SteveH

If you chagned from 3/100 to 2/20 don't you typically allow the participants the choice of which vesting schedule they want to have? So why not just do the same thing? Then phase out the accelerated vesting over the next couple years. The "old" schedule will only affect participants hired prior to xx/xx/xxxx.

Ok I confirmed it from the all knowing Newkirk that it is plans beginning in 2010. I just got their sample booklet that covers the PPA. I wonder why Congress pushed it out that late. I thought they usually created a new law and let it sunset 5 years later. Now they are creating laws that don't go in effect for 5 years. Anyway Blinky, funny story... I was doing some research on the board here so that I could answer a question someone asked of me. I found the answer and the person asked where I found it. The only thing that popped in my head (which I didn't say) was: "Blinky the 3-eyed fish told me." So I had to go find another source and print it out.

I did see that 2009 thing, but I thought that effective date was referring to something with muliple employer plans. It kind of seemed like it had moved on to the next subject. Regardless I have at least a couple years. We are proposing a DB plan to a client and he wants to keep his 401(k) adminstrator. I wanted to make sure that the DB(k) wasn't in effect for '07 which could have influenced whether or not he should keep his 401(k) administrator. Thanks guys and/or gals. (political correctness stinks, who would talk like that?)

I just read through the actual text (ok skimmed) of Section 903 of the PPA and didn't see the effective date for when we can combine the DB plan with a 401(k) feature. Has anyone seen that date yet? The summaries I have read all mention that you can do it but don't mention which plan year it becomes effective.

I know of one self directed cash balance plan also. I can't help with specifics either, but yes there is at least one out there.

Perfect, thanks jpod.

I am just wondering from a contribution persepctive. For instance if the plan says that the allocation will be 15% of pay, but the employer doesn't have the money, what happens? Has the employer not deposited the required contribution and therefore has gotten the company into an excise tax situation?

If a client is looking to give a more guaranteed contribution to their employees, what affect does writing into a profit sharing document that the contribution will be 10% of pay? Typically you would just list it as discretionary and then allocate an amount that would equal 10% of pay. If the document actually dictated that the allocation would be 10% of pay, and then the client did not contribute 10% of pay what are the consequences? Are you in effect creating a Money Purchase Plan subject to minimum funding if you write in the 10% of pay? You can ammend a plan within the couple months after the plan year, but when MPP were a little more common, we would tell employers that once someone worked the 1000 requirement they were entitled to the contribution. So you couldn't really change a MPP formula past mid year. I am trying to determine the difference between a Profit Sharing plan with the contribution fomula written into the document and a Money Purchase Plan.

I know there has been a quite exhaustive discussion on these boards about the 25% of pay limitation when combining a DB and a DC plan together. I have done the 404(a)(7)©(i) research. I realize there has been discussion about people flip flopping between the plans and issues with having an account balance in a profit sharing plan or possibly even just deferring to the 401(k) component of a profit sharing plan also. I am trying to convince someone that it is acceptable to go over the 25% of pay deduction limit as long as their is no single person participating in both plans. It is my understanding (from a gentleman on this board) that this topic was covered at an ASPPA conference in 2005. Does anyone have a copy of the Q&A that covered this that I can use to add to my case? My goal is to design a proposal that has a class of employees receiving a DB benefit and a different class receiving a DC benefit. Right now I am being told that "they" don't think I can do that. I don't know if this board will let you send attachments through their email system to other users, but if you shoot me an email I will reply. Thanks everyone.

I wonder, does it start out plucking gone awry? But that doesn't seem to be the answer because even if someone got a little over zealous with the tweasers that wouldn't explain the fact that the eyebrows, once drawn in, now have a completely new location on the forehead that is obviously not normal. Maybe it is just an attempt at individuality, and I should let it go.

I am sorry this thread is a little old, but why not just add the spouse the the payroll? What is the advantage of trying to carve out her own Schedule C income? I am not seeing where there is a tax advantage by trying to avoid paying her with a W-2. Maybe if there is a lot of money involved (over the taxable wage base) that both spouses will be over. Taking that into consideration with a DB plan, if there is that much money here, I would be surprised that the client is still a Sole Prop. What am i missing?

I feel like Joel's question is the same as asking, "Why does the woman in the office next to me always buy Starbucks coffee when should could just drink the stuff here in the office for free?" mjb's response: "Well it's probably because she feels that the Starbucks coffee tastes better." Joel's retort: "No, no, that's impossible. She only buys black coffee, none of the frilly stuff that Starbucks makes. It is the same coffee that is available here in the office and at the office they only ask for donations of $.08 per cup!" mjb's (getting a little frustrated) comes back with: "Well perhaps the coffee is better quality, maybe it is heated just to the right temperature, maybe she has the hots for the young kid behind the counter." Joel's (getting a little indignant) fires back: "Ridiculous, she should just drink the coffee in the office, that woman makes no sense! Someone please tell me why she always drinks the Starbucks." Pensions in Paradise, Gburns, mjb (sensing that this conversation is never going to go anywhere): "Dude, since you don't know why she drinks Starbucks, and we obviously aren't inside of her head, why don't you just go ask her?" Joel (frustrated by the smart remark above): "Look if you don't want to have a philosophical discussion about the woman in the office next to me, then just leave me alone!" --------------- So now that I have cleared up that we have discussions about what people think about. Why do some women shave off their eyebrows and paint new ones on? Is it because they want to always look surprised? Discuss....

Wife is self employed. She hires husband and pays him $15,000 per year. They both participate in the wife's 401(k) plan. Husband defers the full $15,000 into the 401(k) plan. Husband is also employed elsewhere, his other position offers him a 403(b) and he participates. Are 403(b) and 401(k) deferrals considered the same for an individual's maximum deferral limit? The missing piece of information right now is how much he participates in the 403(b). If the 403(b) does not count towards his 401(k) personal deferral limit then I won't bother tracking down that information.

Someone above mentioned "cross tested DB plan" and a couple people (sorry forgot the names) took exception to the term. In my brain I use the phrases "new comparability" and "cross tested" interchangeably. Mainly because I hate calling a plan "new comparability" when we have been doing it for like 10 years. The newness has worn off, at least it has for me. Now also when I think of a new comparability profit sharing plan, I think of a profit sharing plan with different allocation percentages to different groups. If you apply the different allocation formula to a DB plan as being a "new comparability" DB plan and that is interchangeable with "cross tested"... well you get the point. At least this is what I think the original person was referring to. He was calling his DB plan with seperate formulas a "cross tested DB plan" and that probably wasn't literally what he meant. So what do you call a DB plan with different formulas for different classes of people? Just a DB plan?

I have to admit I don't have any experience with governmental 457 plans at all, zero, zilch. The client is looking for something with a little more public funding and more "guaranteed" than their current 457 plan. I believe a goverment entity may adopt a profit sharing and/or a defined benefit plan, but I also understnad that are a lot of differences. I think I even read that thy aren't subject to Title I of ERISA. That seems like a big deal to me. We are talking about a small, rural goverment entity. As strange as this sounds I am almost thinking that a Money Purchase plan might be a good fit. I figured MP plans were "so 1990s", but maybe this could work. This will lock in a fixed amount of contribuiton that is required to be paid each year, but will not have exposure to unfunded liabilities. Anyone have some tips for me while I continue my research?

OK so TH minimum is the answer. That's what I thought. There is a top heavy minimum provision. I haven't gotten to the other rank and file employees yet so I am not sure if this topic is ready to die just yet but I am keeping my fingers crossed.

Edit: Looks like Effen is bringing up my same points. Thanks Andy, there are so many very serious people here. I try to keep it simple, because of all the people that read these boards. This thread is a great example. Over one hundred views and only a couple posts. Back to my little confusion though. You think I should round to the nearest $500 prior to taking her 4/25 participation into account? The little part of the paragraph right before where it talks about the rounding says "multiplied by the Participant's total number of Plan Years of Service (up to a maximum of twenty-five (25) years)". So I wanted to take the $450 and multiply it by 4/25ths then round. - Warning rant about to begin - I wish it was that simple, but nothing with this plan seems to be simple. Probably the reason it is a takeover in the first place. You know the great kind of plan where they forgot to add a couple employees onto their census for a couple years. And the client is mad beacuse "it has taken him more than a year to terminate this plan", although he forgets that just in March he was telling me that maybe he didn't want to terminate because the plan assets aren't quite sufficient to pay all the benefits. No crap, since you never included 2 out of your 5 employees that were eligible! I don't know who wrote the plan originally, I am going to blame it on a lawyer because they never realize what certain plan provisions mean in the real world because they don't actually work on the plans. - Rant over - Sorry lawyers, didn't mean to offend. But round to the nearest $500, who does that!?

It is the first paragraph of Article V BENEFITS. I left out the first part of the paragraph earlier, but I'll just quote the entire thing. 5.1 Retirement Benefits (a) The amount of monthly retirement benefit to be provided for each Participant who retires on the Participant's Normal Retirement Date shall be equal to the Participant's Accrued Benefit (herein called the Participant's Normal Retirement Benefit). A Participant's Accrued benefit is based on a retirement benefit formula equal to 3.0% of such Participant's Average Monthly Compensation multiplied by the Participant's total number of Plan Years of Service (up to a maximum of twenty-five (25) years), computed to the nearest five hundred (500) dollars. I am pretty sure this is a Corbel document if that helps.

In case anyone is still looking at this topic, another wrinkle has come up. I asked around the office and got 2 different answers so I need some help breaking the tie. This is a takeover plan and it has one (IMO) really bad provision. The accrued benefit is defined as 3% of the Participant's Average Monthly Compensation multiplied by the Participant's total number of Plan Years of Service (up to a maximum of 25 years), computed to the nearest five hundred dollars. The rounding part is the problem. We have the owner's wife that was paid $7,200 a year. The plan is terminating and she has 4 years of service. She has more than 25 years of part. before she would reach NRA. Her average monthly comp is $7,200 divided by 12 equals $600. $600 times 3% times 25 equals $450. $450 times 4 divided by 25 equals $72. Round $72 to the nearest five hundred dollars is 0. Now one person in the office thinks I should round the $450 to $500 and give her an $80 benefit because rounding her benefit down to zero sounds crazy. Someone else thinks that the Accrued Benefit is actually 0 and that she should receive the top heavy minimum instead since that has no rounding provision. (Yes the plan is top heavy and it does not exclude key people from receiving the THM). I vote for 0 accrued benefit and she gets the top heavy minimum because the plan doesn't say anything about rounding the monthly comp, it says you round the accrued benefit.

I pitched a fit and the boss made someone sit down with me and work out my issues. The distribution ones, not the mental ones. Anyways, thanks for looking. I think I have enough right now to take another stab at this.

I am trying to put together a benefit statement (my first one ever) so that the participant can decide what form they want to take the distribution in. I was going to ask for someone to help talk me through it, but I have a feeling that would be too complicated. I have asked for help here at the office but everyone seems too busy to really give me good help. I am trying to get the Life and 10 annuity amount at NRA and also a Joint and 100% Survivor annuity at NRA. The gentleman's accrued benefit at NRA is $2,000. His wife is actually three years younger than the participant. The perfect solution is if someone has an Excel file that can assist me with the calculations. I know this is complicated, but hey that's what message boards are for. Throw it out and see if someone can help. Thanks everyone.

XYZ LLC is owned 50% by husband and 50% by wife. LLC has about a dozen sales staff. Subsidiary ABC is owned 1% by above mentioned LLC, and 49.5% by husband and 49.5% by wife. Subsidiary has hundreds of leased employees. The leased employees receive a W-2 from ABC. They are hired by ABC and then leased to other companies. XYZ wants to implement a DB plan for the two owners and the dozen sales staff. The comment I heard today was that the hundreds of other employees are just inventory. From what I can tell it seems like leased employee issues hinge on control. If the recipient company controls the leased employee then they are a common law employee of the recipient company. If ABC controls the employee then they are a common law employee and because of the controlled group they are also going to be covered in XYZ's DB plan. The problem is that it seems pretty subjective. There isn't any rule out there that you can point to and say with confidence that you are correct. Any thoughts, help, suggestions? Right now I am just pissed that I have literally been proposing this case for 4 months and we are up to revision 16. Now that the client is finally ready to sign on the dotted line, I get this crap. Maybe it is ok, maybe this is not a problem. Hope, at least I can still have hope...

I kind of suspected that this was the case. I knew that employee contributions didn't count against deductibility if there was no matching contribution, but for some reason I was unsure once matching contributions came into the picture. I know this makes sense from a logic point of view, but the more I learn in this field it seems like I find things that don't make sense too often. I came back here to say that I found the answer in the pension asnwer book. For some reason I couldn't find it this morning. I'll blame it on my lack of sleep. By the way, I really do appreciate everyone that contributes to these boards. Sometimes you just need a little push in the right direction. I don't come here very often, but when I do, it seems like I always get good quick advice. Now I don't have to go ask Bill (in my office) and listen to him harass me about how I should know the answer already. Half the time I don't even think he knows the answer but can play it off like he does and just tell me to go find it in one of the pension reseources we have. So thanks again everyone for your replies.

First a confession...Some slacker friends came over to my home last night and I ended up only get 4 hours of sleep. So stating the obvious, I am having a rough day. Ok now on to my current dilemna... Some other company set up a safe harbor 401(k) plan we have a DB plan for the client. All employees are covered by both plans. His combined DB and matching contributions are under the 25% limit, but once you add in his deferrals the contribution is over the 25% limit. I am trying to convince myself that this is ok because if there wasn't a matching contribution then I wouldn't be worried about this at all. Total eligible salary = 272,300 Total DB contribution = 59,275 Total Match contribution = 8,169 Total Deferals for 2005 = 14,000 25% of eligible comp = 68,075 If I subtract the DB and matching contributions from the 25% limit, the plan is $631 under the limit. What are my options here? 1)Tell them to return all of the deferrals less $631? 2)Eliminate the match contribution (although it is safe harbor and I don't think can just be done away with). 3)Or I am confused and deferrals don't count against the 25% limit anymore, the plan is fine. 4)Something else. Of course I want to vote for #3 !!

That is how I understood the policy to work, just like key man insurance. Although I wished I would have remembered that term in my first post. So I am reading rcline46's post to say that things seem to be ok. Jay21's post is a little confusing to me, but I don't read anything in his post saying that this is wrong either. I think his comments are reflecting somehow that the policy is used to partially fund benefits in the plan where I don't see that happening unless a partner dies or on plan termination if there is a thousand dollars of cash in the policy once it is surrendered.