Effen

Although Andy's advice is probably the best, our AFTAP certification provided the basic calculation including the funding target, value of assets, adjustments to the assets (COB, PF) and the percentage. For first year plans everything was 0, including the AFTAP. We sent the certification along with a cover letter that explained the stupidity of the rule.

As far as I know there is still no answer. There is lots of discussion about this on this board if you do a search. Here is one you may want to read. http://benefitslink.com/boards/index.php?s...mp;hl=undefined From a practical matter is doesn't really matter since benefit restrictions don't apply for new plans. We did AFTAPs for new plans and showed them as 0%, not 100% and I believe we told PA's to pass out notices that tried to explain the situation.

NO, I think that is the point. The amounts deposited for 2008 that go towards the PB DON'T share in the actual 2008 investment return. Only the original COB & PB get the market rate. Amounts deposited for 2008 get brought forward (and back) at the effective rate only. At least that is what I think today

So, now this all makes perfect sense (not!) ... Only the PB that existed on the first day of the valuation date gets brought forward at the actual earnings rate. The PB that is created, or the amount of the increase, due to contributions made for the current year, get brought forward at the effective rate. That kind of makes more sense. I had several clients who made large contributions in December and created pre-funding balances. It didn't make sense that I would need to discount these to the first day of the year at the effective rate, then bring them forward at the actual rate (-30%). You are saying that the actual rate of return for 2008 doesn't really impact the "value" of amounts deposited for the 2008 plan year. So, for example: 1/1/2008 MRC = 0, Max Ded = $1 million. Effective rate 6%, actual return for 2008 -30%. Plan Sponsor deposits $25,000 on 7/1/2008 for 2008 and elects to increase the PB. At 1/1/2009 the PB = 25,739 (25000 * 1.06^.5) NOT 16,998 which would be the 25,000 discounted to 1/1/2008 at effective, then accumulated to 1/1/09 at actual rate (25,000 / 1.06^.5 * (1-.30)) BIG difference. Do I have that right?

They seem to be using the actual rated to bring the COB forward (2%), and the effective rate (6%) to bring the PB forward? What am I missing?

You could say that we choose not to buy that dog. We have plenty of our own dogs that bite just as much.

Generally, we don't do them. We tell them that their accountants can do them cheaper and more effeciently than we can. This seems to work without any further discussions about 98% of the time. (Then again, we don't consider ourself to be a "tpa" either.)

Not allowing new employees to participate in the multiemployer plan would not directly create a withdrawal liability. I could over time depending on turnover. Partial withdrawals are the result of a specific decrease in the number of contribution units over a specific time period. Mr. Ecklund is correct that some plans will not accept this type of contract, but some will. Also, if the plan is critical or endanagered, it would be prohibited from negotiating such an agreement.

Where are you located?

You have a problem and should contact the plan's attorney. How many participants are in the plan? If they aren't in the name of the plan, whose name are they in? Is it a qualified trust? What have the 5500s reported? Auditor reports? 1099s?

Any employees subject to collective bargaining can generally be excluded for "coverage" testing and "non-discrimination" testing. The other participants would need to be considered when performing coverage and non-discrimination testing on the various plans.

Whoever said cash balance plans were "simple to operate". Probably the same people who said Obama was bi-partison. They are sold as easy to understand (which they are compared to a traditional db) but they can be very difficult to operate. I don't think I have any stand alone cash balance plans that are top heavy. If they are going to be top heavy, we almost always have them paired with a 401(k)/profit sharing plan which is used to meet the various minimums (TH & gateway). And yes, the TH minimum could be higher than the cash balance account.

Andy et al - I now completely agree that the forced burn only applies if you are avoiding benefit restrictions. So a frozen plan that only pays de-minimis lump sums would NOT be forced to burn COB even if by doing so would make the AFTAP > 80%. That said, I don't think anyone knows what the de-minimis amount would be if you had a plan that was amended, due to the mandatory rollover rules, so that lump sums less than $1,000 can be forced and lump sums between $1,000 - $5,000 require a participant rollover election, but not a spousal consent. Some are saying it would be $1,000, others $5,000 and the IRS isn't saying anything, yet. I love the fact that we may need to wait for technical corrections to the technical corrections bill.

Interesting theory.... so, I am presented with the following: Frozen plan (post 2006) paying non-discretionary lump sums only (ie: benefit restrictions are meaningless) 80%+ funded in prior year 11/1/2008 valuation Funding Target 17,000 Assets 13,000 COB 0 The employer would like to make a large contribution for prior year (2007). If they put in $599, I'm still < 80% funded, but I create a large COB that I can use to reduce my 2008 MRC. If they put in $601, it would be forced to burn all but $1 of my COB and therefore they will need to make another large contribution for 2008. Seems silly but I think if they put in too much in 2007 it will force them to put in more in 08. However, based on your theory, I wouldn't need to burn COB since the restrictions don't apply (post pension relief)? Do you agree?

I'm not sure that would be true if the people that produce the statements admit they made everything up.

Andy, I agree. The "relief" part of the bill seems to have only applied to benefit freezing. The restriction on non deminimis lump sum would still seem to be based on the 10/1/08 or later AFTAP. So, in my case, if my plan paid non deminimis lump sums, they would still be restricted.

It seems to me that the technical corrections part exempted immediately distributable lump sums from the restrictions and the funding relief part lets me use the prior year's AFTAP as the determining percentage. Therefore, no restrictions will apply, but I didn't see anything stating that I didn't have to give a notice anyway. (This plan is also currently frozen.) Maybe a simpler question would be, if benefit restrictions apply because the plan is less than 80% funded, but the plan is frozen and only pays lump sums that are less than the immediately distributable amount, do they still need to notify the participants?

Has anyone heard if we still need to do a Notice of Benefit Restrictions if no benefit restrictions apply? I have a 10/1 case. 2007 AFTAP proxy was 85%, 10/1/08 AFTAP 75%. The new bill states I can use my 2007 AFTAP to determine if benefit restrictions apply for 2008, therefore I assume benefit restrictions don't apply, but I didn't see anything relieving me of the notification requirements. Also, since my plan only pays lump sums of less than $5,000 (which have been exempted from the restrictions), even if restrictions applied, they wouldn't really apply since my plan doesn't pay lump sums > $5,000. (I heard someone say that it isn't really $5,000, but it is the mandatory distribution amount. Therefore, if your plan states that only lump sums < $1,000 can be forced - due to those wonderful IRA rollover rules- than only lump sums less than $1,000 would be exempt and lump sums between $1,000 and $5,000 would still be restricted.) :angry: So, do you think I still need to give a notice prior to 1/31/09 (assuming I certified AFTAP on 12/31/08)? If so, would it simply state the AFTAP? Which AFTAP? Would I need to mention the restrictions that don't apply?

Maybe Aspen's lobbiests were better connected then ASPPA/ACOPA's It would cost a lot of money to revise a book just for one page.

The House passed a pension bill House Bill

I was actually thinking the opposite; the plan might want you to declare it < 60% sooner so it wouldn't have to pay the lump sum. Either scenerio is possible. Maybe it would make sense to add a statement in your "impact of not deferring" section of your election package. Since we must now explain the implications of taking a lump sum, it would seem a logical place to add such language. I just hope no one in Congress reads this board, otherwise you may end up adding it to your already long list of required disclosures.

What do you mean by "making up the shortfall in contributions"? I have not seen anything that says they don't have to make the contributions necessary to reduce the deficiency to $0. I think that is why most plans will never come out of critical status. Also, don't forget about reorganization, which also still applies. Personally, I think changes will need to be made. The market drop has made much of the PPA requirements totally unworkable.

Maintain the FSA, you just run a deficiency. If you use amortization extensions (if Endangered or close to Endangered) you will need to maintain 2 FSA's - 1 utilizing the extensions, 1 w/out.

Blinky - you are correct. I ment if the plan is covered by the PBGC, then you must file the termination with the PBGC.

The lawyers will need to sort this one out. Good Luck.