Effen

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.

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...