david rigby

That is what I think it is, but I'm having difficulty following the logic. This is 412(m)(7) before the change: “7) Special Rules For 2002 And 2004 In any case in which the interest rate used to determine current liability is determined under subsection (l)(7)©(i)(III)— (A) 2002 For purposes of applying paragraphs (1) and (4)(B)(ii) for plan years beginning in 2002, the current liability for the preceding plan year shall be redetermined using 120 percent as the specified percentage determined under subsection (l)(7)©(i)(II). (B) 2004 For purposes of applying paragraphs (1) and (4)(B)(ii) for plan years beginning in 2004, the current liability for the preceding plan year shall be redetermined using 105 percent as the specified percentage determined under subsection (l)(7)©(i)(II).” The net result is to eliminate paragraph B, but I’m having trouble with what it means.

I'm unsure of the purpose of this section of PFEA: "(3) CONFORMING AMENDMENT- Paragraph (7) of section 412(m) of such Code is amended to read as follows: `(7) SPECIAL RULE FOR 2002- In any case in which the interest rate used to determine current liability is determined under subsection (l)(7)©(i)(III), for purposes of applying paragraphs (1) and (4)(B)(ii) for plan years beginning in 2002, the current liability for the preceding plan year shall be redetermined using 120 percent as the specified percentage determined under subsection (l)(7)©(i)(II).'. " Interpretation?

I think this is it. From IRS Reg. 1.416, "Q-17. Who is a 5-percent owner of the employer? A-17. If the employer is a corporation, a 5-percent owner is any employee who owns (or is considered as owning within the meaning of section 318) more than 5 percent of the value of the outstanding stock of the corporation or stock possessing more than 5 percent of the total combined voting power of all stock of the corporation. If the employer is not a corporation, a 5-percent owner is any employee who owns more than 5 percent of the capital or profits interest in the employer. The rules of subsections (b), ©, and (m) of section 414 do not apply for purposes of determining who is a 5-percent owner."

I agree with BobK. Several prior discussions on this topic. Perhaps you can Search for them.

I have 9.54% as well.

With respect to the "2-year lookback", perhaps Gray Book 2002-3 will help: Funding: Limit on Deductible Contribution to Unfunded Current Liability EGTRRA extends the IRC 404(a)(1)(D) "Unfunded Current Liability" deduction to multiemployer plans and to plans that cover 100 or fewer participants. However, for plans covering 100 or fewer participants, unfunded current liability shall not include liabilities attributable to benefit increases to highly compensated employees from amendments made or effective (whichever is later) within the last 2 years. 1) When does the "last two years" begin? 2) Is a plan year of less than 12 months a "year" for "last two years" purposes? 3) Does the prohibition on reflecting recent amendments apply to multiemployer plans that cover 100 or fewer participants? 4) For this purpose, is the date on which a plan amendment is formally adopted the date it is “made”, or may an earlier date be considered the date an amendment is made if the plan is operated consistent with the amendment for amendments that reflect changes in the law or annual updates of IRC limits? 5) If an amendment is adopted under IRC 412©(8), is the date on which it is "made" deemed to be the start of the plan year for which it is treated as effective for IRC 412 purposes? RESPONSE 1) Two years prior to the beginning of the plan year for which current liability is determined. 2) No, a short plan year is not a year for this purpose. 3) Yes. 4) An amendment is made on the date it is formally adopted. Annual cost of living increases in statutory limits such as those in IRC §§401(a)(17) and 415(b) are not considered "amendments" for this purpose. No guidance was given as to whether changes made at the time of EGTRRA compliance would be considered "amendments" for this purpose. 5) No, for this purpose, the date the amendment is made is the date as of which the amendment is adopted. Copyright © 2002, Enrolled Actuaries Meeting All rights reserved by Enrolled Actuaries Meeting. Permission is granted to print or otherwise reproduce a limited number of copies of the material on the diskette for personal, internal, classroom, or other instructional use, on the condition that the foregoing copyright notice is used so as to give reasonable notice of the copyright of the Enrolled Actuaries Meeting. This consent for free limited copying without prior consent of the Enrolled Actuaries Meeting does not extend to making copies for general distribution, for advertising or promotional purposes, for inclusion in new collective works, or for sale or resale. Blinky, I'm often wrong, but I don't see how one can apply subparagraph (iv) to any plan that is not covered by the PBGC.

I stand corrected. My 2004 version, and BNA, use "(iv) Special Rule for Terminating Plans". Clearly the reference to ERISA 4041 would apply only to PBGC covered plans.

Let's not forget tax implications. The PS contribution is tax-deferred when made and while in the plan. But it is permanently exempt from SS tax.

Oops. I think I should have said The FFC is 73,000 (12,000 + 61.000) minus 170,000 (but not less than zero). Same result.

The equation of balance should never be out of balance. [OK, before you point out the Aggregate method, please see the correct Eq of Bal in Reg. 1.412©(3)-1(b)(1)]. Also, if the UAL becomes negative, you set it equal to zero. Let’s assume you do not mean to use both PUC and UC; one or the other will do. I think the ERISA FFL should be the greater of zero (your ERISA FFL) and 170,000 (90% RPA override). The FFC is 12,000 minus 170,000 (but not less than zero). Don’t wipe out any bases.

IRC Section 404(a)(1)(D). According to the description at the top of the page, as of January 7, 2003. http://frwebgate.access.gpo.gov/cgi-bin/ge...=Cite:+26USC404 “D) Special rule in case of certain plans (i) In general. In the case of any defined benefit plan, except as provided in regulations, the maximum amount deductible under the limitations of this paragraph shall not be less than the unfunded current liability determined under section 412(l). (ii) Plans with 100 or less participants. For purposes of this subparagraph, in the case of a plan which has 100 or less participants for the plan year, unfunded current liability shall not include the liability attributable to benefit increases for highly compensated employees (as defined in section 414(q)) resulting from a plan amendment which is made or becomes effective, whichever is later, within the last 2 years. (iii) Rule for determining number of participants. For purposes of determining the number of plan participants, all defined benefit plans maintained by the same employer (or any member of such employer's controlled group (within the meaning of section 412(l)(8)©)) shall be treated as one plan, but only employees of such member or employer shall be taken into account. (iv) Plans maintained by professional service employers. In the case of a plan which, subject to section 4041 of the Employee Retirement Income Security Act of 1974, terminates during the plan year, clause (i) shall be applied by substituting for unfunded current liability the amount required to make the plan sufficient for benefit liabilities (within the meaning of section 4041(d) of such Act).” My copy of the Code is dated January 1, 2004 and is identical to above.

I'll take a contrary position, at least a little (surprise). Ditto the comments about CODA. But there is a more basic issue: why does the plan exist? If the plan sponsor has created this as a capital accumulation plan, then that is why a PS contribution is made in the first place, and changing the design to allow in-service distributions is a very significant change in philosophy. Tread lightly, and change the plan only after the sponsor has considered all the ramifications. If needed, I'm sure my employer can provide some consulting advice.

One or more of these might be your reference: http://benefitslink.com/boards/index.php?showtopic=20562 http://benefitslink.com/boards/index.php?showtopic=15502 http://benefitslink.com/boards/index.php?showtopic=10990

Here is the vote: http://www.senate.gov/legislative/LIS/roll...ote=00068#state

AndyH, The Senate website does not have the vote for the final bill. Do you have a link?

Section 102 of the Pension Funding Equity Act of 2004 concerns an “alternative DRC”. Subsection (b) amends IRC 412(l) for this purpose. The new 412(l)(12)© reads as follows: “C) APPLICABLE EMPLOYER- For purposes of this paragraph, the term `applicable employer' means an employer which is-- (i) a commercial passenger airline, (ii) primarily engaged in the production or manufacture of a steel mill product or the processing of iron ore pellets, or (iii) an organization described in section 501©(5) and which established the plan to which this paragraph applies on June 30, 1955.” Can anyone shed some light on (iii)?

I guess we're assuming no other exemptions from ERISA section 4021(b) ?

"...is vacation a sort of qualified plan..."? No. "...can a request by an executive be subjectively denied by a human resources representative?" Apparently so. Sometimes the answer is "rules are rules".

Be sure to check all the exemptions in ERISA section 4021(b).

Good advice. First question might be to see if any of the exemptions may have been available to the plan.

Thanks for the explanation. Approximately, what is the impact? about 100 basis points above current level?

6 months? Sure, please share the logic.

One more question to ask: what do you (realistically) think that $1500 will be worth when you take it out? (Hint: Don't believe any of the hype. One possible answer is $1500.)

Might be some helpful information here: http://www.irs.gov/pub/irs-pdf/p575.pdf For example, search for the word "beneficiary", and look on page 25.

Can you make the plan effective 1/1/2004 and have this Q go away?