Calavera

Page 26 of the 2011 PBGC instruction: "There is no premium proration where a plan ceases to be a covered plan before the end of the plan year."

In your email you indicate the last day of coverage as xx/xx/xxxx, describe the situation with all relevant dates saying that there were two participants, and now plan covers only the owner, so plan is no longer eligible for coverage. You should receive the email from PBGC that a coverage determination case will be opened, and the assigned Employee Benefits Law Specialist will make a determination within 3-4 weeks. When they notify you that plan is no longer covered, you file your final PBGC form indicating that this is the last filing. Then you terminate a DB plan as a non-covered by PBGC. I am no sure about the possibility of retro coverage removal, so my suggestion would be to set 12/31/2011 as the last date of coverage, and file the 2011 PBGC filing as the final filing.

The only guidance I was able to find was referring to pre-PPA 4011 notices that were repealed and substituted by AFN. From 60 FR 34412 dated June 1995 http://www.gpo.gov/fdsys/pkg/FR-1995-06-30/pdf/95-16196.pdf The Department of Labor has advised PBGC that, in the absence of final regulations implementing section 101(d) of ERISA requiring notice of failure to meet minimum funding standards), it will treat a plan administrator that provides a Participant Notice as having satisfied section 101(d) with respect to any missed contributions identified in the Participant Notice.

According to 1.415(b)-1(b)(1)(i)(B) you should use monthly annuity factor: (B)Other benefit forms.— With respect to a benefit payable in a form other than a straight life annuity, the annual benefit is determined as the straight life annuity payable on the first day of each month that is actuarially equivalent to the benefit payable in such other form, determined under the rules of paragraph © of this section. Now, regarding the Plan's actuarial equivalence for everything, which is GAM83 (50% Male/50% Female) and 7.00% interest. I maybe over thinking, but if your plan states that an actual lump sum payable under the Plan will use greater of the two factors: GAM83MF/7% and Applicable Int/Applicable Mort, wouldn't you use the greater of these two factors for 415 purposes under the "test 1" (plan's actuarial equivalent).

All makes sense now, and looks good to me

Rolf, I agree that it should be lesser of the three factors. I was under the assumption that Plan's Actuarial Equivalence (GAM83-7%) is for the late retirement increases and not for the lump sum calculations. If your plan defines lump sum factors as applicable interest/mortality, the 5.5% factor will win. If your plan defines lump sum factors as 7%/GAM83 then plan factor wins.

In this case I think I would calculate the max deduction as (Target Liability + Normal Cost + Cushion - (AVA - Contribution made for prior year but not deducted)) (Pre-PPA adjustment to the Assets). I am sure you can do it if contribution was made during 2010 year before the 2009 deadline. I believe you cannot do it if contribution was made during 2009 year.

The minimum calculation for 2010 will automatically consider the prior year unpaid since your assets is lower and your amortization is higher The extra 5% in discounting applies only to missing quarterlies. So, assuming there are no missing qurterlies for the 2009 year, out of $2,000 the $1,500 x (1+2009 Eff Rate)^(9/12) will cover the 2009 unpaid contributions. Since unpaid contributions are taken into consideration through the increased amortization, I wouldn't adjust this calculation and simply take 90% of calculated 2010 MRC.

I got 415 lump sum as 160,521 x 7.104333 = 1,140,395 using 5.5%, age 79 and 2010 applicable mortality table.

Original email mentioned fundamentals and since in my opinion the following is incorrect: "therefore 415 lump sum = 19,500 * v^17 * a62 = 19,500 * (1.055)^(-17) * 12 = 94,172" I indicated what I think it should be for funding purposes and for payout purposes. You would look at the document to determine the Plan's lump sum. Then, under 415 regs, you need to convert it to the annual amount of the straight life annuity commencing at the annuity starting date, which IMHO is a lump sum date, and not a deferred date. Therefore you will use an immediate factor. Following the regs example, you will calculate the Plan's lump sum, then convert it to the three life annuities, then take the maximum of those three annuities, and then you should compare it to the 415 allowable life annuity payment at the commencement date.

Under a traditional plan with assumption 100% retirement at age 62, 415 lump sum for valuation purposes will be: 19,500 * v^17 * a62, where v is based on an appropriate valuation segment rate and not 5.5%. For purposes of actual payout the 415 lump sum is calculated as the present value of immediate benefits and not deferred benefits. So it will be 195,000 reduced for participation less than 10 years, reduced for payment before age 62, multiplied by an immediate factor. In your example for age 45 it will be 6,526 x 15.86 = 103,502. Note that credit is usually given at the end of the year, so the person will be age 46, and you will project his account for 16 years.

Didn't get mine yet. Got this from JB on June 22nd: We have sent out approximately 2,700 renewal of enrollment notices. We hope to be able to mail out the remaining notices shortly. If you filed an application for renewal of enrollment and paid the $250 fee by April 1, 2011, you may presume that you have been renewed and you are authorized to use the "11" prefix. Thank you,

Okay, you had to know this question would asked by a Missourian: Where does "it appear?" Is this your personal opinion? Did the DOL state this informally at a meeting? Was this in some consulting firm's newsletter? Okay (should've been more accurate), it appears from my reading of the Section 504 of PPA, and from what others were saying http://benefitslink.com/boards/index.php?s...c=43956&hl=

It appears you should post 5500 and Schedule SB (no other schedules or attachments). In addition you may mention it in the annual funding notice. APPENDIX A TO §2520.101-5-- SINGLE-EMPLOYER PLANS ANNUAL FUNDING NOTICE Right to Request a Copy of the Annual Report ...[if the Plan’s annual report is available on an Intranet website maintained by the plan sponsor (or plan administrator on behalf of the plan sponsor), modify the preceding sentence to include a statement that the annual report also may be obtained through that website and include the website address.]...

Two partners each: husband and wife. Yes, they have employees. Otherwise, they wouldn't have adopted a safe harbor plan. Contributions towards employees' benefit should be deducted on 1065. Contributions towards Husband/Wife benefits should be deducted on their 1040. I think any reasonable consistent methodology will work to split the contribution between partners (H/W) and employees. Furthermore, each partnership will take deduction for their employees. For the net earnings of H/W, the deduction on 1040 should be allocated by their ownership, unless there is a special partnership agreement stating otherwise. See links below for an additional information: http://www.law.cornell.edu/uscode/26/usc_s...04----000-.html http://benefitslink.com/boards/index.php?s...37158&st=15 http://users.wfu.edu/tower/432.732class/Pa...0Allocation.ppt

Our current approach is to freeze the age 62-65 limit to the limit that corresponds to the year of plan freeze (usually the same as the year of plan termination). We will not provide the COL increases, but we will adjust limit to the age at the distribution.

How many owners each partnership has? Are they different for each partnership? Do they have any employees besides partners?

Is it free pass for the 2010 year only? Do I need to get an approval to change it from 12/31/2011 to 1/1/2011?

1. For 30K contribution in a SEP, W2 wages should be at least 120K and business should not sponsor a defined benefit plan.

1.404(a)(4)-5 provides rules for determining whether the timing of a plan amendment (including the establishment of the plan) has the effect of discriminating significantly in favor of HCEs. And these rules are based on all of the relevant facts and circumstances. I would explain it to the plan sponsor, and as long as Plan Sponsor gets his facts straight, he should be fine ... until IRS disagrees with his reasoning.

In final 415 regulations as amended by WRERA Section 122: (a) IN GENERAL.—Subparagraph (E) of section 415(b)(2) of the 1986 Code (relating to limitation on certain assumptions) is amended by adding at the end the following new clause: ‘‘(vi) In the case of a plan maintained by an eligible employer (as defined in section 408(p)(2)©(i)), clause (ii) shall be applied without regard to subclause (II) thereof.’’.

How about: 1. Do not refund 2. Do not deduct 3. Count total contributions for minimum purposes 4. Carry over and deduct non-deductible portion next tax year 5. There are no excise taxes on DB contribution over max - http://benefitslink.com/boards/index.php?s...ic=47600&hl

You also need to be careful with plan termination. If you submit the 5310 to the IRS, your reason for plan termination most likely would be "Other" with additional explanation as "Plan is fully funded". It may raise some questions about improper front loaded plan design that was not intended to run until retirement.

I think you have to preserve the value of the early retirement subsidy. Therefore I would use deferred to 55 factors for calculating plan’s lump sum. The 415 calculation will use the immediate factors at 49. You can also amend the plan to change the early retirement age from 55 to 49.

In addition: only limitation on lump sum is applicable for the first five years of the plan somebody may argue that this plan is not subject to ERISA and this particular notice is not required one participant really gave himself this notice by looking at a mirror and telling himself that he is going to work really hard, continue this plan until retirement and not planning to take a lump sum in a near future