Effen

436 restrictions are still applicable for a terminated plan until the instant that the final distributions are paid. If the plan is subject to 436 restrictions, they still apply until you are ready to make the final distributions.

I agree with mbozek, the MRDs should be based on the monthly accrued benefit generated by the cach balance account, unless you are making a complete distribution.

I don't think there is anything wrong with the actuary being "involved" with the asset allocation as long as the involvment is informational. I would rather have an investment advisor discuss what he is thinking before he just buys something that really doesn't fit. The actuary should explain the plan and make sure they understand how the plan works so that the investment advisor can do his job. That said, the ultimate responsibility should stay with them.

This may be true, but it is by no means the right answer. 1.401(a)(26) is not a "snap shot" test. It must be satisified every day of the plan year. So yes, if on July 1 you have 8 eligible employees, then 4 must benefit. However, if of June 25th, you have 15 eligible employees, then 6 must benefit. To really answer this question we would need to know the plan's entry dates, eligibly provisions, and demographics for the entire year.

Technically, 401(a)(26) must be satisified every day of the year. So, when you have 8, 4 of them must be benefiting, and when you have 5, only 2 of them must be benefiting.

I agree with SoCal - this is a document issue. Amend now with retro effective date, maybe consider VCP. I don't necessarily agree with your actuary that 3.75% cash balance is not "meaningful" under a(26) (regardless of whether or not it produced a .5% accrual), but that is between you, him, and the IRS. I think it would be very difficult for the IRS to argue that 3.75% is not meaningful; especially considering the TH min in the DC plan is only 3%.

I suggest you give Kristina Archeval of the PBGC a call. She will explain your options and work with you and your client. You don't have to give the clients name until they are ready, but I have found her to be very helpful.

I don't really understand your question. You make a statement that the plan "complied operationally with the meaningful benefit requirement", but then say "the amendment to increase the NHCE by 1% was never done". What is the significance of "an amendment to increase the NHCE by 1%"? Since you say "the" amendment, was this something the IRS required? Increase the NHCE what? by 1% of what? I'm just a bit confused. When most people talk about meaningful benefits they talk about the need to provide a .5% of comp. accrual for each year, but this is based on an internal IRS memo and is not statutory or "required". "Meaningful" is never actually defined in the code or regs. You ask how it should be "fixed", but if you "complied operationally with the meaningful benefit requirement", why do you think it is broken?

Maybe. If the plan is Critical there are surcharges that apply without opening the agreement until the parties adopt a Rehabilitation Plan. If the plan is Critical or Endangered the Trustees develop a Rehabilitation Plan or a Funding Improvement Plan. Once bargaining contract is opened, the parties need to adopt one of the plans, which generally forces contribution increases. These subsequent increases may be more or less than the surcharges. It is fairly complex, but yes, surcharges can apply without negotiations if the plan is in Critical status.

Just a few words of caution, a few questions you should ask yourself.... 1) Since you work "exclusively" on DC plans, what makes you think you have the expertise to do DB work? Do you have anyone on your staff who knows how to do it? How will you (the owner) know if the work is being done correctly? 2) Will the clients be asking your staff for direction on DB issues? How will they respond? Who will pay the price if they respond incorrectly? 3) How will you be able to tell if the actuary you are outsourcing things to is doing it correctly? Much of the work we take over comes out of situations where the db work was outsourced. The TPA fronting the work had no idea what they were doing and assumed the actuary was watching out for their interests. Many actuaries who are willing to sign outsourced work are not of the highest professional character and often take a "garbage in, garbage out, is not my problem” approach. I personally know several who admit up front that they feel they have no obligation to do anything other than confirm the data, and check the valuation. They give no thought to 401(a)26, 410(b), 401(a)(4), etc. If the plan doesn't comply with the discrimination rules, that isn't their problem. So, whose problem is it? DB/DC Combos and cash balance plans are nothing to dabble with. Sure you can make some money, but just make sure you make enough to cover any corrective actions you may be asked to pay for if/when something blows up. There are some good ones out there if you choose to go that route, but I suggest you find an actuarial firm to partner with instead. Let them do the db work, and you stick to the dc work. It may be a little clumsy for the clients, but that way you won’t have to assume that something with your name on it is actually correct.

You funny man! Actually, the last I heard is that there may be a flicker of hope because funding relief can be pitched as a revenue enhancer, but I wouldn't expect much any time soon.

not sure I understand your question. Why would it be different than any other type of db?

I don't know. I think the IRS has said the interest crediting rate is protected regardless of whether or not it falls under a safe harbor. Be happy you aren't one of those people who were using a 5.5% crediting rate. I think if it is in the document, you are probably stuck with it. I don't see the IRS allowing you to lower it, but who am I to say.

My initial reaction is the 4% is a protected right and feature of the benefit and cannot be reduced for past accruals. I think you could reduce it on future accruals with proper 204(h) notice, but what a mess that would be administratively.

Hugh?

IMHO, I think you are probably SOL. I think the IRS would argue that if you didn't notify the PBGC, then you never really made a 430©(2)(D) election. You might have to redo valuations, pay excise taxes on deficiencies and move on. I suggest you give one of the IRS actuaries a call and see what they say. I'm sure they have heard this story before and they might have a reasonable solution.

Agree with ATA. The ex live-in might also be able to argue she has a "contract" with your Don Juan to provide the benefit and she is entitled no matter what the plan provides. Looks like the plan has some issues to resolve as well as your participant. Probably time to for everyone to lawyer up. All this said, he still probably can't give the new spouse the J&S since they weren't married at the time benefit commenced. If you argue the plan should have never paid the benefit to the live-in, then you need to adjust Don's payments to reflect that it should have been a life only and not a J&S. The new spouse is still SOL since she jump on the poor sap too late.

Most likely this is not an option. The amount of the J&S was determined based on the beneficiary when he made the election. Once it has commenced, 99.9% of the plan documents would not allow him (or her, or her, or her) to change anything. Most likely this is not a option. You generally can't change beneficiaries once it has commenced. I have never seen, nor heard of, a document that would allow a new beneficiary on a J&S to be changed after benefits have commenced. You might also want to check the document to see if it even permitted a non-spousal J&100. Most plans do not allow for non spousal beneficiaries on the J&S. Maybe the first beneficiary was improper to begin with. My best advice is stay out of this and let a lawyer decide.

I agree with everything said, including Andy's comments, although I'll admit I am more likely to email, than phone. That said, I like Benefitslink organization and search abilities best. ACOPA may have better content, but the interface is horrible. I have spoken to the powers that be at COPA and they recognize the problem, and have said changes are coming, but so far nothing. The content is good on the COPA board, but good luck wading through the morass. Also, there seems to be a fairly limit number of people who respond. Philosophically the ACOPA board is more collegial. They require real names, which might inhibit some people, and you have to be an ACOPA (actuary) to join. I have tried the Linkedin group a few times, but so far is seems like it is mostly populated by insurance salesman or other self proclaimed experts who just like to read their own fluff. I also just found out there are other pension related groups in Linkedin. "Pension and Employee Benefits Specialists" and "Entrepreneurial Actuaries" are two groups I just found. Actuarial Outpost is pretty popular with ASA/FSA types and SOA exam takers. It is a nice board, with lots of good information, structure similar to Benefitslink. I can only really keep up with one board and haven't really given AO a good look, but I know from talking to my friends at the nationals, it is the board of choice for many "real" actuaries. I never heard of Blink, except for the band in room 182.

No, I wouldn't say that. I was really just commenting on the 25%/31% limit. If the minimum required contribution (MRC) is > 25%, they need to make the MRC and then they can put in up to 6% into the DC. If the MRC is < 25% and the maximum deductible is > 25% of comp, they can either put less than 6% into the DC and any amount less than the max in the db. Or, they can put X into the DC where X >6% so that the max DB would be 25%-(X-6%, not less than 0), as long as the MRC is satisfied. Also, I'm not really sure what you are saying by "max ( 25% , max(MFA,(FT-Assets))". I'm not sure why FT-Assets is relevant to anything. Are you thinking about the MRC or the max deduction? The maximum is more complex than just FT-Assets and the MRC is determined on a completely different basis, so I wasn't sure what you were trying to get at.

For non PBGC plans, I think of it as a 31% limit, unless the DC is less than 6%. My understanding is the first 6% doesn't count against the limit and therefore the 25% becomes 31% if they contribute more than 6% into the DC. However, if they contribute 6% or less, then it is like it never happened and they can fund the DB up to the DB max.

You are also correct that if the contribution is made within 30 days, you don't need to notify the particpants.

DB rules are NOT like DC rules anymore. DB rules say you commence the accrued benefit on the 4/1 following 70.5. In your example, I would say that the monthly accrued benefit derived from the 12/31/13 cash balance account would need to commence on 4/1/2014.

MRD's only apply to vested benefits. If not vested, no MRD.

Be careful about sales tax. I know WV has come after some TPA firms claiming that they were not providing "professional" service and therefore were subject to sales tax.