tymesup

Can you substantiate the amount and date of the prior distribution? That there were no other distributions? Can you substantiate you've got a full five years of participation under the prior plan? I think there's a thread somewhere that mentions disregarding another plan's benefits if the two companies have some separation in ownership and/or time. It would seem possible you're not allowed to use this other company/plan. Given this potential client's fact pattern, he should get a large benefit/deduction without the prior plan. I wouldn't push too hard to get more.

We could create a second file for testing purposes, but it's asking for trouble and definitely more work. We're hoping the software is available before anything hits the air cooling device. It's probably too late for Santa, but maybe the Easter Bunny will come to the rescue.

Our software won't do 401(a)(4) testing for BOY valuations, yet. Until it does, we're hosed.

Today's SOA webcast featured Jim Holland. There doesn't appear to be any guidance on 436 restrictions/EOY valuations on the radar.

I don't think you can reflect the amendment for a 1/1/08 valuation.

We're just starting to jump on the CB bandwagon and have done EOYs. With PPA, we're hoping to convert to BOY. I found that IBM and Georgia Pacific did BOY for their CBs, so we know it's possible.

A nugget from Jim Holland at the ASPPA conference: Q. Can a defined benefit plan still be split-funded using life insurance? A. This will be discussed in future proposed regulations. However, it is difficult to understand how insurance can be used because the Pension Protection Act requires that the plan be valued using market rates, and the insurance portion of the assets will be valued at insurance company valuation rates. Since split-funding uses a level funding method, and all plans now will be using the unit credit method, the current use of life insurance to fund a defined benefit plan may disappear. It may be possible to use “the envelope method.” I think Jim is in left field to suggest insurance can't be used in a DB plan. I do agree we'll be using envelope funding. You may want to check this thread: http://benefitslink.com/boards/index.php?showtopic=37378

We've been using CSV for our valuations. Since we assume no turnover and no mortality, I think the accumulated value would be more appropriate. If we were using explicitly reasonable assumptions, we'd have to obtain all the surrender values and add up the PVs at the various decrement ages. I don't have any clients that want to pay for this calculation.

You'll have to decide whether to give credit for the frozen years. Either way, there is a discrimination issue.

Note there's a proposal to increase the fee from $25 to $250. http://a257.g.akamaitech.net/7/257/2422/01...007/07-5428.htm

The 417e mortality table was changed with Rev Ruling 2007-67, issued on or before 11/7. There is at least some doubt whether this table should be applied for 415 purposes. http://www.irs.gov/pub/irs-tege/rr2007-67.end.pdf

I'd be leary of paying anybody while the 5310 was being looked at. Hopefully, the plan states that payments are made as soon as administratively feasible. Bad break for the affected participant, though.

Mix in a 20 year certain annuity with the J&S. A salary scale is explicitly reasonable. The benefit should be over 100% of comp, cause Social Security is going down the tubes. Assume the employer is going to hire more people and start funding them now. Do an end of year valuation and fund over the number of years to retirement age. Better yet, accrue the entire benefit immediately and use the unit credit funding method. Don't forget to add 45,000 for profit sharing. And 15,500 for 401k. And 5,000 for catch-up.

404(j)(2) NO ADVANCE FUNDING OF COST-OF-LIVING ADJUSTMENTS. - For purposes of clause (i), (ii) or (iii) of subsection (a)(1)(A), and in computing the full funding limitation, there shall not be taken into account any adjustments under section 415(d)(1) for any year before the year for which such adjustment first takes effect. I'm under the impression that PPA lets you project one year's worth of 415 increase, although I can't find the reference right now.

ERISA 101(j) has no meat on its bones. When IRC 436(e) kicks in, accruals cease (similar to a freeze or plan amendment reducing benefits), aren't you glad PPA protected your pension. Since the 101(j) notice tells them about the decrease, a separate 204(h) Notice would be rubbing salt in the wound. As a practical matter, you wouldn't be able to issue a 204(h) Notice ahead of time, since you wouldn't necessarily know the numbers or whether a certification would be ready in time.

Uh oh, I'm getting 147.998 at 65/65 for the 10 year certain and life. Anybody else get 137.862 for the plain life annuity at 65/65?

Agreed the statutory language hasn't changed. It's not clear where IRS got the authority when they wrote the reg - the statute looks pretty cut and dried. Perhaps this goes back before ERISA. This hasn't got a lot of attention and the reg hasn't been rescinded, so you might very well be right.

Does the IRS track the CB from year to year? I've been told they track Schedule I EOY/BOY assets.

The gotcha is if you were using the plan year commencing within the taxable year, PPA makes you switch to the plan year ending within the taxable year and there's a year with no deduction. PPA - Effective for years beginning after 2007 404(o) DEDUCTION LIMIT FOR SINGLE-EMPLOYER PLANS. -- For purposes of subsection (a)(1)(A) -- "(1) IN GENERAL. -- In the case of a defined benefit plan to which subsection (a)(1)(A) applies (other than a multiemployer plan), the amount determined under this subsection for any taxable year shall be equal to the greater of -- "(A) the sum of the amounts determined under paragraph (2) with respect to each plan year ending with or within the taxable year

"Reported" = shown on Schedule B. The client had some cash, wrote a check. The (prior) actuary was able to use some of it in 2005. He reported the 2006 deductible amount on the 2006 Schedule B. The client deducted everything (more than the deductible amount) in 2005/2006. There's no funding deficiency. It's not clear that a Credit Balance helps this client under either ERISA or PPA. I don't see any benefit to refiling the Schedule B. The 404 assets are bigger than the 412 assets, which is a minor annoyance.

A large contribution was made early in 2006. Some of it was reported on the 2005 Schedule B. Some of it was reported on the 2006 Schedule B. Some of it has not yet been reported. Can the 2007 Schedule B list it as being made in 2006? Will this cause any problems? Does this violate any rules? Thanks for any help.

The certification under IRC 436 is due as of the first day of the fourth month - 4/1 or April Fool's Day for calendar year plans. I don't think there's an exception for small plans. I don't think there's guidance for end of year valuations.

Note that when PPA applies, you will have to map the plan year ending 12/31/xx to the fiscal year ending 4/30/xx+1.

I agree with a. I don't see anything in 415 that says make all these adjustments for age, service, etc., come up with a number, then apply vesting. This seems similar to the question of when to apply the 415 limit if you have an accrual fraction. You're allowed to project a large benefit, then pro-rate for service/participation, then limit to 415.

I worked on a large law partnership plan some years ago. The assets were commingled. We kept track of each partner's assets, subtracted them from that year's PVAB and the difference was their contribution. We then did the overall valuation and hoped it's range surrounded the total of the individual contributions. Since the asset return jumped all over the place and the PBGC rates jumped all over the place, the partner contributions jumped all over the place. Partners were constantly asking why their contribution went up or down or sideways and why it didn't compare to the partner du jour. The arrangement lasted about five years before we were sent packing.