Effen

I'm sorry, but you said, "just want to contribute up to the maximum he would be allowed to take as a lump sum after everybody else is cashed out". Now you are saying, "there is no excess asset and the owner just want to contribute what he can take out" Is the plan currently frozen? I think you said it was frozen in 2003 Does the plan currently contain sufficient to cover the frozen accrued benefit? If not, he can contribute enough to cover that accrued benefit without concern of 1.401(a)(4)-5. If he "contributes up the maximum" I assume the plan will have more assets than it needs to provide the previously frozen accrued benefit. If you then re-allocate those excess assets to him, the re-allocation of those excess assets is considered to be a plan amendment that must comply with 1.401(a)(4)-5. The fact that you said the plan was frozen, then you were asking about his current 415 limit, lead me to believe that he ultimately planned to receive more than the value of his previously frozen benefit. If this is true, I think you need to consider 1.401(a)(4)-5. If he is just going to make a contribution to bring the assets up to cover his previously frozen benefit, I think you are ok.

Definitely! Too bad they aren't like us actuaries who speak as one voice on all topics.

I would argue this is an accounting question and not in the actuaries area of expertise. You should refer the client to discuss this with his/her accountant unless you are willing to take the repercussions if you are wrong and the deduction is disallowed. That said, I think it would be deductible, but different accountants have different opinions about how, and over how many years.

Be careful of the rules related to the timing of a plan amendment or series of amendments has the effect of discriminating significantly in favor of HCEs (1.401(a)(4)-5). The allocation of excess assets is considered a plan amendment that must comply with the applicable non-discrimination rules. What you just described fits the perfect example of what this rule is targeting. I would not want to be on record as the one who recommended it.

Quick - someone help out John. I think Ned Ryerson has taken over his handle.

I think we are all saying the same thing. 1) You only need to include the value of the early retirement subsidy in the lump sum IF the plan says you do. Nothing in the regulations require you to include it, therefore, if the document is silent, you should ignore it. 2) If there is a subsidized early retirement benefit, the relative value disclosures should be providing clear information that the value of the lump sum is lower than the value of the immediate annuity.

I would say yes. Did the participant accrue any benefits after 1/1/2011? If so, than I think post 2011 comp would definitely count in determining the 415 limit.

This is a legal question and should be run through fund counsel. My thought would be that if they were really eligible for the 401(k), I don't think they could be retroactively excluded at a later date. You may interpret the exclusion to become effective on the date the CBA is signed and 401(k) deferrals made after that day should be refunded. I don't see how 401(k) deferrals that were made while they were plan participants could be returned. I think this all hinges on weather or not they were really eligible for the plan while the CBA was being negotiated.

Just make sure you give all the other employees the same opportunity. What is the point of borrowing from a plan that is being terminated? Who will hold the loan once the plan is gone? Seems like a lot of work for a little gain. Won't he have to repay the loan in order to distribute the assets?

Your assumed retirement age for valuation purposes does not have to match the NRA in the plan document. It is just your assumed retirement age. If it was truly a mistake in the document, then just fix the document and move on. You might consider a VCP filing as a cleaner fix.

I don't know about recertification. The AFTAP is based on BOY numbers. However, you may have some flexibility in the assumptions since you "know" there are immanent layoffs. I think you have some room to value lump sums more directly in the AFTAP if you are going to pay out immediately. Also, look to see if this is an "unpredictable contingent event" and if that allows you to re-certify the AFTAP? If they really don't have enough money to fund the plan, they should contact the PBGC ASAP. The PBGC will want them to prove they really don't have the money, so you should let them know that up front, in case they are just bluffing. Ultimately they are going to have to put the money into the plan or demonstrate that doing so will bankrupt them.

yes

yes

I know how it works, and I hear what you are saying, but it sounds to me like bad communication and understanding on the part of the employer. The money contributed to a multiemployer plan is considered an employer contribution, even though the members theoretically vote at meetings to take less pay and put more in the plan. If they chose not to put more in the plan, the plan trustees would eventually take action to either reduce benefits, or pressure the bargaining parties to put more into the plan via the CBA. Beyond that, you will need a lawyer to explain the mechanics inside the Code.

I vote 2. Around $2.5M and DECREASING. They should at least be receiving the monthly annuity until they can get the plan terminated. Every day they wait, they are just loosing money.

Does this relate to your post on the multiemployer board? If so, read my response. Just because an employer contribution is based on a $/hour formula doesn't make them "employee contributions".

In a multiemployer plan the "employer" contribution is often defined as a $/hour or $/unit contribution. The "employees/members" often consider this to be their money that comes out of their pocket. However, legally, these are NOT employee contributions. They are employer contributions. The union negotiates the rate the employer contribute, but the members of the union do not have any options. The money that is being contributed is classified as employer contributions, not employee contributions. This is not necessarily the employers sole obligation. If they choose or negotiate out of the plan, they could also be required to contribute a withdrawal liability which depending on the funded status of the plan, could be substantial. Bottom line, although the union (not the members) are trading compensation for contributions, they are employer contributions, not employee contributions. There is also a lot of disinformation spewed by both sides during negotiations. My experience is that the business agents doing the negotiating often have only a very basic understanding of the plan and how it works and often say things that are not true.

I don't know what you mean by "new way", but when I post, it autocorrects and marks words it thinks are spelled wrong.

For those of you who, like me, have never heard of a ROBS, attached is a general article that describes the concept. http://www.bankrate.com/finance/money-guides/small-business-robs-risks-retirement-1.aspx

I have had luck sending in the EZ's with a cover letter explaining the situation. If/when they send you a letter with a big fine, tell them again what happened, mention the DFVC program, offer to pay the maximum DFVC fine, and see what happens. Usually, you don't hear anything further. I have done it two or three times and have never had to pay a fine. This assumes they have a "valid" reason for not filing. Something other then they just didn't file them.

You could also quit, and take as many cases as you can to a new firm that appreciates what you do and is concerned with quality work. If the new owner doesn't appreciate the service, it won't get any better for you. There are lots of ways to get CE credits and training, webcasts and conferences just to name a few. Also, don't be afraid to tap into other firms. Befriend someone in another firm so that you are comfortable bouncing things off them when you aren't sure. Good luck

Just curious, but why would you put such language in the plan and risk the issue? Seems to me it would be very hard to argue the plan is permanent when you already know when it is going to be terminated.

Agree, does not cause a problem with "definitely determinable", however, it should be treated as a plan amendment and the allocation needs to comply with the applicable non-discrimination rules.

I know of her. I believe "Rike" is short for "Federica".

I don't know about the first question, but the 2nd is often discussed. The sad truth is that because the guy has no credentials, there is nothing that any organization can do because they don't have any jurisdiction. The Joint Board or the SOA, ASPPA, Academy, Conference, etc. can only discipline their members. They can't do anything to someone who isn't a member. I guess some actuary could sue him if he could prove damages, but I think that would be difficult. I think the best you can do is just make sure all of the professionals in town know he is not an actuary. I don't really see anything wrong with calling yourself an "actuarial consultant" even if you aren't able to sign an Actuarial Certification. There are lots of bookkeepers who aren't CPAs and lots of healers who aren't doctors. If he is doing bad work, eventually the marketplace will take care of him. Plus, there are lots of TPA firms doing DB work without any actuaries on staff. I may not like it, but I recognize it at a business reality.