Effen

When you say "electrical" do you mean these are electricians out working with the tools or are they a company who manufactures electrical components where the employees are represented by an electricians union? If it’s the second, I'm not sure you would meet the exemption as a "construction trade employer" since the employer isn't really in the construction trade. I think the exemption may apply to the "employer", not all employers of the "plan". I know we have a non-construction employer who is a contributing employer in a construction trade plan. The attorneys for this employer wanted the trustees of the plan to sign an agreement that they would treat this employer "like a construction trade employer" for the purposes of the withdrawal liability. It may not have any value, but they (the non-construction employer) figured it wouldn't hurt. Are you saying that the sale didn't mention the potential withdrawal liability? You may want to look at ERISA Section 4204, SALE OF ASSETS.

That's strange.... then why do I keep hearing about the all the effen actuaries? .

What a COOL site. I never knew it existed. Now I don't have to seach the office for "the book". I feel like Steve Martin in "the Jerk" - WOW, I'm really somebody!

Any reason why the SOA hasn't updated for the June 30th rate?

From the article.... There is no evidence that Congress intended to subject §501©(3) organizations to the aggregation rules of §414, either expressly or by implication. Despite efforts by the IRS, through a 1986 Private Letter Ruling and General Counsel’s Memorandum, to interpose a definition of “control” in a non-ownership situation, that position was not adopted in the final regulations issued under §414. The law, thus, still requires some degree of common ownership for purposes of the controlled group rules of §414(b) and © and for the affiliated service group rules of §414(m)(2). So I guess the theory is that there can be no controlled group w/out stock ownership. No stock, no controlled group, no aggregation for 403(b). why wouldn't the same arguement work for a 401(a) plan (DB, DC), or does it? Thanks for the reference.

"wholly owned" were my words. Most of my clients are corporations and I didn't really think about the nuances before I typed it. My understanding is there is no stock, except for one share due to the "for profit" entity. Thank you for your help.

I just received some additional information.... apparently the four entities are 501©(3) tax-exempt organizations, but there is also a "for profit" entity that has no employees. That makes 5 organizations under one "parent", the four w/ employees are 501©(3) tax exempt and one, w/out employees, is not.

I am not very familiar with the rules related to 403(b) plans but I recently had a hospital client ask us to prepare 5500s for their 403(b) plans. During our discussion, he laid out the following: They currently have 4 wholly owned subsidiaries. Three of the four have 403(b) plans. Two of those three 403(b) s are exactly alike, but all are under different contracts w/ TIA CREFF. They have been filing separate 5500s. Each of the three contain both employer and employee contributions. It seems to me that they might have a problem under 403(b)(12)(A) since the 403(b) is not available to one of their subs. Do they have to offer the same plan to each of their subs? Apparently TIA told them they had to have separate plans, but he wasn't sure why. Also, do they need to test the employer contribution under 401(a)(4) or 410(b)? Any guidance would be appreciated. I just want to be able to alert them that they may have a problem, before I potentially become party to their problem.

I agree w/ MGB. In the "real" cash balance arena, this is the typical way to handle conversions. This may or may not be true in the "tax shelter" cash balance world. I would expect that most of tax shelter plans aren't conversions, but are new plans

NO. If it is one plan, with two components, they need to be combined. Also, a cash balance plan IS a defined benefit plan. The term "cash balance" defines the method used to accrue benefits. Participants in a cash balance plan earn benefits similar to a defined contribution plan, but it is still a defined benefit plan. The employer still bears the investment risk.

I have a client that has a retired participant who refuses to cash her pension checks. She thinks someone will steal her money and doesn't trust anyone, including her family members. She has no bank accounts so direct deposit is not an option. Her family has not been successful in establishing a power of attorney. However, we were informed that her son was recently assigned Representative Payee by Social Security. I ran this past several attorneys but none of them were familier with the term "Representative Payee" or their authority. Can the Representative Payee cash the pension checks? What would happen to the uncashed checks if/when she dies? Has the Plan met it's obligation? Could/should they give her cash?

Well, obviously the amendment can't discriminate in favor of HCEs. Would they need to check back-loading issues? Also, it won't help reduce the excise tax if that is what they are after. I believe it would have to be a pro-rata increase to reduce the excise tax.

You know what they say about assuming things. Personally, I find the canned documents contain some of the worse language around. The problems the canned documents create are not usually discovered until the plain vanilla client needs a little chocolate sauce put on. Then they realize all the money they saved by going with a cheap document may have just cost them plenty.

You need to ask the Plan's actuary to make this determination. Most early retirement benefits are subsidized, but the amount of the subsidy can vary a great deal depending on the factors used.

I don't know if they can be "forced", but why would the employer choose to pay twice as much as they need too? If the Plan is deficient, they have to pay the required contribution, plus a potential 100% excise tax. It would seem a pretty poor business decision to choose to pay the excise tax. That said, I know some employers just don't have the cash available. Have they looked into the various options regarding waivers and amortization extensions? (IRC 412(e), 412(f)) Also, since the deficiency is imminent, did PFEA 04 give them any relief

I don't think you can "value the plan monthly". A cash balance plan is a defined benefit plan and therefore if the participant doesn't receive the present value of their annuity on the date of distribution you have improperly reduced their accrued benefit. I don't know what it means to value it monthly. The value of the accounts change daily. That said, I think if the amount of the distribution exceeds $5,000, the spousal consent rules apply. We generally give 2-3 months of lead time for election forms. In other words, if a request comes in in May, the election package we send assumes the lump sum will be paid in August. It also contains a big note that if it is not paid by August, it will need to be re-caclulated.

"I would be curious to know if the ABPT testing would then be the numbers to report on the 5500, schedule H relative to coverage. " 5500 Schedule T should have this detail.

It's also fairly common. The IRS has stated repeatedly that it doesn't like it, but it is still very common in small tax shelter plans.

Also, wouldn't the method change require IRS approval since you only used aggregate for 1 year?

I'm using an FIL method and my UAL is negative and I'm not in Full Funding. Sec. 4.01(2) of RP 2000-40 grants automatic approval if I want to re-establish my UAL. Q1: If I do this, it looks like the re-established base should be amortized over 10 years. Do you all agree? Q2: If the Plan was amended this year to increase benefits, any reason why I can't re-establish my UAL recognizing the amendment or should I create two bases. One, my re-established base and two, my recent amendment. I guess the two base approach would give me a lower min since the amendment is 30 years and the re-established base is 10 (I think).

If limit it to Enrolled Actuaries and want an "A" month, I would say April 1st, since we are all fools for staying in this dinosaur business. WDIK - tremendous post!

Does anyone have an opinion on a method that instead of forcing UAL=0 when UAL is <0, you force UAL + CB + ARA = 0. This seems to produce a little more realistic result and doesn't force the creation of such a large large loss base. Part of my problem was the the sponsor wanted to make a large contribution, which would have created a large credit balance which would result in a large offsetting loss base to bring UAL back to 0. Our system allows this and I'm told that at least one major national firm does it this way.

You’re right, it is all UC, not PUC. (working late - thank you Congress!) OK, I agree that the FFC is < 0, i.e. 0. What I find strange is that because each year I will add the value of the AFC's to my reconciliation account, I will need to add an offsetting loss base to keep the equation equal to 0. This produces some very strange looking results. Do you agree this is the correct way to handle it?

Consider the following: CB = $0 Reconciliation account = $126,000 (due to LY AFC) PUC NC = $0 412 charges = $12,000 412 credits = $0 AFC = $61,000 ERISA FFL = $0 (UC AL slightly > assets) 90% RPA FFL = $170,000 Min. Req = $73,000 (AFC + 412 charges) Max Ded = $300,000 (100% of RPA) Even though I don't get a FF credit, should I wipe my bases out next year due to the application of the ERISA FFL? If not, assuming all other assumptions are met, wouldn't I need to force a loss bases each year to keep the balancing equation = $0 (since my UAL will be negative?) I guess that once the plan was well funded the AFC would no longer apply and I would get my ffc and all would be wiped out, but the process would look pretty strange to the sponsor. Or just let the balancing equation go out of balance since my UAL is < $0.

I think this is an issue between the locals and not so much a Plan issue. It should all be spelled out in the recriprocal agreements. If you don't have recriprocal agreements, I don't think there is any requirement to recriprocate contributions. Without the agreement, the different locals would be treated like seperate employers. That said, I work with several locals who pro-rate the hours credited under the home local to account for contribution differences between recripricating locals. Based on your example, the person might get 2.7 hours credited for every hour he works as a traveler. If your benefit home benefit formula is based on a percentage of contributions, no adjustment would be necessary since it would automatically provide additional benefit for the additional contribution. If your home benefit is based on $*YOS, than you might want to consider extra service credits. Either way, I think you need a reciprocal agreement.