Effen

Also be careful that the Top Heavy rules don't force earlier vesting, but if he is working < 1000, you should be ok. He could have a problem if he really was working more than 1000 hours, but just telling you he wasn't. But that would be his problem, not yours. Make sure you have it in writing.

Yes, it only applies to the vested benefit, but be careful that the doc doesn't grant full vesting at age 65 (or some other age) regardless of YOS.

You may want to search the board for old discussions about this. I think there are some fairly lengthy threads. Keep in mind your document must contain the proper language no matter what you do.

This question probably needs a lawyer’s response, and although I'm not a lawyer I did stay at a Holiday Inn Express last night.... My understanding is that typically the Employer Trustees are appointed by a contractors association or like organization and the Union Trustees are appointed by the union. They need to be able to operate in the best interest of the plan and its participants, and should be independent of outside influenences. Sometimes they need to make difficult choices (benefit cuts) and they need to be free to do so. The fact that they are personally liable and can go to jail usually provides sufficient checks and balances.

Assuming this is a multiemployer plan, and generally speaking... the Plan Trustees control the benefit formula and the collective bargainig process controls the contributions. The Trustees look at the amount of money coming into the plan and set the benefit level accordingly. The two don't necessarily need to be related. It is rare that a multiemployer plan bases the benefit on compensation. Typically the benefit is a function of service or contributions. Do salaried employees participate in the plan? Does the plan benefit any non-bargained employees? Is it a multi-employer (more than one contributing employer) or is there only one contributing employer? What union is it?

Did you continue to put money into your 401(k) after the date of seperation? Did the employer make any contributions (matching or profit sharing) after the date of seperation?

It is never the actuaries decision. It is the Plan Administrators decision and is stated in the plan document. The only provision that I know of that remotely resembles your question relates to underfunded multemployer plans. If a multiemployer plan is significantly underfunded, the Trustees may remove any subsidized optional form, including the normal form.

What provision of PPA do you think requires this? Are you thinking about the provisions that relate to underfunded multiemployer plans?

SoCal, I recently ran across 1.411(d)-4 Q/A 3 which seems to imply that a transfer may be possible. I'm not changing my original opinion, but I'm struggling with this Regulation and how it fits into the argument. Q/A 3 seems to say that a transfer would be possible, as long as the benefits are preserved, but how can you guarantee they will be preserved in a DC plan?

Define "transfer". You can terminate the cash balance and allow the participants to rollover their distribution to the 401(k) (or take the cash), but I don't believe you can just transfer the balances without a distributable event.

Sorry to say, but the plan document is the only place that you will find an answer. Basically, if it isn't in the plan document, you can't do it. I doubt the plan document is silent regarding forfeitures, however I don't doubt that you might not like the answer. You may be able to change/clarify the language with an amendment, but it could only be effective prospectively.

Especially now there are lots of closed db plans out there. Plans freeze participation as a transition away from the db plans all the time. I agree with ipod & Binkly. It is ok to limit participation to people hired prior to a certain date, assuming you can pass all the applicable tests.

Is this a DB or DC plan? The implications could be different if it is a DB.

I don't think you can ignore your plan's language. If you wrote the plan to avoid a whipsaw problem, seems to me you would need to amend that language out before you can ignore the whipsaw. Therefore, I don't see how the law change impacts current distributions. FWIW, I think most people on this board probably used the 417(e) rate as a crediting rate and therefore designed the plan around the whipsaw issue. Therefore, for right now, if it aint broke, don't fix it. I think this topic will heat up once people start thinking about plan design/amendment issues. Personally, I just haven't had time to think about it.

I've been wondering how long it will be before some otherwise exempt group asks to be covered by the PBGC. Does anyone know if it is possible?

I don't really see this as debatable. The quarterly is clearly late because the credit balance didn't exist on 7/15. There is no grace period for interest penalties, only for notice requirements. I agree with the other responses and see this is pretty clear. If you shop is split, I would argue you all haven't read the notice.

Yes, you prepare the form on the PBGC web site. It looks very similar to the current paper form you work with now. Once the form is prepared, you "release" it to the next person who does their thing and "releases" it to the next person. As far as edits go, our forms are always perfect and never need editing For example, theoretically, I, the actuary, prepare and sign the form, then "release" it to the HR person for his/her review. They get an email from MYPAA saying, "Effen has released the form to you". They follow the link and review the form. Once they are good with it, they release it to the CFO for signature. The CFO gets an email, follows the link, "signs" the form, the releases back to the HR person or to someone else to coordinate the premium payment. I would recommend you do it first with a client you are very comfortable working with. Have them on the phone while you do it so you can find out what they are seeing on their screens and you can see what your screens say. That is what we did, and it's worked well so far. Good Luck!

ak2way, I'm sorry, but I'm a bit dense this late on Friday.... Because 23 + 2 = 25? So taking your first example a little futher, you would say that the max DB is 22% of pay (to meet min funding), the max DC is 8% and the entire 30% DB/DC contribution would satisify 404(a)(7)? So basically you are saying db + dc - 6% m/b < 25%, ie: they raised the limit to 31%.

Yes, we are the Filing Cordinator for all our plans. I would agree that if you expect the client to be able to do this as the filing cordinator, you are in for some problems.

Gary, I have found the system to work fairly well so far. We have actually filed a few and have most of our clients signed up. They really do very little, in fact, probably less then then did with the paper. All they need is an email account and access to the internet. It really isn't that bad once you have done it. The Filing Cordinator prepares all the forms, everyone else just clicks a box or two. We have one client who refuses to give us an email account (he is simply anti-establishment) and I haven't figured out what to do with him, but once I told the others it was required, they all went along.

FWIW, we received the following statement from our valuation system vendor. They originally released an update doing a BOY calculation, but have changed their position and now believe it should be EOY.

412(e) is a ONE TIME extension generally used to save a plan that will be deficient in the very near future (typically 1-5 yrs). It was a seldom used code section until recently when multi-employer funds got themselves in serious problems due to poor laws (forced to increase benefits to keep employer contributions deductible) followed by poor investment performance. Basically, many were forced to spend the excess assets they built up in the good market in order to keep the contributions deductible, then when the market fell, they were stuck with benefits that were higher than they could afford. The IRS has only approved two 412(e) extensions that I am aware of. Many have been filed, but they have either been rejected or are sitting in DC waiting for IRS action. The IRS didn't like 412(e) since it was written long ago when interest rates were much higher. This is why it was changed in PPA 06 to something that is more reasonable in today's environment that requires less IRS involvement. Many/most multis are heading for trouble. 2016 is a long way away and much can change. Your "entity" should be prepared for higher contributions and the union members should be prepared for lower benefits. PPA 06 had many multi-employer provisions that will require the Trustees to formally address this problem. As a contributing employer he should be able to get a copy of the funds actuarial report. Once he has the report, he can hire his own actuary to review it and explain it to him. Make sure he hires one familiar with multi-employer plans since they can be quite different from a corporate plan.

Sounds like you are talking about a 412(e) extension. Based on PPA 06, these appear to be dead unless they were filed prior to 6/30/05. PPA provides for an automatic extension of 5 years if certain conditions are met, but those rules aren't effective until 2008. I don't know why they would have filed for 412(e) if their problem was so far out. I agree, it doesn't really make sense. Basically, you are just extending the amortization periods for each of the amortization bases, but the old 412(e) got very complicated with various interest credits and hypothetical credit balances due to differences in interest rates. The new PPA 06 rules appear to be much simplier. Extending the amortization period lowers the required payments, just like the payments are lower on a 20 year loan than a 10 year loan for the same amount. Look at the amortization bases in the valuation report. You will see them listed, along with the number of years remaining. This stuff is very complex and is more than can be handled on this board. You need to talk to the actuary and have him/her explain it. That is what you pay them for. Although since the application was denied, and since your deficiency isn't until 2016, this sounds like it is a non-issue at this point. If you are not the actuary or the accountant, what is your role in this? If we knew what perspective you were coming from, it might help answer your question.

But why do they want to do this? What are they trying to accomplish?

Generally, most documents I work with state that if there is no beneficiary designation or if the beneficiaries pre-decease the participant, any death benefits are paid to the estate. Also, if the death benefit is an annuity (like the remainder of a period certain), it may cause problems for the estate; how could the estate close if it will be receiving annuity payments for the next x years? I'm not sure why you would want to designate the estate as the beneficiary. Are you asking about pre-retirement or post-retirement death benefits?