Effen

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.

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.