Effen

That is my understanding. Do you think there is some question about it?

Plan termination liabilities literally fluctuate every day, probably every minute of every day, as the market changes and the insurance companies try to work their own internal magic. The best way to find out what the market rate of the plan's liabilities is would be to ask an several insurance companies to quote it - generally they will do this for free, but many brokers are willing to help you for a fee. Most brokers will do all the leg work and will quote the plan for free on the assumption that you will eventually let them broker the deal when it happens at which time they will take their slice of the pie. If the plan pays lump sums it should be fairly simple for the existing actuary to tell you what the plan term liability is based on the current lump sum rates. Other than that, the actuary should also be able to tell you if the current funding target is most likely higher or lower than a plan termination liability. In most instances right now today, it is probably a low estimate since annuity rates are a little lower than the segment rates, but there are always exceptions. SoCal's advise was the best - hire a good actuary, or if you already have one, ask him or her.

Coming onto this train a bit late, but ... Am I correct that the AFN requires a statement that the "Plan’s annual report is available on an Intranet website" which I guess doesn't mean it has to be posted there, but it must be available via the intranet website. However, PPA requires that the actuarial information included in the annual report "shall be displayed on any intranet website maintained by the plan sponsor" which means that the 5500 SB needs to be posted on the intranet website. Andy, is this why you were reminding us that you are from Missouri? Are you arguing that there is no requirment to post the entire 5500 in the intranet website? This appears to be what others are saying, but it is far from clear. Is my understanding correct?

I not get one either.

I don't understand what this means? Are you saying the plan document called for a benefit of 135%, but the policies call for 168%? Are you saying that you have a plan document that does not match the amount of the policy? Who is requesting the valuation and what makes you "feel" it is overfunded if you have never done one? Also, what do you mean by "a valuation"? What is it that you are trying to value?What is your role in all of this? If the client is funding a policy in excess of the benefit provided by the plan document the contributions for the excess may not be deductible. You could amend the plan up now, but that won't help you with the past contributions. Also, you need to make sure you are not violating the 415 limits. You also should look into the "listed transaction" rules and make sure they are not a concern.

For the benefit of the group, could you share the answer. Thanks

Why not ask the agent who sold him the policy? What do you mean he "made contributions"? Did the contributions go to the insurance company? How did he determine how much to contribute? Who should he have consulted with before making the contributions? If it is a 412(i), all payments should be going to the insurance company based on the amount they are billing. If he made contributions to a trust (and not the insurance company) the 412(i) status is most likely blown and you have some bigger issues. I think we need more specific information.

Thank you. That is exactly what I was looking for.

Can a QACA safe harbor match be applied to deferrals over 6%, assuming the statutory requirements are met? In other words, can I have a QACA safe harbor match that provides 100% on the first 1%, plus 50% on the next 9%?

Was that like Dragnet..."the following conversation is true, the characters were changed to protect the innocent"

Assuming the plan document permits such a form of distribution. Most plan's only give one bit at the apple and won't let you change from an annuity to a lump sum at a later date. Personally, I think the 415 limit is determined at the time the benefit is paid, which may result in a lower lump sum than it was on the date the plan was terminated.

You need to check the plan document to see what it says. Also, I would ask about past practice. I have seen it done many different ways. - Absol-fn-lootly. That is what the "relative value" requirements and the "consequesnces of failure to defer" are all about. You are required to put this information into the benefit illustration package. 0 another absol-fn-looty. All of your assumptions need to be your best estimate, including retirement rates and expected form of payment. Depending on your system, these may or may not be possible. If they are not possible using your current software, you may need to rethink your software vendors. Typically on a plan like this we would look at the recent experience to see what percentage retire at what age. For example, you may have an assumption that 75% retire when they are eligible for the rule of 80 and the other retire at various rates. Of those retiring 60% will elect a lump sum and 40% will elect an annuity. This may change with age and service.

Don't know, but their cabana is the hottest spot north of Havana.

It would depend on how the amendment is worded. If the plan is amended effective 1/1/2010 and simply increases the formula from 50% to 75%, how can you argue someone who is an active participant on 1/1/2010 would not be entitled to it? I suppose the amendment could be written to exclude people who terminated before the adoption date, but then I think you would need to test it for discrimination. If the person that termed is an HCE, probably no issues, but if you they are a NHCE it seems like it would be difficult to prove that the timing of the amendment was not discriminatory.

From 2011 Grey Book - Q/A - 4 QUESTION 4 Funding: When to Reflect a Plan Amendment Adopted Within 2-1/2 Months After Year End The final §430 regulations provide that a plan amendment is reflected in FT and TNC if adopted no later than the valuation date for the plan year. In the case of an amendment adopted after the valuation date, the amendment is reflected in FT and TNC if the plan administrator makes the election in §412(d)(2). However, in both cases, the amendment is taken into account only if it takes effect on or before the last day of the plan year. Assume a discretionary amendment (i.e., an amendment that is neither required for qualification nor integral to an amendment that is required for qualification) is adopted within the §412(d)(2) period of 2-1/2 months after the end of the prior plan year to increase the benefit formula for prior service for all participants that worked at any time during the prior plan year. If the plan administrator makes the §412(d)(2) election, can the amendment be reflected in FT and TNC? Does the answer depend on whether a §436 contribution is required? On whether plan operations had actually reflected the amendment in the prior year? On whether the amendment is reflected for coverage and nondiscrimination purposes? RESPONSE In this situation the amendment is only reflected if it is adopted and takes effect by the end of the prior plan year. In general, if a discretionary amendment is adopted after the plan year that provides for increases in the prior year, there is no legal right to the increased benefits until adoption. Such an amendment takes effect when adopted (assuming §436 permits), and could be taken into account for the adoption year if a §412(d)(2) election is made for that year. If a discretionary amendment is implemented operationally during a plan year (thus creating a legal right in the plan year) adoption is required by the end of that plan year [see Rev. Proc. 2007-44]. Any corrective amendment that meets the requirements of §1.401(a)(4)-11(g) that is adopted after the end of the plan year is treated as being effective in the year preceding the year the amendment is adopted for purposes of coverage and nondiscrimination, but that treatment will not apply for minimum funding (or deductions) as noted above. 2011 -4 The above Response is a summary, prepared by representatives of the Program Committee, of the oral responses to the question posed to certain staff members of the Treasury and IRS, which represent only personal views of the individuals who provided them. Accordingly, the Response does not necessarily represent the positions of the Treasury or the IRS and cannot be relied upon by any taxpayer for any purpose.

I am not a lawyer, but my understanding is that "Adopted" means they have made a formal decision. Ideally this is demonstrated by a corporate resolution, signed plan document and an opened trust. We tell our new plan clients to make sure they open a trust before year end and deposit at least $1,000. Documents can be backdated and therefore are subject to scrutiny, however it’s hard to argue with a trust statement showing an opened trust before year end. For me, if they don't show me a signed document for before year end, they don't have a plan. Regarding IRS submission, there is no requirement that you submit a plan to the IRS. If the plan is individually designed, and you want to submit for a letter, most attorneys I work with just hold it until the proper cycle. No need to submit before you are required.

Thanks for the explanation. I was also wondering why the strange posts were occurring. If nothing else links to sites selling depression drugs might fit right in on this board, especially during AFTAP season. I really hate PPA - we shouldn't have fought so hard to keep credit balances, because it is a clear case of "be careful what you ask for". Two hours figuring the PFB because they elected to use part of it to meet a quarterly, after the quarterly due date, then made a contribution later to cover it... and 15 minutes to check the actual valuation results... Whats wrong with this picture!

Yes they still apply, yes they can be a real problem, no there isn't any new guidance related to re-org.

What is the AFTAP? If less than 80% the NHCE should have also been restricted. Edit: Never mind, I see now the plan was frozen before PPA took effect. I think the IRS's current position is that restrictions stay in place until the instant the assets are distributed.

Probably. I think this is an area where common practice doesn't necessarily fit with the law. What you described is a relatively common practice; however I don’t believe it is defensible. You can only suspend a person’s benefit beyond Normal Retirement if they are still employed. If they are not employed, the plan has no authority to suspend their benefit. That said, I have seen many plans operate under the idea that if the person doesn't ask for their benefit, they don't have to pay it, but most attorneys will tell them that position is incorrect.

I don't see why not, assuming your benefits comply with all of the applicable non-discrimination rules (401(a)(4), 410(b), 401(a)(26)). I don't know what an "IDP DB document" is, but I expect that it is some sort of prototype like document that doesn't want you to do it. Just because it doesn't fit into their box, doesn't mean you can't go buy a new box.

Four lefts make you a NASCAR driver!

I agree, great rule Dave. It is still a copywrite issue if the author is posting his/her own article? However, I was wondering, when a Sitewide Moderator executes their power and deletes, moves, or closes a thread, do you get notified?

You aren't getting any real responses because there aren’t any good solutions. If you ask the IRS, or consult the actuarial standards, you are supposed to go back to the prior actuary and ask them to redo the work. Once you sign the current SB, according to the IRS, you are accepting everything in the past. Therefore, if you know the past is wrong, you really can't sign the SB until it is corrected. Now, who does that work and who pays for it? Why did the prior actuary do the work without seeing a signed copy of the amendment? Maybe they have one? If they did the work without it, they should agree to redo the work. Do they have something telling them the amendment was signed? Was there a Board resolution adopting the changes? If so, it might not matter that the amendment wasn't actually signed. If you are convinced the past is wrong, and if the prior actuary won't correct, you have three choices. First, you can do the corrections and footnote the current SB reflecting any changes. Will the client pay for this? Second, you can resign. Third, have the plan properly amended with a retroactive effective date and just ignore the problem with the past SB, although that makes you just as responsible as the prior actuary. Since the formula they used was too high, they were actually over contributing, which with the high deduction limits is less of a problem. Maybe wipe out all the credit balances and say "no harm, no foul" and move on. (Keep in mind, this might not be an option under actuarial standards, but you can always run it past ABCD and see what they say. I have found them to be very helpful.) Sometimes there are no good answers and in those cases, I say just do what you think is best. I often argue with people who say "you just can't do the work and you have to resign". All that does is create a plan that no one can work on and what kind of solution is that? That said, if the sponsor is at fault it this mess, you need to think carefully before you proceed.

Agree, #1