required since either the assets exceeded the liability, or maybe the benefit was lower in 2015, 2016 and increased in 2017. Lots of possibilities, but having the plan funded at 100% is the most important statement on the AFN. You could also look at the actual 5500 filings which would give you a better picture. They are available for free on the DOL website. You have the EIN from the AFN and s/b able to easily find the 5500 for the prior years. By looking at the actual 5500, you will be able to see exactly what they contributed and what the funded status was at all points.

Be careful of 411(d)(6). Changing actuarial equivalences may be problematic since they are a right and feature of the benefit when it was earned. Therefore, all optional forms must be protected.

I had a plan that remained open until the last person was paid. I don't recall the PBGC having any issues with it. I believe we sent them a letter and informed them all participants were paid, and that was it.

in theory, but I have never seen it in practice. The only time I have heard this being applied is when the sponsor is being non-cooperative.

Good response Larry. I am wondering if this is a 2017 missed contribution, in which case he might also have a 2018 problem looming. Zak - are you talking about a contribution that was due in 2018 (ie: for the 2017 plan year), or a contribution for the 2018 plan year that is not required to be deposited until sometime in 2019? Larry - what did you mean when you said the, "penalty would apply ONLY for one year as there is specific action that can be taken to eliminate the funding requirement in 2019 and beyond. " Are you referring to terminating the plan before the 2019 plan year? If he doesn't terminate, why wouldn't the excise tax continue to apply each year? Even if he can get a $0 requirement for 2019, the 2018 (or 2017?) remains due and the excise tax still applies, doesn't it?

That sounds correct. If you are unable to make a required contribution, a 10% excise tax immediately applies. In addition, the required contribution does not go away and the excise tax applies each year until the contribution is made. If you haven't already done so, you can freeze the plan and/or terminate it. This may help avoid additional funding requirements for 2019 and beyond, but there might not be much they can do about 2018 at this point. There are some strategies that can minimize the damage, but they are outside the scope of this board. Ask your "retirement plan folks" or find an ERISA attorney what they suggest.

Sadly, it appears the spirit in today's media and politics has infiltrated into actuarial circles. Good to see you back Ishi!

I did receive paper ballots in today's mail.

A few on the ACOPPA board were expressing a similar issue. One stated the problem could be with Barracuda, if you use that software. He suggested logging on to the academy site directly and voting through their website.

I don't know how many Academy members frequent this board, but I would encourage all of you to seek out opinions related to the proposed changes before voting. The CCA and ASPPA have both put out information related to the changes. I am happy to post, if people haven't read anything about what is really going on.

I agree with David. That said, in one situation where some election forms came in late, the attorney simply revised the amendment to add a few extra days on the window. I definitely would not recommend ignoring the provisions of the amendment or giving any leeway in the plan's provisions.

Wouldn't the total two year's of contributions need to be less than the maximum deductible contribution for year 1, since that is the year you are taking the deduction? And if it is, why not just create allocate it all to year 1, then create prefunding balance and use that to satisfy year 2?

A contribution is deemed to be made once the payment leaves the sponsors control, so consider how the payment was made, and when did it leave their control? Did he write a check - when did he mail it? If he walked into the bank on Monday to initiate a transaction, then it is late, but if he did it on Saturday and it didn't post until Monday - he might be ok.

Not challenging, just questioning,..but why couldn't they amend the plan to remove the offset? Would it be ok if you continued to apply the original language to the benefits earned prior to 12/31/18 and removed the offsets going forward? Can you freeze a floor offset plan?

Many variables that can change the value. "ancillary benefits" mean things like death benefits. If the participant dies before age 45.66, is anything payable to a beneficiary? If so, how much? If not, then you might add additional discounts for mortality. Also, what is the normal form of payment? In some states the normal form is a J&50, in which case you might also need to know the spouses age. You can also get variations due to rounded ages or time periods. Assuming Life Only w/ exact ages: If I use 83 GAM male, no pre-retirement mortality, I get 12.49 for a factor. 71 GAM Male, no pre-retirement mortality, i get 12.046 RR 01-62 (94 GAR), no pre mort, I get 13.096. w/ pre-retirement mort I get 12.6029 2018 417(e) Mort, no pre mort, I get 13.507 All this tells me they are probably using some form of something fairly old, maybe 71 or 83. The document would tell you, and it should be publicly available, but it might be a process to request it and read it.

Consider changing the date of termination to be 15 days after the notice was given. That may create the need to do one more valuation and SB, but the over funded plan could pay those expenses.

Can you provide more information about the situation. Is this a 2 participant plan - owner and EE, or did you just miss one EE with the 204(h)? It is difficult to provide advice without knowing more about the specifics of what happened. You could argue the owner was informed when he decided to freeze the plan. For the one EE, maybe its easier to notify them now, and give them the accrual from the intended freeze date until the notification date. Could be a lot easier/cheaper than dealing with a 5330.