Effen

They can both be right, however all you need to do is amend the plan to allow for a lump sum option (along with an immediate annuity) upon plan termination.

Why would Shirely know where Mike's stuff is? (Sorry, just couldn't resist. OK, back to AFTAP's and SBs)

I know Charlie is still in business. Maybe you should just call him directly.

If a client elects funding relief under PRA10 for 2009, do you think that should be marked as a method change in the SB? I think not, but I'm trying to figure out how to alert the IRS that they took the relief. I will designate it on an attachment where I illustrate the amortization bases, but I'm wondering if I should do something more? This client made a formal election to accept the relief.

http://benefitslink.com/boards/index.php?s...arterly+penalty

401(a)(17) always applied to the benefit formula, but not always to the 415(b) limits. It really only mattered if the person's NRD was later than 68 or 69 when the 415(b)(1)(A) limit would exceed the 401(a)(17) limit. In the past, as long as your actual comp was > 415(b)(1)(A) limit, you could have the (1)(A) benefit. Then the IRS came up with Regs that said your 415(b) limit could never exceed the 401(a)(17) limit, effectively cutting the maximum benefit for older participants. I don't recall all the sites and dates, but this change was fairly recent...maybe last 5 years or so?? So, keep in mind that the most comp you could have ever used for benefit purposes was the 401(a)(17) limit of that particular year and therefore this person's average compensation for benefit accrual purposes would be based on the average of the limits in effect during those years. That said, if the benefit formula permitted him to accrue a benefit greater than the 401(a)(17) limit, he could have had it, assuming his less than his actual comp and the 415(b)(1)(A) limit.

I think there are situations where you could have a 2nd annuity starting date, for example if the benefit is split due to PPA benefit restrictions, but generally once someone makes their election, based on the available options, they don't get a second bite at the apple. If the plan offered a new payment form, generally it would not be offered to those who already elected a different form of payment. If you gave them a 2nd bite, it would lead to adverse selection issues. Maybe if you gave an example of your concern, you might get more responses.

Since the particpants know how much of their package goes into the pension plan, they often consider that to be their contribution, which in a way it is, but it is treated as employer dollars.

Sorry Andy, but I think I'm going with SoCal on issue Q2. Mabye I will just look at all of the guidance we have so I can know for sure....oh ya, we have none.

It is possible, and I have seen it in some documents, but I wouldn't call it common. I would read the provisions very carefully. Often a "year of service" has a different definition for eligibility, vesting, and benefit accrual. It is fairly typical that you double count eligibility service, but not so for vesting and accrual. Typically vesting and accrual service is measured only on the plan year and not the employment year.

And what is the death benefit?

Previously, in the old SAR days, we would include a statement on the SAR explaining that the employer missed a quarterly contribution and provide them with all of the required information. Since the SAR was done with the 5500 for the year in question, most people considered this timely notification. Now that AFN's are due 4 months after the first day of the year, before the employer may have completed the required deposits, do you think it would be ok to wait until the following AFN to report the late quarterlies? For example, can I report missed quarterlies for 2009 on the 2010 AFN which is distributed in April of 2011 or would the client need to do a stand alone notice? If you think it needs to be a stand alone notice, when would you send it?

I would make sure they receive all of the proper notices related to the PBGC termination and make sure they get the benefit they are entitled to. "woodwork" people surface all the time in bigger plans. I don't think USX is redoing Schedule Bs everytime they find a previouly unknown participant. We have had the PBGC discover missing people on audit of a plan termination. All they request is that the missed participants receive what they are entitled to.

The final 430 Regs probably contain your answer. Do you have a specific question?

You can use compensation, or compensation times service, or service, or age, or job class, or whatever, as long as the allocation complies with the applicable non-discrimination rules AND is provided by the plan document. Since you are excluding some employees, whatever you choose may need to be general tested.

Generally, the allocation of the excess assets is treated as a benefit accrual (or increase) that needs to comply with the applicable non-discrimination rules. Therefore, you don't necessarily need to include everyone, but you need to include enough to pass 410(b) & 401(a)(4).

Andy, did they actually recover any money? How are they able to change the premium filing method once the form has been filed?

I had a client who recevied a similar letter for an existing db plan. The letter promised they had overpaid by $14,000 and they could help them get the money back. I checked their records, checked with the PBGC and found no overpayments. I told the client my findings and suggested that they contact the person, get it in writting that they could recover the "excess" and go for it. They contacted the company who told them the statute of limitations had passed and they could not recover the excess payments. Moral - it's probably a sham. You (or the client) can get a complete history from the PBGC that details their payments. I have had several clients receive these letters and so far none have been legit.

I agree. Death of the participant does not seem to lift the restriction. Sorry about the mislead.

I believe death ends the top 25 restriction. In other words, if the participant dies, the spouse can receive the full benefit.You should read your document to make sure.

I agree. If you were "green" in 2008 and you froze your status for 2009, you are considered "green" for 2009 even though your actual 2009 certification said you would have been critical if you hadn't frozen your status. If your 2010 status shows you are "green" again, then you are green and you were never really critical. No, assuming they froze their status and their 2008 status was not Critical (many funds froze their status even though their status wasn't going to change to avoid updating their funding improvement or rehab plans)

The actuary needs to certify the plan's status each year. This needs to be done within 90 days of the first day of the plan year.

The other issue is the notice is stupid, and intentionally contradictory from one year to the next. The 12/31/2008 liabilities reported on the 2008 notice are estimated and based on PBGC rates (assuming they followed the guidelines). PBGC liabilities are not the same as funding liabilities since they are based on a different set of interest rates and are generally (but not always) used to determine the amount of the PBGC premium. The 1/1/09 liabilities reported on the 2009 notice are based on the plan's funding target which is on a completely different set of interest rates. The problem doesn't rest with your company giving you bad information, the problem is with our Congress and IRS who devised a notice requirement that forces your company to provide information before it is possible to calculate, and requires them to provide numbers that are labeled the same, but calculated differently from year to year. Believe me; it can actually be worse for multiemployer plans where they could be getting two different notices on the same day with different information. Remember this type of thing when you vote next! P.S. It is refreshing to know that someone actually reads these things.

Not really. Once the pen was put to paper the benefits were accrued and therefore protected under 411. You can change the provision to the exent it might impact future participants, but you can't really change what has already happened. The horse is already out of the barn. Maybe look closely at the plan language and make sure the statements were done correctly. Do the participants really have 2 years of benefit credit at the end of year one, or should it have been that they just accrued their year 1 benefit as of the first day of the first year so that end the end of the first year they still only have 1 year of benefit credit? We don't do many with past service credit, so I don't know if this is a common "problem" or not. How do others draft the past service language?

I have seen a lot of creative things in the multiemployer world, but something like that would seem to run afoul of the definitely determinable rules. Also, you would have to keep doing 204(h) notices every time the benefit decreased. I just don't see how it could work.