mwyatt

But consider the following: this was a major push back in 1997 to have trusts/plans get their own EIN numbers. We diligently applied for our clients to obtain said numbers. Of course we're dealing in the small plan market, where distributions are a random occurrence, so we've now run into the situation where clients have been trying to pay withholding taxes online due to recent distributions only to find out that their numbers assigned back in 1997 were canceled due to no activity. Further, if you go to the online SS-4 application, the IRS now seems to be hedging on whether or not you actually need to apply for a separate Trust EIN. What is the answer?

Especially if they're focusing on 2008. As an aside, I have noticed in my review of cross tested plans in the office that things seem to be turning around (felt like the Maytag Repairman last year, as not much need to run General Test with a $0 contribution), but getting inundated with review requests now for 2009. Also nice to see that assets did so well in 2009 for most of our clients (although we won't compare to EOY 2007 values - still a ways to go to get back to even).

Maybe we should spring for business newspaper subscriptions for our brethren in the IRS. $300k deduction for year end 6/30/08 and $0 for 6/30/09 kind of brackets the market meltdown I think. Your tax dollars at work.

On my wish list of nonsensical PPA changes would be the fact that you can't actually prepare current year valuations until the prior year is funded due to this new wrinkle of discounting from the date of deposit to the beginning of the year. 9/15/09 to 10/15/09 was the worst experience of my career with all of these small plans waiting to the last minute. For the good old days when a receivable was a receivable. May have to introduce some sort of differing fee schedule dependent upon when these clients choose to make their contributions. As to the thread, figure out the valuation date from the Schedule B/SB on freeerisa or looking in files. If the val is an EOY val, probably a little dubious that 2009 results would be available now (even more dubious if an LLC or a sole proprietor, Schedule C/K-1 is dependent on the accountant before the actuary can even start). As an aside, anyone check out the timing of the EA meeting this year? April 11-14th. Looks like a real party this time, since you're going to be up all night on your laptop w/ logmein.com fired up 24/7. Know I have to go for final reg discussions, but do these guys look at a calendar when they set these dates?

For those on ski vacations this winter in glitzy areas, see how many elderly are shepherded to the top of Dead Man's Gulch by their scheming offspring for that ultimate extreme skiing experience. I'll throw this link out I crafted off of our website this afternoon in recompense of ignoring the 2-year phase in. You'll get the IRS 417, funding segment, and PBGC variable rate premiums on one page in frames. Tired of chasing down three different pages when a little HTML coding can get them at one time. Hope it is of help Interest rates on one page

Good catch, Andy; phase-in was for 2008 and 2009 only. My bad...

Curious as to why the IRS released rates today, but didn't provide the 2010 Funding Transition rates (Jan-10 only shows for plan year 2009). Oversight? Funding Yield Curve Segment Rates

Well Andy, I'll take the administration at their "word" and think that things will be free and clear on $35k (funny though, I've yet to see anyone commenting on the fact that both the House and Senate bills are introducing a cap of $2,500 on Flexible Spending Accounts, other than some NYT apologists commenting on how they are so confusing and who would want to bother filing all of those receipts - guess they haven't quite figured out the total tax savings for folks when you're exempt from Fed, State, and SS). At some point in time after this bill passes, someone is going to figure out the fine print, and it ain't going to be pretty.

In point of fact, you actually don't even file the B/SB with the 5500EZ anymore (although it is still prepared by the actuary and provided to the client).

Unless you can find a "Greanpeace" actuary, would think tax savings on $6,000 contributions would be obliterated by expenses. Plus how much tax savings do you realistically net with incomes of $35k?

Looks to me from reading of Notice 2009-97, that the only issue granting extension for DC plans is for 401(a)(35) - diversification of employer securities. Appears that the batch mailing of "good faith" PPA amendments next week should continue for the large majority of DC plans.

I'll add to this thread having reviewed a Rube Goldberg proposal (it works as long as none of the employees/family members have the nerve to change their employment status). The proposed plan in question works fine given that the owner's wife and 2 kids (questionable as to actual employment, but I digress) get nothing from the proposed combo DB/DC, coupled with a NHCE pool of 5 that have 4 of similar age to the owner and one recent hire substantially younger. The whole scenario completely blows up if the 30 year old NHCE decides to move on. Question is this: they commit to various allocation percentages for the owner and the NHCEs in the CB plan in the plan formula. But a couple years down the road when the census has changed, do we have the option of after the fact lowering the owner's CB allocation, or is our only recourse to bring up the NHCE allocation rates (and hence present a factor of 15-20 multiple, not percentage, increase to the NHCEs). Gut feeling is that we can't cut anybody (owner or not), so that the only corrective measure allowed is to zoom up the NHCE allocations to a level that won't exactly have the client feeling warm and fuzzy, to put it mildly. Or am I overcautious with such an aggressive design?

You can probably fund for the 100% J&S (but you're going to be using the funding interest assumptions and standard male and female tables), but the reality is that your client is going to want the lump sum as the end game. Do you want to be explaining to your client that yes, you deducted all of this money, but (barring another market collapse) you've actually generated excess assets that you're going to recoup 9 cents on the dollar? Thought most small plans had moved away from the J&S subsidy a long time ago (say the 80s).

I'll only say this: the PPA minimum funding method for a salary based plan was deemed an unreasonable funding method (pure Unit Credit) prior to 2008 by the IRS. So what does that say as to PPA?

For small plans, have to look at HCE benefits. Rule is for 50% cushion amount, can't reflect amendments in last 2 years (and by IRS logic, really means three years, so for 1/1/09 val, for example, this would mean looking at 12/31/06 benefit provisions). Note that this also includes COLA amendments on salary and IRC 415 limits, as well as benefit amendments. Think that this also translates to the amount due to future salary increases as well. Note that this for 404 calcs, not 430.

Just curious, since the movement I've seen from 2008 to 2009 AFTAPs is decidedly downward (say 120% to 60%), who is your client's broker?

From the Explanation of PPA (page 102): Under the bill, the PBGC is directed to prescribe rules for terminating multiemployer plans similar to the present-law missing participant rules applicable to terminating single-employer plans that are subject to Title IV of ERISA. In addition, under the bill, plan administrators of certain types of plans not subject to the PBGC termination insurance program under present law are permitted, but not required, to elect to transfer missing participants’ benefits to the PBGC upon plan termination. Specifically, the provision extends the missing participants program (in accordance with regulations) to defined contribution plans, defined benefit pension plans that have no more than 25 active participants and are maintained by professional service employers, and the portion of defined benefit pension plans that provide benefits based upon the separate accounts of participants and therefore are treated as defined contribution plans under ERISA. Effective Date The provision is effective for distributions made after final regulations implementing the provision are prescribed. Has anything moved forward on this from the PBGC's end?

Too bad that this is somehow getting mixed up on two threads, but a husband and wife plan not covered by PBGC is subject to the 6% limit for DC. That was why so many folks here were asking about PBGC coverage. Is true that for 2008 forward, combination plans where the DB plan is subject to Title IV coverage are exempt from the 404 combined limits.

Good luck. PBGC has their own way of interpreting things (and if it means lessening their liability given a huge deficit, so much the better - might give anyone out on this board pause who champions the "public option" as a more humane way to go with health care). Just argue your point - not sure that actuarial equivalence should be viewed as a "benefit increase" given the whole concept. For history, consider all the way back to the late 70s when you had plans in the transition of pre-ERISA vesting schedules; operationally, these plans were in compliance with the ERISA vesting, but the restatement process took place in '78. PBGC (who were taking over their plans) went on the attack to actually use the pre-ERISA schedules post ERISA because the outcome would be more favorable to their balance sheet, never mind screwing the participants. Not a particularly proud moment for the PBGC, nor is your example. Hanging their hat on GUST restatement implementation is kind of shabby treatment for their interpretation of phase in.

PBGC or no PBGC coverage on the DB plan?

Of course, w/o digging into the regs, what exactly is the value of regs literally issued on 10/15/2009 that provide for no discount on 2008 contributions if written notification provided to the actuary by that same date? Just wondering.

Fee discussions are verboten (remember all of that Anti-Trust mumbo jumbo at the beginning of any EA Meeting General Session).

Nope, just curious that these seem to be "test cases" posted. Gary, seriously, have to consider Prohibited Transaction problems too. I'd recommend that your client run this by an ERISA attorney; us actuaries aren't qualified to give thumbs up or down (plus they can hang their hat/noose on the attorney instead of you).

Discussion of fees is something to do around the bar at the EA or ASPPA meeting, not on a website (those Google spiders are constantly out there, you know). Seriously, why don't we just start a discussion thread to come to an agreement about what we should all charge? After the various examinations by the various professional agencies (although I guess the Academy has some bigger fish to fry right now) and the DOJ, we can continue our discussion after we finish raking the sandtraps at the minimum security facility.

Given the exemption to 404 combined plan deduction limits if covered by PBGC, that $102 check per year may not exactly be the worst thing in the world in this circumstance.