JAY21

If you have a corrective amendment completed after the IRC 412(d)(2) election period (2.5 mos after PYE), you cannot use the corrective amendment on the Valuation for funding but can still/must correct the discrimination testing by the 11(g) deadline (9.5 mos after PYE). On the Form 5500 if the corrective amendment brought in an additional participant to pass testing do you show a different higher participant count on the Form 5500 than you do on the Schedule B ? Any problems showing a different participant count on the Form 5500 than the Schedule SB ? Thanks in advance.

I think Bird nailed the reason right on the head. We are seeing this a lot.

I had received some mix feedback on this one. Some people said their ERISA attorneys said "no need" and some felt like it was needed. We have tried to error on the side of caution so we have been filing them (one 5310-A for each plan).

I guess I was trying to see if there was a way to take the first year 415 limit payment in a manner that would make it eligible for a lump sum rollover (client really doesn't want the taxable income) instead of taxable annuity payments, but by taking ONLY the amount that would be equal to the annuity amount. Probably can't have the best of all worlds here I suppose.

If a participant must receive payments at NRA to avoid an impermissible forfeiture of their benefit (say they are hitting the high-3 415 compensation limit) must these payments be considered "annuity payments" that are taxable -OR- can these payments be considered a partial lump sum eligible for rollover (non-taxable) status ? Thanks for any opinions.

Is there any consensus or opinions out there on whether Hatfa liabilities can be used on a restricted HCE distribution calc ? (110% funded after proposed distribution).

A CPA is insisting that the one of the partners in a husband/wife partnership share of k-1 income on line 14a, which is less than the Guaranteed Payments shown near the top of the k-1 statement (forget the line item) should NOT be used for the pension calcs and further should not be split between compensation and contribution. Essentially he seems to be saying that the guaranteed payments would be treat like unto w-2 wages for a corporation in that they are not reduced or split by virtue of the contribution made on behalf of the owner. I did not have that understanding, but I learn new things from time to time, and would appreciate any others' opinion on this. thanks in advance.

Be prepared to find it difficult to find an insurer that will offer this on a 1 life plan. I had a similar situation recently with 3 participants recently who had total benefits with a present value of around 200k and we were working through a broker that specializes in pension annuity purchases and even with all insurers available to us we could find only 1 insurer that would bid on it and the price was about a 50% premium over the aggregate 417e lump sum amounts under the plan. Boutique market commands Boutique prices. I agree with Andy that this may be the only approach but it's real unfortunate when this happens.

I have some news plans coming in with insurance and though we do not sell products ourselves we're try to accommodate the client and make sure the insured death benefit is within the incidental benefit limits and constitute definitely determinable benefits. I did a google search on IRS LRMs for DB plans and found their language. If I'm interpreting it correctly a plan using the 2/3rd ILP method for the maximum insurance would provide the following maximum benefit (please confirm or correct): QPSA + Incidental Reserve (if Incidental Reserve is a positive value). Incidental Reserve: Proceeds from Life Insurance plus Theoretical ILP reserve minus (CSV of policy + QPSA). Does this sound correct ? I'm not promoting life insurance just trying to deal with it correctly. Thanks for any help.

I don't do many permitted disparity plans these days. On a takeover plan a participant will be getting a lump sum distribution. The excess benefit % uses the maximum permitted disparity % (0.75% for SSRA of 65; reduces to 0.70%, for SSRA=66, and .65% for SSRA = 67). The Actuarial Equivalence for the excess portion for purposes of calculating a lump sum distribution uses standard interest rates (7.5%) and a standard mortality. Does applicable of 417(e) rates have any impact on the excess benefit % ? Is there any adjustment/normalization due to 417(e) I think I remember that you didn't have to make any special adjustment just for 417(e) lump sum purposes to the excess benefit %, but I'm not positive on that. Appreciate any feedback.

Last I checked on this if we used the various proposed reg options to credit theoretical accounts with an interest credit equal to actual rate of return on plan investments, you had to use that annual rate (not an average) in your DB/DC combo testing. Is that still the case or has there been anything new on this that would allow an "average" of multiple years' returns to be used instead of each year's ? Thanks.

Has anyone had the situation where they went down the PBGC standard termination path and got about 90% done with all distributions and then the client discovered unanticipated losses on the final assets that will require some extensive time in order to come up with the money. Plan has already been on 2 extensions of time for different reasons and now the surprise losses will cause some extensive and unknown delays. What are the mechanics here ? Does the PBGC have you revoke the plan termination ? Any special rules or unique situations that arise when the plan term is revoked after 90% of the people have been paid out ?

Anyone have some insurance company names that WILL offer the lump sum based upon the floating 417(e) rates in addition to all the other usual annuity benefit options ? Thx.

My 2 Cents, thanks for the informative response. So the insurers that you have seen have been willing/able to do the 417(e) calcs on the lump sum for plans that offer that ? I realize this is probably what makes it unattractive to insurers. I don't suppose that calculating the present value as of the purchase date using the 417(e) interest rates in effect at that time, and then having the insurance company provide a reasonable rate of return on "that" lump sum amount after that date, would satisfy the rules would it ?

We work with small DB plans so It's been a while since someone has chosen an annuity as part of a plan termination. I now have a few such elections on a plan termination where none of the participants are at ERA or NRA yet but want a deferred annuity. Can you remind me under a PBGC covered plan what the annuity structure must be to relieve the plan of it's liabitlies to the participant. I know it has to be an individual contract in the participant's name, and I believe since the annuity payments will start way after 90 days that their election as to the form of deferred annuity benefit will be null and void after 90 days, so does the deferred annuity essentially have to contain ALL optional forms of benefits under the plan ? Thanks for the help and reminder.