Effen

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.

That seems to conflict with 412©(8), or the new 412(d)(2). I think there was a grey book question about this a few years ago, or maybe something was said at an EA meeting shortly after PPA was passed where the service said for PPA, you basically need a 412(d)(2) election for any amendment that was adopted after the beginning of the year, however you could recognize it if the PA wanted to. Your post from 430(d) seems to be in conflict, so now I am a bit confused? 412(d)(2)Certain retroactive plan amendments.— For purposes of this section, any amendment applying to a plan year which— 412(d)(2)(A) is adopted after the close of such plan year but no later than 2 ½ months after the close of the plan year (or, in the case of a multiemployer plan, no later than 2 years after the close of such plan year), 412(d)(2)(B) does not reduce the accrued benefit of any participant determined as of the beginning of the first plan year to which the amendment applies, and 412(d)(2)© does not reduce the accrued benefit of any participant determined as of the time of adoption except to the extent required by the circumstances, shall, at the election of the plan administrator, be deemed to have been made on the first day of such plan year. No amendment described in this paragraph which reduces the accrued benefits of any participant shall take effect unless the plan administrator files a notice with the Secretary notifying him of such amendment and the Secretary has approved such amendment, or within 90 days after the date on which such notice was filed, failed to disapprove such amendment. No amendment described in this subsection shall be approved by the Secretary unless the Secretary determines that such amendment is necessary because of a temporary substantial business hardship (as determined under subsection ©(2)) or a substantial business hardship (as so determined) in the case of a multiemployer plan and that a waiver under subsection © (or, in the case of a multiemployer plan, any extension of the amortization period under section 431(d)) is unavailable or inadequate.

I believe there was a Gray Book Q/A a few years ago that said, if the document was silent, you needed to give both. They only way you are permitted to give the greater of the two is if your document contains specific language permitting it. Otherwise, they should get both.

My experience is it needs to be a majority owner (at least 50%), not just the right to own. That said, it might be worth a phone call to bounce your idea of the PBGC and see what they say. If one or two owners waived their benefit would it be enough? What if two owners agreed to sell their shares to the other two so that they would each be 50/50 owners. Then they could waive their benefits, terminate the plan, and sell the shares back. Obviously the buy/sell agreements would need to specify lots of issues, but maybe the four of them could some how work out an equitable solution. I have had situations where the ownership was changed right before the plan was terminated. In small plans, the PBGC generally doesn't care about history, they just care about who owns what at the time of termination.

New York Times adopted one of these last year. UFCW considering one at the moment. I will send you some stuff off-line because I don't know how to post it. I don't think these have made the leap to the small plan world, but I can see the train coming. Don Fuerst wrote several articles about these when he was with Mercer. Don is currently the Staff Fellow with the Academy. I have spoken to him about this in the past and he is very willing to help.

No, I mean why would he want to create a new plan that looks identical to the old plan. But I think I understand now, you can't pay lump sums to the actives unless you terminate the plan, right? Ok, now I get it. So if he thinks interest rates will rise and annuities will be cheaper in the future, why not wait to pay the lump sums as well. They will be cheaper in the future also (assuming the plan is not using some non-417(e) actuarial equivalent). Anyway, to answer your question, I don't think there would be anything wrong with a plan that only contains retired participants. You would probably just do a spinoff to create the new plan.

why? what would be the point?

Grendel - my initial response was simply to say "you are wrong", but that doesn't really help if I can't prove it. So, I went looking for a reason. I may be wrong on my reasoning, but here goes. 411(d)(6) relates to decreases caused by amendments. Assuming the plan is not being amended from year to year to change the interest crediting rate, 411(d)(6) does not apply 411(a)(13) breaks the relationship with 417(e) and therefore the hypothetical account balance can be treated as the accrued benefit and would not be permitted to be decreased You also might want to take a look at Announcement 09-82 and Notice 07-06 which defined acceptable interest crediting rates. I believe the theory is that the hypothetical account balance and the interest crediting methodology are protected and cannot be changed without dealing with 411(d)(6), however fluctuations in the projected monthly benefit commencing at NRD that is based on the current hypothetical account balance is not protected. It really should just be viewed as a current estimate, similar to the lump sum value of at traditional db plan - the lump sum value fluctuates each year as interest rates change. However, once the benefit goes into pay status, then it cannot be changed. 411(a)(13)Special rules for plans computing accrued benefits by reference to hypothetical account balance or equivalent amounts.— 411(a)(13)(A)In general.— An applicable defined benefit plan shall not be treated as failing to meet 411(a)(13)(A)(i) subject to subparagraph (B), the requirements of subsection (a)(2), or 411(a)(13)(B)(ii) the requirements of subsection (a)(11) or ©, or the requirements of section 417(e), with respect to accrued benefits derived from employer contributions, solely because the present value of the accrued benefit (or any portion thereof) of any participant is, under the terms of the plan, equal to the amount expressed as the balance in the hypothetical account described in subparagraph © or as an accumulated percentage of the participant's final average compensation.

I also have a cash balance plan that doesn't pay lump sums - I think these can be separate decisions. The cash balance account is converted to an annuity at retirement, and doesn't change after it is in pay status (I assume Karl's plan works the same way?). Cash balance is just the way to accrue the benefit. I agree it is odd not to pay the lump sum, but it is a way to guarantee a lifetime income for the participants. Karl - church plan or not church plan, the answer is the same.

Maybe you should stop putting estimated information on the benefit statements. There is really no reason for it to be there. Yes, it is a defined benefit plan, but the benefit that is defined should be the cash balance account. If you are going to quote a projected monthly benefit on the participant statements, you should also tell then that it is only an estimate. Our cash balance statements do not contain monthly projected benefits for just this reason.

Seems ok to me. Keep in mind they really couldn't have had the benefit in 2009. What you were showing was a benefit payable at NRD, based on the expected future growth. In 2009 the projected cash balance account was anticipated to provide a benefit that is 15% higher than it is now because interest rates have declined. That is just a function of the interest rates and not a problem. I believe PPA confirmed that this is not a 411(d)(6) violation. When we do benefit illustrations we say the project benefit at NRD is only an estimate and will change over time.

What does the plan say? Most likely you will need to suspend his/her benefits and start crediting additional benefits. I can't think of any reason why the employer would not be required to contribute, but you should check the document. Also, don't forget to give him a 204(h) Notice when you suspend his benefits.

I'm not so sure. I believe on termination the crediting rate has to be the average of the rates over the last 5 years. Not sure what happens if it goes into another year, but I think you are supposed to lock in the crediting rate. That said, I agree with Hojo on the caveat. Always a good idea in a cash balance plan to state that the monthly benefit can fluctuate.

Also, if the plan is still active, the document will define how future accruals will be handled. If the plan offsets future accruals by the actuarial equivalent of previously paid benefits, they may end up not getting any additional benefit for additional future service. As ATA said, all this should be in the plan document.

FWIW, I also agree with David.

Ya, I knew that.... I was just testing the rest of you....