Effen

I'm not a lawyer and you need to have the fund's lawyer handle this. First, I am surprised this could happen. Did the employer really think these contributions should come out of the employees wages? Didn't the employees say anything when they figured out the employer was shorting their pay checks? That said, it seems to me that you must refund the employee deferrals because the plan can not accept them. You might also consider refunding them with interest, but that might also require you generate a 1099 if the interest is taxable. I disagree - the employer still owes the contributions under the collective bargaining contract and the employees are still entitled to the benefit. It sounds like basically the employer stole the money from the employees in order to satisify his obligations. Once the money have been returned, his obligations still exist. This sounds like a real mess.

Again, you aren't required to file the termination with the IRS so how could you be required to do the funding valuation first? Also, the funding valuation isn't final until the Schedule SB is filed. Therefore, although you may be preparing the numbers that will be used on the SB before hand, it isn't a final val (and can therefore be changed) until the SB is actually filed. It is a good idea to run a val to see if the min/max is sufficient to meet any existing shortfalls, or to inform the client of the contribution requirements, or to determine if the assets will be sufficient, but it doesn't really impact the determination letter process, since it isn't even required. Good idea - yes. Required - no.

The two things are not really related. First, you are never required to file the plan terminatinon with the IRS. If the plan is covered by the PBGC, you must file with them. Why do you ask "how" does one file... what has changed to make that process any different than before? Yes, if the plan terminated on 8/1/2008 you will need to do a 2008 valuation. When you prepare the valuation is up to you, as long as it is done in time for them to make a contribution before the due date if necessary.

I have heard "Rev. Jim" express this opinion, but I also know that not all of his "merry men" agree. According to Maid Marion, whether 436 restrictions survive the plan's termination is an ongoing debate inside Nottingham Castle.

I think this is one of those things that no one seems to be sure of yet.

We recently took over a plan where the AXA broker, who also happened to be an EA, purchased annuity contracts without the clients approval. Once the client figured out what happened they asked AXA to return the money. No can do said AXA and the client was forced to hire an attorney who finally convinced AXA that it was in their best interest to return the money. Add to this the fact that the actuary only purchased contracts on the 3 HCEs and completely ignored the other participants. Proceed with caution.

Yes - primarily cash balance and some small traditional db's

Does anyone know if a plan takes the automatic 5-yr extensions for the charge bases in the 2008 valuation, if they would be permitted to take another automatic 5-yr extension on bases created in the 2009 valuation (investment losses) In other words, can you keep taking the 5-yr extenstion on new bases every year or is it "one and done" kind of thing? I didn't see anything saying I can't keep taking the exentions, but then again I didn't see anything that said I could.

Another way to think about it is that "funding" defines how much cash the employer needs to deposit into the trust. The FASB report tells the employer how much he can expense for accounting purposes. The two numbers can often be VERY different.

I think I'm bi-mortal (kinda like Madonna) - I have done it both ways. I don't think the IRS has ever issued a firm directive. If the plan offers only the REA death minimum, then you could argue either way. If the death benefit is the PVAB (like most small plans), then I don't think pre-mortality would be appropriate, but I have seen plans that still call for it. I agree, this assumptions would probably be a stretch.

Your software only does what you (or your programmers) tell it. Unless it was designed by Noonien Soong, it can't read regulations. There is still debate about much of this, but I think most people agree that if you are: 1) funding for the 415 maximum as a lump sum you should use 5.5% w/ 94 GAM Post and discount at 436 interest and mortality(depending on death benefit). 2) funding for non-415 limited lump sum based on 417(e) rates, you should use 436 interest rates (maybe adjusted for 417(e) transition rules) w/ 417(e) mortality post and discount at 436 interest & mortality (depending on death benefit) 3) funding for non-415 limited lump sum based on rates lower than 417(e), you MUST use the plan's lump sum rates (interest and mortality) and discount at 436 interest & mortality (depending on death benefit) 4) funding for 415 max as the J&S annuity, I think you would use standard 436 rules pre/post - what justification would you have to use anything else?

Lets say I have a plan that is 95% funded in 2008 and qualifies for the transition rule. Therefore, I have no shortfall amortization charge since I was > 92% funded. However, I think I still owe quarterlies in 2009 because I had a funding shortfall in 2008, even though I didn't have to amortize any of it. Agree?

I don't think you would "prorate" the TNC. I think it would be based on whatever actually accrued from the BOY to DOPT or freeze. I'm less sure about the shortfall amortization - prorating makes sense, which it why it probably isn't right.

You could always talk to your actuary and see if they can do estimates at at reduced price, or if they would help you write/review a spreadsheet for your own internal use. I have several clients who I helped develope something they could use for estimates. There may be an upfront charge, but it may save you money in the long run.

Choose wisely, you will be stuck with it for a while. previous post

Although it is usually at the clients expense, one persons crappy cash balance work is often money in my pocket. Sort of like the old Fran commercial, you can pay me now, or pay me later. If you want to go with the person who is charging $100/ Schedule B ... good luck. Maybe I'll see you on the other side. I agree, lots of people doing lots of bad cash balance work... It's almost getting as bad as the 401(k) world...

I agree, maybe I should of said, ask an actuary who knows what they are doing. It is a little difficult to respond to "Need help calculating contribution for second year of plan." How should I (we) respond to someone who is obviously doing cash balance work when they probably shouldn't be. If they don't know where to start, there isn't much we can do for them here in cyberspace. Hopefully, somewhere in their organization, they have someone who knows, I was assuming this person would be an actuary and therefore, they need to seek help from that person. Here are a few more possible responses: - Don't we all - How did you do the first year? - Didn't your computer give you the answer like it did in the first year? - Try doing a little research - Send the work to me and I will be glad to take care of it for you

Call your actuary.

Thank you both for responding. I realize that the QDIA don't require a target date fund, but they seem to be popping up in many 401(k)s due in large part to the QDIA Regs. My question really was, why aren't they popping up in 403(b)s, or are they?

And so it begins... MultiIndustry_Funding_Letter11_12_.pdf

First, I am not a 403(b) person, but a friend of mine asked me why his mission (church plan?) recently told him that all new contributions would go to a new 403(b) vendor and that he could no longer use the vendor he was currently using. Apparently old money was allowed to stay, but new money needed to go to the new vendor. The remaining single vendor was available under the multi-vendor arrangement. When he questioned them, they responded that a new Federal law is forcing them to use a single vendor. I poked around and didn't see any requirements to use a single vendor. Is there some reason why they would have forced this? Also, the new vendor doesn't offer any target retirement age funds, but it did offer "active management". Don't 403(b)s have issues with default options? As we see 401(k)'s nudged into offering target funds, aren't 403(b)s being nudged as well? The plan does have a match, so it would seem that a default fund would be necessary. Any comment would be helpful.

1) If no one "benefits" in both the DB and the DC, the combined plan deduction limits of 404(a)(7) don't apply. 2) If the plan is covered by the PBGC, the combined plan deduction limits of 404(a)(7) don't apply.

OK, I think I finally understand your question. Assuming your cash balance plan does not credit interest at higher than market rates, I will agree that the answer to your question is unclear. That said, I would make sure any of my plans at least pay the TH min, applying the 417(e) rates if paid in a lump sum. I haven't yet been able to find anything to definitive prove either position. I guess we won't know for sure until we see some Regulations.

I think Mike and I are in complete agreement - you must apply the 417(e) rates if you are going to pay out the TH minumum as a lump sum. If you had a plan that provided only the TH minimum, would you still think that you don't need to apply 417(e)? If so, what is the purpose of 417(e)? Yes, TH mins are expressed as monthly annuities payable at NRD, but 417(e) applies to any distribution payable more frequently than a lifetime annuity (or joint lifetime). Therefore, if the benefit is actually paid as a lump sum, it is subject to 417(e). Just because the plan is a cash balance plan doesn't eliminate the 417(e) requirements on the TH benefits. Maybe your question is, if I credit a cash balance accrual equal to the present value of the TH benefit based on plan conversion methods, do I still need to track the TH minimums or am I deemed to have satisified TH. If so, than I think you would still need to determine the TH minimum as an AB payable at NRD, then apply the current 417(e) rates and pay the participant the greater of that calculation or their current cash balance account.

I agree with Mike. The TH min. is expressed as a monthly benefit payable at NRD for life. If you pay it out in a lump sum, you need to account for the 417(e) minimums.