Calavera

Tell to the IRS actuary that if he/she is using the "accrued-to-date" approach, the total average compensation should be used for a cash balance plan, as you would use for a career average db plan. This should give you the same results as if you just do calculations on the annual basis.

Assuming your client already has 10+ years of participation and his 3-year-average salary is above $220k, this is correct. However you may gain some of this decrease back when the IRS issues new 415 $-limit. Yes he can forego portion of his benefits upon plan termination. He will need to fund by the distribution date based on the decreased lump sum that corresponds to his age at distribution.

Is this a cash balance plan?

This will be considered the 2017 PY contribution. It will impact your 10/1/2018 asset but it will not be counted as the 2018 PY contribution. It is possible that the 2018 PY contribution will still be required. As long as your 2017 max deduction covers your February contribution that was deducted, you are ok and there is no need for a plan amendment. You need to be sure that your 2018 max deduction is enough to deduct the September contribution for the 2017 PY, and the 2018 PY contributions (if any).

It is a wonderful idea to put post-tax money into pre-tax account and get taxed again upon withdrawal. However 25% of net $0 is still $0.

The actual max deduction under the rules would be $33,539, but in this case your client will not be able to deduct his full medical insurance of $14,400 (see 1040 instruction for line 29). What CPA is trying to say is, "please do not make $9,539 of employer contribution, and if a client made it during 2018 year, please do not count and deduct whole amount."

I wish. See below (emphasis mine) Code D - Use this code for a participant previously reported under the plan number shown on this form who is no longer entitled to those deferred vested benefits. This includes a participant who has begun receiving benefits, has received a lump-sum payout, or has been transferred to another plan (for example, in the case of a plan termination). Also complete columns (b) and (c). Participants should not be reported under Code D merely because they return to the service of the plan sponsor.

Do not forget to report all terminated people reported previously, with code D under plan A.

No. See following for more details: https://benefitslink.com/boards/index.php?/topic/53060-top-25-lump-sum-restrictions/ https://benefitslink.com/boards/index.php?/topic/44667-restricted-distribution-eligible-for-rollover/ https://www.irs.gov/pub/irs-wd/1031042.pdf

I believe plan owes him EE contribution with interest only, unless it was already paid out in 2008.

Love it.

There was a good article also mentioning the same PLR. http://www.employeebenefitsupdate.com/benefits-law-update/2015/2/12/when-a-termination-is-not-a-termination.html

#1 - After reading through some materials related to the Heinz case, I am still not sure if it is not allowable. All examples are pointed out to employees currently eligible for early subsidies or late retirement increases, and not to those who are not eligible yet. #2 - I agree that you can not amend the plan, but maybe if you already have this provision in the plan you may start implementing it. I let attorneys to decide on both cases.

Some other options in addition to David's suggestion of amending the plan for in-service distribution at NRD: 1. Client can implement Suspension of Benefit for active employees who didn't reach NRD yet, and stop actuarial increases for them if they continue to work past NRD (subject to RMD rules). 2. Client can implement Suspension of Benefit for active employees who are over NRD, and stop actuarial increases for them after suspension is provided (subject to RMD rules). 3. Client can amend the plan for RASD and provide two options: a) current retirement and NRD retirement. Consult plan's ERISA counsel for more information.

Thanks Dave for that awesome reference. Jpod, keep in mind that plan document should have the appropriate language You will need to apply for a disallowance

1. Not permissible 2. If the interest credit rate is a variable rate, the rate of interest used to determine accrued benefits under the plan shall be equal to the average of the rates of interest used under the plan during the 5-year period ending on the termination date

From http://www.ccactuaries.org/archives/meeting-materials Released annually at the Enrolled Actuaries Meeting between 1990 and 2015, the "Gray Book" was an essential compendium of questions from actuaries and answers from the IRS. The Super Gray Book consolidates these materials on a USB with searchable indices for the each set. Note: Due to reallocation of resources at the IRS & Treasury, competing priorities, and government concerns surrounding reliance upon responses in the Gray Book, the Gray Book will no longer be produced.

For what it worth from Gray Book 2004-42: Treas. Reg. §1.401(a)(9)-2, A-2(a) provides that except in the case of a 5%-owner, the “required beginning date” is April 1 of the calendar year following the later of the calendar year in which the employee attains age 70-1/2 or the calendar year in which the employee retires from employment with the employer maintaining the plan. If December 31, 2003 is the employee’s last day at work, and the last day for which he is paid or entitled to payment of wages, is that the date of “retirement”. Or is January 1, 2004, the first day he is not employed, the retirement date? When is the employee’s required beginning date? RESPONSE “Retirement” is the last day worked, not the definition of retirement date in the plan. What date is an employee’s last day worked is a facts and circumstances determination. The facts and circumstances are based on the employer’s practice concerning the last day an individual is considered an employee.

Bravo!

Assuming HJ is the S-corp. owner - It most likely will be a combination of a qualified defined benefit plan with 401k/Profit Sharing plan. Talk to your accountant and/or google for a small actuarial businesses/consultants for a proper advice.

Agree with Tom and Larry. The testing age is 65 (latest of 2 uniform NRAs). Generally, the best way forward is to amend DC plan NRA to 62.

Generally actuaries will not deal directly with participants (unless it is a one person business). I suggest to contact the company sponsoring the plan (HR, benefit administrator, etc.). Then company will request a recalculation from their actuary.

1. You can try requesting plan sponsor to recalculate RMD amount based on the account method. 2. I do not think either method is considered to be a default method. 3. A lot of TPAs are using annuity method because they think it is easier, which is not true. 4. It appears your $4,115 not eligible for rollover out of $105,358 corresponds to the following: spouse terminated employment during 2018 spouse will commence his/her benefits in 2018 spouse is 72 years old as of 12/31/2018 if any of the above bullet points are not correct, the $4,115 needs to be recalculated

We should not be a "Trad'l DB guy" or a "CB guy". We should do what's best for a client. Just let it go Mike

Aha, takeover plan. - Sorry for a firing comment Well, then you are right on target. You have 2 options: 1. Opting-out of using lookback rule and fund 2017 year so your 2018 assets is higher reducing 2018 premium. I agree it is not practical because you will be stuck with estimated/amended filing (see Estimated Premium Funding Target section of the PBGC instruction). 2. Not opting-out, paying ~15k premium for 2018. Still funding 2017 year so your 2018 assets is higher to reduce 2019 premium. Additional ideas are: a) changing the retirement age assumptions (if possible); b) changing AVA to MVA or MVA to AVA (whatever is applicable in your case) if it is beneficial c) introducing termination assumptions along with immediate distribution upon termination if it is beneficial