david rigby

I'm sure someone can correct me if this is out of date. Blinky is correct that the corporate extension can be used. However, the extension of the corporate income tax return is to September 15 (CY plans) but the Form 5558 extension is to October 15, so be careful.

As stated by Mike, there is a lot here. Anyone who helps will need much more information than is posted in this message thread. While I don't disagree with Mike's suggestion to consider an attorney, you might also consider this program: http://www.actuary.org/palprogram.htm

This is Q&A 2003-35 from the Gray Book: QUESTION 35 DC Plans: Safe Harbor 401(k) Plans, Top-Heavy Exemption If a plan that is intended to be a safe harbor 401(k) plan also provides for a separate profit sharing contribution (which may be discretionary), does the 401(k) part of the plan lose the exemption from top-heavy under Code section 416(g)(4)(H), as added by EGTRRA? Does it matter whether a profit sharing contribution is actually made or not under the profit sharing provision for a given year? RESPONSE If a profit sharing contribution is actually made, the top-heavy exemption is lost. The exemption does apply if there is no actual profit sharing contribution. The safest course of action is to have two separate plans. Copyright © 2003, 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.

I also heard the discussion to which Frank alludes. It was presented something like: - participant retires on December 1 and receives annual distribution (plan permits annual payment). The amount is the 415 limit. - participant changes his mind about form of payment on February 1 and receives a lump sum (as permitted by plan), - since the age is the same (using the plan's rounding procedures), the lump sum is the present value of a 415 benefit.

Does DOL Reg. 2520.104b-10)d)(3) help? http://www.dol.gov/dol/allcfr/ebsa/Title_2...520.104b-10.htm

Perhaps this is all just too silly: Just to be cautious, has the plan taken advantage of the retoractive application of the $200K comp limit? Has there been a distribution? Can the benefit be defined using a normal form of a J&S, then pay monthly or annual benefits instead of a lump sum? If the plan can continue to exist, make sure it takes advantage of future increases in 415 limit.

OK to be more generous than the law allows in this area. Might be some business and/or benefit planning reasons not to do this, though.

Try this. http://www.soa.org/tablemgr/tablemgr.asp Read the qxtables.txt file to see a list of the tables included.

Mike's comments certainly echo my gut reaction as well. It is possible that the PBGC has already answered this question. My hunch is that they would be able to give an unequivocal answer. On the outside chance that this is new ground, it seems likely that both the IRS and PBGC would prefer the spinoff route. Otherwise, it becomes very difficult to document how the assets are allocated.

How is the 8/1/03 amendment different from a plan freeze?

Assuming that the participant really did receive adequate notice, (2). See pages 25-27 of the Form 1040 instructions. http://www.irs.gov/pub/irs-pdf/i1040.pdf

Already I miss Dick Wickersham.

Note that this could lead to the establishment of a "transition" base for amortization. That should not be a problem, since the prupose of a "transition" is to respond to a change in accounting method.

Contains some provisions of concern. For example, upon termination of a DC plan, it permits the transfer to the PBGC of account of a "missing participant". I wonder if the authors intend for DB plans to pay for the administrative cost of such service.

Only for purposes of a very rough estimate: to "convert" the 5.08% factors to those using 4.75%, multiply by 1.03.

Top heavy?

yes. If the employee was previously reported on SSA (due to VT status), advisable to remove him/her on the SSA, as well as adding the surviving spouse.

I agree with MGB's explanation and annuity values. If you need more decimal places: immediate at 59: 161.07316 immediate at 60: 157.79831 immediate at 62: 151.05205 immediate at 65: 140.57747 deferred from 59 to 62: 127.81620 deferred from 60 to 62: 135.03101 deferred from 59 to 65: 99.78263 deferred from 60 to 65: 105.41503 BTW, not very likely that 5.08% will be valid for 2004 payments, probably closer to 4.75%. This could be significant: by postponing a possible retirement only 2 months (from 12/1/2003 to 2/1/2004), you might increase the lump sum by about 3%. But, that also depends on the factors outlined by MGB relating to rounding, how age is calculated, and possibly other administrative procedures.

Hmmm. OK, I'll buy that argument.

Based on the facts given, the method can be changed even though it was changed within the last 5 years. See 4.01(5) of Rev Proc. 2000-40. See also, this discusion. http://www.benefitslink.com/boards/index.p...ST&f=22&t=19350

Thanks for the commentary. I think I agree with your post Blinky, but am confused about your emphasis. For the 2002 schedule B, instructions for Line 1(d)(2)(a) includes “However, a special rule under Code section 412(I)(7)©(i)(III) allows a rate up to 120% to be used for the 2002 plan year.” Then, Line 4a includes “…except that 120%of the weighted average interest rate could be used for the 2001 1(d)(2)(a) calculation if the special rule under Code section 412(I)(7)©(i)(III) is being used for the 2002 plan year.” The “if” in the latter quote might imply that the Line 4 calculation (which is the ratio I asked about originally) at 120% for 2001 is valid only if it is used on Line 1(d)(2)(a) for 2002. Am I reading too much into this? If this interpretation is valid, anyone see a reasoning why the 2002 rate should be greater than 105% in order to use it for 2001?

Sorry for my sloppy phrasing. I have heard others express unhappiness with Wickersham. I agree that losing his willingness to participate in discussions, and to offer opinions, would be a loss for many. The depth and breadth he has brought to professional meetings has always been important.

We'll be glad to help. Need some information first. You do not have to tell us the amount of your benefit; we can give you the factor to use, then just multiply. (The following assumes you are covered in a pension plan that is not sponsored by a church or a governmental organization.) 1. we assume you are entitled to a pension benefit that is payable monthly. correct? 2. on what date (not age) is the benefit assumed to commence? (perhaps you have more than one date in mind.) 3. specify any early retirement adjustment that must be included (if not already included) 4. your date of birth. 5. the plan year (defined in the plan as the fiscal year on which plan records are kept); not necessarily the same as a calendar year. 6. the plan's definition of how it defines the interest rate for making such lump sum calculation (for example, "the rate in effect for the month prior to the beginning of the plan year") and the time period over which it remains stable (for example, the plan year or a plan quarter). 7. normal form of payment for your benefit, without adjustment, such as lifetime annuity, etc.

Judging by some comments I have overheard, others may disagree about that.

Regs. available here: http://www.access.gpo.gov/nara/cfr/cfrhtml...26cfrv5_00.html