tuni88

On 2/15 he hasn't yet satisfied the eligibility requirement to enter the Plan because July 1 hasn't happened yet. Ionly scanned this thread so maybe I'm missing something. Why would you not freeze the plan for new entrants?

We are comtemplating freezing our DB plan and starting up a 401k alongside it. I know the 401k has certain tests internal to that plan so that matching contributions don't become too large for the higher paid employees, etc. (Those tests have acronyms that I forget just know - but that's not my question.) We've never had to do a similar test on our DB plan because, I am told, the plan is DESIGNED in such a way that whatever tests exist they are considered passed automatically. My question is (please help me re-phrase it if you can read my mind and know what I'm talking about): Are there any tests that have to be done considering the two plans in tandem? Can the new 401k be designed in a such a way that any tandem tests can be considered passed? A second question: We're a not-for-profit, but we can still have a 401k-type though, right?

I wonder what the auditor is getting at.

We paid a couple lump sums from our DB pension plan during early 2008. Our auditor is calling these annuity purchases. If they are annuity puchases then we can add them to the fraction that makes up the ATFAP, no? Please sort out the confusion. I guess the question is: Do lump sums get added to both the numerator and denominator of the fraction?

We have heard that "instructing the timing of the AFTAP certification" *may* result in a fiduciary responsibility. Well, they'll have to catch me to flub me. Plus I've got the census data. It's around here somewhere. Hope I can find it amid all the rubble on my desk before this fall.

Yes, I think so. We'll probably instruct him to wait until the last minute (that's 9/30, right?). Do we have to provide a notice as of 4/30 like we did last year? Nothing's changed - we're still between 60% and 80% - so does that notice have to be sent out again or do we just continue on as though nothing has happened? (Nothing HAS happened, even though we think we know what WILL happen.)

Our 2008 AFTAP is between 70% and 80% as of 1-1-08 and we are under benefit restrictions now. (Basically we can't pay full lump sums.) If our actuary does not tell us what our 2009 AFTAP is before April 1, I understand that it is DEEMED to be 10% less, or between 60% and 70%, until such time as he calculates it - which must happen prior to October 1. (Please correct me if I got any of this stuff wrong.) Then what? We expect the real 2009 AFTAP to tank pretty bad. Let's assume it ends up below 60%. On what date do the under 60% benefit restrictions kick in? On October 1, 2009? On the date the actual calculation of the 2009 AFTAP is determined? In the meantime do we just continue operating under the 2008 restrictions? I love this stuff. Not.

What are the implications of being under 60%?

Someone please tell me the difference. I think I know what the Carryover Balance is: the >0 number on our 2007 Schedule B - Actuarial Information that represents, as of 12/31/07, how much we have contributed, cumulatively, more than the minimum required by law. It's called 'Credit Balance' on the Schedule B. [Please confirm.] So what's a prefunded balance? It seems to be more than just a renaming of the Carryover Balance. Can I determine from the Schedule B how big ours is?

Thank you. If elected as king, here is what I will do to revitalize the DB system (1) Outlaw FASB158 for forcing employers to post liablilities for benefits not even earned and boxing employers into a corner by mandating the fiscal year end measurement date. (2) Reinstitute 10 year vesting and graded 15 year vesting with provision for new schedule to apply to future accruals (from hire date) (3) Allow plan to specify fixed interest rate and mortality table for lump sum benefit calculation using standard interest rates and mortality tables. This could be adopted without grandfather (4) Eliminate top-heavy rules. (5) A plan sponsor who in every year contributes no more than the PPA minimum (w/o regard to FSCOB) will not be subject to reversonary excise taxes upon plan termination. (6) Eliminate quarterly contributions except possibly for the very large, unfunded plans. (7) All PPA elections are deemed made by the plan administrator's signing the 5500. (8) Eliminate the PBGC risk premium for plans with unfunded vested liabilities of less than $x million. (9) Rescind PPA accelerated benefit restrictions except for "key" employees (HCEs would still be limited by 401(a)(4)). (10) PPA amortization would be changed to 15 years. (11) Inform all government bodies that their role is to audit and not to punish. (12) Eliminate spousal consent requirements (or alternatively, allow cigar smoking in government buildings). (13) Eliminate every other burdensome and uncessary requirement I haven't thought of. #13 - Dear King, Please do away with the apparent requirement of .9 cents in gasoline prices. I'd prefer you mandate a reduction of .9 cents per gallon but will bow to your wish if you must raise the price by .1 cent. Beseechingly, Your humble servant and toady tuni88

Not inordinately concerned with price, just trying to ensure we're under the fat part of the bell curve with regard to actuary billing rates. (It sounds like we are.) We don't have any concerns about the accuracy of his results etc. With regard to the actuarial valuation report, we're not doing anything with it, so am wondering why we should even receive, and pay for, it unless it is legally required. Or maybe the solution is read it (ugh) and see if there's something in there of value to us.

The actuary calls us each year and tells us what is the range of contributions. We pick a number in the range and prepare to pay it. A few weeks later, usually after we have already made the contribution, the actuarial valuation report shows up. I open it to confirm that the range he quoted over the phone is in the report and then it commences to gather dust sitting alongside all the previous reports from years gone by. The fee for this report can be in the neighborhood of half of the entire year's fee. Maybe some companies need/use a report, but it seems like a no-brainer in our case just to cancel its publication. I don't suppose we'd see a 50% reduction in actuarial fees cuz he still has to spend time doing the calculations. Are there any plan sponsors out there that can respond? Anybody done this? Any regrets?

We got a notice this week that our actuary (a one-man operation) was raising his hourly billing rate to $225. How does that compare to what other actuaries charge for DB plan work? What is a typical billing rate at the big firms? tiny firms? Separate question: Is an annual actuarial valuation report legally required? That seems to be the biggest part of his annual fee. Even if not legally required, are there any bad implications to not having one prepared?

We have a former vested employee from years ago who retired this fall and, after much himming and hawing, ended up taking the lump sum option (about $20,000). He couldn't make up his mind about a direct rollover and ended up sending us no paperwork for a rollover election. So we told him we'd have to take the default action of paying him 80% of the total and sending 20% on to Uncle Sam. Trouble is, we didn't instruct the bank trustee properly and they sent him 100%. Weeks later, long after he had cashed the check, we discovered the situation. I contacted him and asked him to send 20% back so that we could cut a fresh check for withholding. He says he's decided to just let it stand and pay whatever tax is due next April 15. I didn't ask if he's rolling it over himself or just keeping the money. So now what? I'm inclined to let it stand too because I can't see any other alternative if he won't send the money back.

A few years ago we lowered the vesting requirement in our DB plan from 5 years of service to 3. I don't remember why but I vaguely recollect we HAD TO to stay in compliance with law. Now I run across a small company's fairly new SPD wherein they state they still have 5-year vesting. Is 5-year vesting still allowed (0% vested before 5 years, then jumps to 100% at 5)?

Thanks. Not subject to 6.20%, but do pay the 1.45%. Am in a high tax bracket and Roth not an option I believe. Have been reading around in these messages and a new question comes up: How do I know if the plan I'm in is an ERISA plan or a non-ERISA plan? For sure the plan is non-matching. It's all my money only. Also, Master, although you been a wonderful mentor and teacher to date (all 15 minutes), where can I easily get slightly more formally self-educated on 403b's? Would prefer a "highlights brochure" approach that spares details but still gets me educated enough to start to at least sound like I know what I'm talking about? Thanks for your help.

Yeah, I was afraid of that.

I just started teaching very part-time at a local community college. I don't need the pay immediately - I have other income - so I signed up to send 95% (I've gotta leave something for beer and cigarettes) of my quite small paycheck to their 403b plan. I just got my first pay stub and see that none of that money is currently taxable. This seems to be as good as a deductible 401k. Have I got this right? I should be in at 100%, no? (You wouldn't mind if I had to hit you up for a cigarette now and then, would you?) Newbie

What is the most that can be contributed to a DB pension plan in 2008 and still be tax deductible? It used to be normal cost plus 10-year paydown (?) of nonfunded amounts. Now there is "Target Normal Cost." Can more than this be contributed and deducted? We may want to fund-up our probably soon to be frozen plan. If we freeze the plan at 12/31/08 (last day of plan year) will there be a target normal cost for 2008? Certainly none for 2009, right?

Hope not. We sure don't do it.

No, but I presume someone somewhere was trying to accomplish or fix something. If that someone is reading this please explain yourself. I'm holding my breath until I get your answer. Blue ...... bluer ...... exhale!

OK, so if someone retires now from our calendar year plan we need to provide it. Thanks. I'm trying to figure if The Law is an ass. To whoever thought this up: What were you trying to remedy? Wouldn't a 76% J&S have done a better job?

OK, so we have to add a new payment alternative to our DB plan (by the end of this year, I think) - a 75% J+S. The only J+S we have now is the 50% and we require that the spouse sign off if the employee wants something other than the 50%. Question: Suppose the employee now wants to choose the 75% J+S. Can we just pay it or must we get the spouse to sign off? PS - Does anyone know what problem is solved having to add a 75% J+S to our plan?

What is the whys and wherefores for this 75% business? How did it come about? What does it fix? And when do we have to amend our plan?

As I understand it, the first of the three interest rates applies to years 1 thru 5, the second to years 6 thru 20, and the third to years beyond 20. [Please correct if wrong.] So say an amount payable in year 27 is being discounted back to the present. Does the 3rd rate apply only back for 7 years (followed by fifteen years at rate 2 and then five years at rate 1) or does the 3rd rate apply to all 27 years? Thanks.