JAY21

Yep, just got one on a plan term a few months ago that took 13 months.

Often one of the weak links in the unionized PEO structure is the employees often don't even know they are union employees which kind of makes it hard to argue they have collectively bargained for benefits in good faith.

If I'm understanding the strategy correctly to bump up PVABs so everyone's allocation is at least $1 less than their PVAB, I think I like that approach. Then I think the 80-229 ruling should support an allocation amongst owners that is not the same % for each since it is not discriminatory and it's not PBGC covered so we don't have majority owner rules to worry about.

Not yet.

I think Rev. Ruling 80-229 deals with this issue and I thought it merely required that the plan not be discriminatory in its final allocation of final assets. Don't know how that dovetails with any 411(d)(6) issue but you might check it out.

Can I ask one more scenario (which I do have as well). If the plan doc actuarial equivalence is ONLY the 417e assumptions (not greater of 417e and some other assumptions) then would the comparison for funding be the GREATER of: 1. 417e mortality table with 417e rates use for annuity factor at NRA but discounted pre-retirement to current age at 430 rates 2. 417e mortality table with 430 rates. Would this be correct ? Seems a bit odd to use both 417e rates and 430 rates in item #1 above so maybe I don't have that right. Thanks for the help.

Andy, is the segment rate discount in the first part of your response based upon the 430 segment rates (lump sum at 7.5% discounted at appropriate segment rate) ? Thanks.

If a Valuation assumes the payment form will be lump sum distributions, and the plan's actuarial equivalence used 7.5% pre and post retirement interest rates (84 UP table), do I fund using those interest rates while substituting ONLY the 417e mortality table for the mortality funding table ? Or do I need to also assume some different interest rates other than the 7.5%, like the 430 interest rates or even the 417e interest rates ? Thanks for the input.

Anyone know offhand what the penalties are for a late Form 10 filing for a PBGC reportable event due to failure to meet minimum funding requirements ? In this case it looks like the Form 10 filing is about 11 months late. It's on a plan with over 100 participants.

Yes, I think 2011 changes in Val date will require approval unless we get some future IRS allowance to change for 2011. For now, the regs only give the automatic change through the 2010 plan year.

I think the Accrued Benefit gets adjusted for post-NRA adj. to $9,000 (only) unless they actually elect to take the benefit as an annuity, and then if the plan provides for it, they then could get the COLA increase on the 415 limit-$9,000 even though they are at the High-3 average. If they end up taking a lump sum distribution instead of an annuity stream then I think you're limited to the 9k only for purposes of present valuing the benefit for lump sum purposes.

I always understood that FAS 87 net periodic pension cost "disclosed" the actual rate of return as a component but then the other component of net periodic pension cost "deferred gains/losses due to investment performance" (or something like that) adjusted it right back to the expected rate of return for the final result.

The two we've received so far were for 9/30/09 and 12/31/09 plan year ends.

We've had a number of clients (all 5500-EZ filers so far) getting an IRS late notice proposed penalty of $1900 (all of them have been the same $1900 amount) which seems to equate to $25 per day for the 2.5 months from original due date to extended due date. However, several of these people sent their 5500-EZ in months before the deadline. Seems like a potential IRS glitch to me, anyone else seeing any of these late notices ??

Don't plans have the ability these days to take in-service distributions at or after age 62 (earlier with supporting industry data). I wonder if you couldn't have an in-service distribution option in the plan and essentially fund and immediately rollout the contribution each year to the owners respective IRAs where there RMD distributions would be lower under the DC methodology as compared to the DB method. I have no input on the 412(e) plans, my comments relate to a traditional DB plan or cash balance plan.

Thanks for the help. Much appreciated.

One way or another we have always seemed to find the missing participants on our PBGC covered plans. However, that streak may be about over. I have plan with 5 potential missing participants but we have NOT yet done a publich search for them. Does anyone know of a good public search company (or two) that you have had sucess with in the past. I believe we cannot escheat the money to the PBGC as part of their missing participant program unless/until a publich search has been completed. Any names would be appreciated. Thanks in advance.

The proposed regs on cash balance plans gave us new market rate of return options but left some unanswered questions in my mind particularly with regards to what interest credit for FUNDING purposes you would use to project the account balance to NRA if say you have a market return that is negative for the year or even say a modest 1%. Is this an actuarial assumption that can/should be different than the actual rate of return credited to the theoretical accounts for the year ? Any ideas/opinions ?

Are we ok to use 2009 Form 5500-EZ in lieu of 2010 Forms for a terminating plan ? I know we've done that in the past but seems like there was at least one year we couldn't do that, but maybe that was on the longer 5500 forms that had to be E-Filed.

I thought I read somewhere that they will NOT send you a reminder or anything, we're just supposed to remember as best I can tell.

When I download the Application for Renewal of Enrollment (JBEA) Form 5434-A it shows this form was last revised January 2010. Is this form still valid for renewing enrollment by the March 2011 deadline or will they update this form with a January 2011 revised date that should be used instead ?

Interesting. So you can have a max DB plan and if you don't use the prototype SEP-IRA document you can also fund 25% of eligible comp in a SEP-IRA ? Sweet.....

Do we currently have a design-based safe harbor formula for a cash-balance plan ? Did the final and proposed regs add anything to this issue ? The 401(a)(4) regs under section 1.401(a)(4)-8© has a safe-harbor structure but some of the requirements seem outdated and would not allow you to take advantage of the more recent evolution of cash-balance plans (i.e., these regs require the accrued benefit to be the actuarial equivalent of the hypothetical account balance, require if you use a fixed interest rate that it produce the same present value as 417e rates). I have a simple cash-balance design of 25% of pay for each eligible participant. Under a DC money purchase plan this would be a very vanilla safe-harbor formula, it is such for a cash-balance plan ? or do I need to go through the mechanics to general test it if I want the accrued benefit to be equal to the hypothetical account (not equal to the actuarial equiv. of the hypothetical account) ? Thanks for any opinions.

Assuming the valuation has the assumption that the expected benefit form is a lump sum distribution then the annuity factor used to develop the Fdg Target and TNC should then be the GREATER of (a) 417e factor or (b) actuarial equivalence (if different), is that correct ? I realize the discount will use the 430 segment rates but I'm just concerned with the annuity factor itself. Thanks.

Question on a scenario where under recent proposed regs client wants to use an Index rate for the interest crediting on a cash-balance hypothetical accounts. If you choose to use one of the equity based index rates (e.g., S&P 500 index) for your interest credit on the hypothetical accounts, and it has a negative rate of return for a year or more, then for funding I assume it's an actuarial assumption as to whate future interest credit to assume to project to NRA for funding purposes. I'm still working my way through those final and proposed regs but if it's just an actuarial assumption issue then I suspect there isn't any guidance. Any opinion on what one might consider using to make sure the actuarial assumption is reasonable on say an S&P 500 index crediting rate (e.g., S&P 500 returns over past 5 years ? 10 years ? somthing else) ? Just trying to think through the process and what benchmarks one might use for reasonable assumptions.