tymesup

If the lump sum was paid in December of 2015, the participant might still be able to roll over the 10K and still be within 60 days.

No low-hanging fruit on the COPA board saying you can change asset valuation method. Rev-Proc 2000-40 might give permission, but consensus is that it no longer applies and/or isn't worth the risk.

Our document provides that service is disregarded if the plan is frozen. There is no mention of disregarding post-freeze compensation.

If I'm reading 1 correctly, the plan would give credited service and compensation from the freeze date to the end of the plan year. Since that would be more than the minimum necessary under 416, that would not be unacceptable. It's not clear whether the "freeze date" would be the date in the middle of the year or the end of the plan year.

I think they should raise the premium to 1,000,000 per participant (and remove the caps). They would raise so much revenue it might balance the budget.

2-20 vesting may be better overall than 3 year cliff here. It's worse in year 2, but better for years 3-5.

For what it's worth: 2001 Greybook (Q&A 2): Funding: Application of IRC §412©(8) to IRC §404 Plan A was adopted on January 1, 2000. Based on a preliminary 2000 valuation, the minimum required contribution is $1 million and the maximum deducible amount is $1.4 million. On February 1, 2001, the plan is amended to double benefits, effective on January 1, 2000 and made retroactive to that date. Pursuant to an election under IRC §412©(8), this amendment is reflected in full in the January 1, 2000 valuation. Accordingly, the minimum required contribution increases to $2 million and the maximum deductible limit (if the plan amendment were taken into account) increases to $2.8 million. What is the maximum tax-deductible contribution? 1) $2.8 million, reflecting the IRC §412©(8) election? 2) $2 million: the greater of the minimum required contribution reflecting the IRC §412©(8) election and the otherwise applicable maximum disregarding the IRC §412©(8) election? RESPONSE $2.8 million, since any IRC §412©(8) election made for minimum funding purposes also applies for maximum deduction purposes.

Off the shelf: The participant probably doesn't get the prior service unless they repay the lump sum. There may be a deadline for repaying the lump sum. Repayment is with interest, I think at some federal interest rate that was pretty low. Repayment of a partially vested lump sum can restore a fully vested accrued benefit. What does the plan say?

There doesn't appear to be any explicit guidance on the subject. Folks on the COPA site are taking the conservative view by agreeing with the IRS counting method. As a practical matter, the extra cushion usually isn't needed two years later. Note there is also a debate whether an amendment adopted 3/15/14 could be reflected in the 1/1/13 valuation.

The death benefit is not subject to the 415 limit. It is limited to being an incidental benefit.

Agreed with Calavera. Note that while the Code says two years, the IRS counts it as three.

Leave a dollar in the plan. The AFTAP is 1/0; the funded percentage for 110% rule is 1/0.

Having trouble pasting today. Search for IRS Rev. Proc. 2000-42, my post from 6/26/14, #6. Short version, it's unclear, the community is generally not doing this.

Assuming you are satisfied there is no permanency issue, the participation under the old plan can be added to the participation under the new plan to determine the 415 limit. Since the contribution is only 50K, this is probably not an issue.

417(e) applies to a QJSA or a QPSA. If the plan provided a death benefit in excess of that, such as the PV of the accrued benefit, 417(e) would not have to apply to the entire benefit. It would be unusual to do that, however, since it makes administration that much more complicated. Your plan doc says it does apply.

It's not OK for a plan to change the rules once the game has started, but it's OK for the government to do so. It's OK to offer a participant a lump sum at one point in time, but not at another. Employers should just keep paying PBGC premiums, no matter how high they go. Employers should just keep paying their consultants fees', no matter how high they go. The government may change the rules whenever it would like to do so. It does not need to announce the changes in advance. It does not need to ask for comments. Have I got this right?

Here are two ways this could happen: Suppose John Doe were an employee on 1/1/14. If so, he could have been included in the 1/1/14 valuation even if he wasn't a participant on that date. Alternatively, the valuation was performed, a minimum contribution was calculated, a maximum deduction was calculated. John Doe entered the plan in 2014, so a contribution was allocated to him. The total contribution was between the minimum and the maximum.

And four years later, still can't find a cite. Notice 2007-28, question 5, does give an example of "two years" for a different Code section.

Valuation must reflect PFB, which must reflect election to add to PFB. Check 430 regs whether AFTAP must be reissued. Client might benefit from your guidance on whether to create PFB.

Perhaps the suspension was to suspend monthly annuity payments, while you were still working at least 40 hours a month.

Happy New Year to anyone still on Benefits Link (DB plans) on this, the last day of the year.

Have the Teamsters acknowledged they can't keep their promise? Has the PBGC? Has Washington acknowledged they set up a flawed agency? One that may have encouraged the Teamsters to underfund the plan? Is it appropriate for Washington to pick winners and losers in this situation?

The Teamsters made a promise to Bob. They should keep it. The PBGC made a promise to the Teamsters and Bob. They should keep it.

I used to solve the linear equation to determine the maximum. Since it varied by funding method and applicability of the full funding limitation, it was easier to iterate.

Notice 2014-53