david rigby

I don't think it matters. The lender wants to attach anything available. Surely you've seen this.

Perhaps I'm an idiot, but I'm confused by "choose zero contribution" and "gets zero contribution". They seem different to me.

However, that has not stopped various loan contracts from stating that such an account is the collateral. But such provision would (to the best of my knowledge) be unenforceable.

Which do you mean? IBP or IPB? And what is the context?

Terms of the plan will govern. No statutory requirement to include or exclude.

Require? Profit sharing?

I can't see the value of this action. Why bother with the expense of a DL filing? What advantage does it provide? A plan freeze (at least in the usual use of that term) is a very simple amendment stating that there will be no additional benefit accruals (and no new participants) after X date. This is not, and does not imply, a plan termination. A sponsor can "unfreeze" the plan at a later date, with the same or different rate of accrual. No decision is required at the time of the freeze.

Re-reading the book and exercise, I see that the exercise analyzed the Normal Cost and the Accrued Liability for 5 methods (UC, EA, EANFIL, AANFIL, and Agg.) No differences due to method! The author concludes with "Note that all rational methods differ only becuase of the effect of actuarieal assumptions on the incidence of annual costs."

I've been around much longer than Blinky.

The example provides census data for a hypothetical plan, but essentially ignores all actuarial assumptions. Then calculate the funding contribution under several methods: Agg, EAN, UC, etc. All are equal, demonstrating that different patterns of funding are the result of applying actuarial assumptions, rather than applying a different method. I did not believe it until I worked it out myself. Great exercise.

For a fascinating example, see the first question at the end of chapter 1 of this book: The Fundamentals of Pension Mathematics, by Barnet N. Berin

This links to the 2003 Instructions: http://www.pbgc.gov/plan_admin/2003ppp.pdf See Item C.13 on page 21 (the page with number 21 at the bottom of the page): “Count the number of plan participants as of the premium snapshot date.” "Premium snapsshot date" is defined in Item A.6 on page 2 (the page with number 2 at the bottom of the page).

Assuming you are referring to the mandatory 20% withholding on lump sum amounts distributed other than a direct rollover, there is no withholding (at least for federal purposes) below $200. That is, the $15 balance is subject to the same rules, but the amount of withholding is $0. However, such participant should still receive the "special tax notice".

Probably governed by definitions already in the plan.

Unless I completely misunderstand your facts, it sounds like the employee elected to defer. But perhaps you should explain what you mean by "opt-out of the plan".

Perhaps there are reasons to consider a PLR?

Don't know about your fact situation, but the IRS has stated that, because the excise tax for a funding deficiency is statutory, it cannot be waived. With respect to a 2002 plan year, it is also quite clear that the deadline for submitting the waiver request is 2-1/2 months after the end of the plan year. IRS has stated this deadline cannot be extended or waived.

Not if you are prepared!

You could also run a parallel IA method, and use the results to prorate your actual contribution.

The IRS recently issued this revenue procedure: http://benefitslink.com/IRS/revproc2004-15.pdf

That technique is pretty common. Also consider that you may have some amortization bases (for example, a plan amendment 3 years ago) which do not apply to all participants (for example, those hired after the amendment). Or, the credit balance is not associated with any new participants. Perhaps it would help to allocate such items to the participants "affected".

Here is Gray Book 94-7 Disposition of Reconciliation Account Balance - 412 Can any of the components comprising the Schedule B Reconciliation account ever be eliminated and, if so, under what circumstances? For example, if a plan becomes fully funded for Current Liabilities, can the accumulated additional funding charges due to section 412(l) (Schedule B item 9(p)(i)) be transferred to the plan's credit balance? Similarly, can any or all of the Reconciliation account be eliminated or transferred to the credit balance when the 412©(7) full funding limit applies? RESPONSE The reconciliation account should be eliminated only when the ERISA full funding limit applies and there is a full funding credit. In no event should the reconciliation account be added to the credit balance. Copyright © 1994, 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. Another possibility might be to use simple arithmetic. The first sentence of the Line 9q instructions for the Schedule B read as follows: “The reconciliation account is made up of those components that upset the balance equation of Treasury Regulation section 1.412©(3)-1(b).”

ERISA (section 4021) defines those plans that are exempt. Non-profit is not on that list.

George McGovern. "I support Senator Eagleton 1000%."

Methinks there are some missing facts.