tymesup

412 said either each of your assumptions is reasonable or the contribution is equivalent to what you would get if they were. Since most small plans have a death benefit equal to the PVAB, you would get a similar contribution if you had an explicit mortality decrement.

So there are at least two practitioners - you and SoCal - who use BOY for sole practitioners. Maybe we can do that in our office, too.

Hope you don't get stuck with a valuation where the deduction depends on the compensation, which depends on the deduction, ...

ERISA 101(f) provides for a funding notice for plan years that begin after 2007. The time for providing the notice has an exception for small plans as defined in 303(g)(2)(B). Unfortunately, our adviser doesn't have this section on their website.

There's an element of Catch-22 here. The feds are saying professionals can't retire at 55 because they don't retire at 55. How many of these folks would retire at 55 if they had been able to stash away a large sum? Throw in the fact that the limits have changed a bunch of times. Wouldn't TEFRA's slash have affected the number of pros who could afford to retire? Hasn't SBJPA increased this number? Is this number increasing as SBJPA's effect phases in? Grant that qualified plans may not be the primary factor in retirement decisions, they must have some effect.

How about accruing the lesser of 10% of average comp or the dollar limit each year? Fund 150% of that if you want to be a pig. Take a distribution after 10 years of accruals. Does it matter what NRA is if you can take a lump sum at the participant's discretion?

Sure you can. This time of year, our mental state is way past tense.

With 150% of current liability and beginning of the year valuations, there should be a fair amount of flexibility available.

Are you using the deferral account as an offset to the DB benefit? Are you making hardship withdrawals from the profit sharing account?

Once it's uploaded, it can't be changed. Therefore, we're planning to send the form to the client to look at before authorizing us to upload. It adds work, but seems to lessen our exposure.

416©(1)©(iii) provides an exception to the minimum benefit if no Key Employee benefits for the Plan Year. Before 2002, there was no exception. Note the top-heavy minimum vesting schedule does apply.

We have some floor/offset plans with interesting backgrounds. Paying flat-rate premiums for zeroes would be another large straw on a heavily laden camel. Luckily, we don't get many of these frozen accrual plans.We do look to close the barn door before the newer horses get in.

From the 2001 Bluebook www.pbgc.gov/docs/2001bluebook.pdf QUESTION 9 Premiums — Floor Offset Plans Under a floor-offset defined benefit plan, a participant’s benefit is reduced by the benefit attributable to the participant’s account balance in a separate defined contribution plan. Suppose that the benefit attributable to a floor-offset plan participant’s defined contribution plan account balance completely offsets the participant’s benefit under the floor-offset plan as of the premium snapshot date. In view of the change in the definition of “participant” for plan years beginning after 2000 (under which an individual is counted as a participant only if the plan has benefit liabilities with respect to the individual as of the snapshot date), must the plan pay premiums for the participant? RESPONSE: For administrative convenience, the PBGC will accept a simplified test for excluding the participant from the participant count in a floor-offset plan. Under the simplified test, the plan administrator would determine whether, under the terms of the floor-offset plan, a benefit would have been payable to the participant from the plan if, on the premium snapshot date, the participant had been fully vested, had terminated employment, and had been eligible for a distribution. If no benefit would have been payable, the participant may be excluded from the count. In the case of a deceased participant with one or more living beneficiaries not in pay status, the plan administrator would apply the same test to each beneficiary, assuming (for purposes of the test) that the beneficiary was eligible for a distribution on the snapshot date. Whether a participant’s benefit must be taken into account in computing unfunded vested benefits for purposes of the variable-rate premium depends on whether the plan has a current liability for vested benefits of the participant. A floor-offset plan has no vested current liability for a participant if and only if the offset equals or exceeds the gross vested benefit from the flooroffset plan at every decrement age for every type of decrement the actuary would use to value vested current liability. Similar rules would apply for a deceased participant with a living beneficiary not in pay status.

I don't think you would have to pay PBGC premiums for participants with no accrued benefit. Also, you don't have to provide benefit statements unless they ask for them. However, you're still stuck with providing SPDs, SARs, etc.

Under Eligible Employees, could you exclude those hired after a particular date? That would probably preserve your prototype status. I think the Relius folks were OK with this idea.

1.401(a)(4)-1©(10): vesting has to pass 1.401(a)(4)–11© with respect to the manner in which employees vest in their accrued benefits. 1.401(a)(4)–11©: Whether the manner in which employees vest in their accrued benefits under a plan discriminates in favor of HCEs is determined under this paragraph © based on all of the relevant facts and circumstances, taking into account any relevant provisions of sections 401(a)(5)(E), 411(a)(10), 411(d)(1), 411(d)(2), 411(d)(3), 411(e), and 420©(2) ... 11© gives examples, but nothing on the general case of different schedules for an ongoing plan. 401(a)(5)(E)(ii): If the employees' rights to benefits under the separate plans do not become nonforfeitable at the same rate, but the levels of benefits provided by the separate plans satisfy the requirements of regulations prescribed by the Secretary to take account of the differences in such rates, the plans shall not be considered discriminatory merely because of the difference in such rates. How would you compare two schedules without 74-166? Nah, I haven't had to do one of these since 401(a)(26) took away IDB's.

Rev Ruling 74-166 provides acceptable methods for comparing the benefits of two or more plans which have different vesting schedules.

Nice of them to come out with this on Friday afternoon. I guess a class action suit is out of the question.

Off the top of my head, you can get a refund. For a small plan, it may not be worth doing and/or mentioning to the client.

Once you convert to a cash balance, the participants will expect to receive lump sums. Add it now, be a heroine. Add it later, look like you were trying to pull a fast one.

2000-40, Section 6, .02, (6) Non-Applicability says you can't do the change if you're a spread gain and .... Since UC is not spread gain, I think you're OK.

If you fund for 150% of the accrued benefit for the first two years, that should give you enough cushion to take care of the third year if it's a downer. You're looking at excise taxes if you underfund or overfund. No employees? Get it in writing.

If you believe in waiving benefits, this might be a good time to do so.

And I thought I was behind in my reading.

I think the new 415 regs put the kibosh on increasing the 415 limit to recognise that a monthly annuity is less valuable than a beginning of year annuity. For example, if the limit is 180K for 2007, it's 180K no matter how you pay it. IIRC, ASC is retooling their software to reflect this change.