ScottR

Yes, I think you're reading it correctly. We're free to change val dates in 2008, 2009, and 2010. I'm pretty sure I heard confirmation of this at the ASPPA Conference. .. Scott

The law is a little fuzzy on this. Looking at the various categories of participants.... Active at plan termination date: Clearly get 100% Terminated and paid in full before plan termination date: No further benefits are payable at plan termination, because any non-vested benefits were formally forfeited when the vested interest was paid out. So there's nothing left to become vested at plan term. Terminated non-vested before plan termination date: No benefits are payable at plan termination, provided the plan contains "deemed distribution" language. i.e. that the participant is deemed to have been paid his full vested interest, thereby forfeiting non-vested benefits. If the plan doesn't contain deemed distribution language, things are much less clear. One could argue that no forfeiture occurs until the participant has 5 consecutive 1-year breaks in service, and that the non-vested benefit would become 100% vested on plan termination. A more reasonable position (IMO) would be that full vesting is required if the participant didn't have a 1-year B-I-S. This is why I always include deemed distribution language in my DB docs. BTW, I'm assuming that a partial plan termination didn't occur when the employee terminated employment; if it did, then 100% vesting must be given to all affected employees. Terminated with partial vesting and not paid out prior to plan termination date. I generally provide full vesting at plan termination if the employee terminated in the current plan year. Otherwise, they get just their vested interests, as determined when they terminated employment. Best! Scott

I agree WRT benefit accruals. But what about lump sum restrictions? I seem to recall that the WRERA relief doesn't apply there. So the plan was deemed to be < 60% funded on 10/1/09 and no lump sums could be paid for the balance of the year. Agree? .. Scott

Consider a partnership with 3 owners. No other employees. Is there any way to set up a SEP covering just one of the owners? My experience with SEPs is limited, but I'm under the impression that a SEP must cover all employees who have been with the company for a few years. Is there some sort of custom SEP plan that allows for the exclusion of certain HCEs? Thx, Scott

Max monthly benefit at 58 = (195k/12) x (APR62/APR58) / (1.055^4), where APRs are based on 83GAM, 5%. A second calc should be done based on the current 417e mortality table and 5% interest. The 415 limit is the lesser of the two results. I'm pretty sure it would be the first one. ... Scott

If the plan's death benefit is PVAB, I generally don't use a preretirement mortality discount. It doesn't make sense to discount the value of future benefits for the probability of dying before assumed retirement date, unless you also value the expected death benefit payouts. For large plans with no death benefits, or QPSA only, I often do use preret mort. ... Scott

Hi all, We have an overfunded, terminated DB plan with surplus assets, and we're looking for creative ways to avoid a reversion to the employer. A qualified replacement plan isn't viable, because the employer is now dormant and doesn't expect to have any payroll in the future. Allocating some of the surplus among the participants also won't work, because both participants (H/W) are already at 415 limits. Both are at the 100% of pay limits, and the plan's normal annuity form is J&S. The effective date of plan termination was 12/6/05, believe it or not. I think we're going to buy a J&S annuity for the husband, because the premium will be much higher than his max permissible lump sum under IRC415. That works well because his wife is much younger than he is. But even after the purchase, there will be about $75k of surplus left. The wife doesn't want to annuitize any of her own benefit. Here are a few random thoughts and questions. Any ideas that you might have would be most welcome. - Am I correct that the 50% tax (vs. 20%) would apply to any reversion, since we're not able to allocate any of the surplus among the participants (already at 415 limits) and there can be no qualified replacement plan? These seems like a harsh result, but I don't see any relief provisions in the Code. - Is it possible to use up more surplus by including a COLA in the annuity purchased for the husband? If so, are insurance companies issuing such animals? And how does the COLA typically work? A flat % per year? Must it be limited forever to increases in the 415 dollar limit? - If we can demonstrate that husband and/or wife terminated employment with the Employer (a corp) prior to 2009, may we increase their percentage-of-pay limits for the period between year of termination and 2009? For example, if they terminated employment in 2006, may we increase their 415 limits to 100% x 195/175 of high 3 average comp? (they both had 10+ YOS) TIA for your help and ideas. Best! Scott

What techniques are used by large plans and/or annuity companies to verify that retirees in pay status are still living? i.e. what's to prevent relatives or the estate from continuing to cash retirement checks after the participant dies. Is there anything that can be printed on the check to prevent someone other than the payee from cashing it? Are any investigative services available? TIA. ... Scott

Hi all, We're looking for an actuary in the Philadelphia area to do some FAS 106 actuarial work. If you know of anyone, please respond by email: scott2434@rcn.com TIA. .. Scott

Hi all, We're looking for an actuary in the Philadelphia area to do some FAS 106 actuarial work. If you know of anyone, please respond by email: scott2434@rcn.com TIA. .. Scott

FWIW, I've become involved with a PBGC-covered plan that terminated last year without benefit of PBGC review. I contacted the PBGC, and they told us to file the plan termination papers now, including a post-distribution cert. They said we were guaranteed an audit of the plan termination. .. Scott

I know some of these have been asked before, but I'm looking for consensus. 1) Lets say my 2008 AFTAP is 75% and my 2009 AFTAP is 65%. I gave the appropriate notice in 2008. Do I need to give another notice in 2009 even though nothing changed? The statute says the notice is required "after the plan has become subject to a restriction". I was subject to the restriction in 2008, nothing new in 2009, so it seems that no additional notice is required. Agree? 2) Lets say my 2008 AFTAP was 85% and the 2009 AFTAP is 75%. My plan only pays lump sums less than $5,000 and therefore the restrictions have no practical impact. Do I still need to give a notice? I think the conservative answer would be yes, but does everyone still agree? Attached is the language I've been using. .. Scott AFTAP_EE_Notice___less_than_60_.doc AFTAP_EE_Notices_60__to_79.99_.doc

If the plans have a one year service requirement (or more), you have no problems. A year of service is a 12-month period with 1000 HOS. Employees without any years of service don't satisfy the eligibility requirements, and they may be ignored for coverage and nondiscrimination testing. .. Scott

I agree with all of the above. What I've been doing is to compute the participant's PVAB as of 3/31/10, and then convert that into an equivalent annual benefit with 4.99% COLA payable for the participant's life expectancy. i.e. a term-certain, increasing annuity due with annual payments. ... Scott

This is new to me. Can you elaborate a bit? When exactly does "former HCE" status begin? TIA. ... S

This appears to be acceptable in certain situations only after plan termination where assets are insufficient. Otherwise, no can do. Agree. Waivers of benefits already accrued aren't permissible in ongoing plans. Only upon plan termination. ... S

The PBGC instructions say that the participant count for premium purposes is equal to the number of participants with non-zero accrued benefits. The count date for the initial PY is the first day of the year. Thus, for any type of DB or CB plan with no past service benefit liabilities on the effective date of the plan, the participant count is zero for the initial PY. File the PBGC premium form with partic count = $0 and no premium due. I actually learned this the hard way. I had e-filed a PBGC form late for a new CB plan, and had them pay the fixed rate only. The PBGC immediately assessed a late filing penalty of 5% per month, which the client paid. They turned to me for reimbursement of the late filing penalty. When I researched it, I found that no premium was payable for the initial PY. I requested, and got, refunds from the PBGC of both the premium and the late filing penalty (which was based on the premium amount). Sweet! ... S

For 2008, I've been saying that a change of funding method has occurred, on line 25 of the Schedule SB, and on line 7 of the Schedule R. I'm assuming that the switch to the PPA-mandated procedures is a change of funding method. Anyone think otherwise? TIA.

For "NHCE's benefitting under the plan" do they mean only the NHCE's receiving at least a .5% of accrual or ANY accrual? If I have 5 NHCE's who have the following: EE# DB Accrual % DB NAR DC Alloc Rate 1 .5% .30% 5% 2 .2% .80% 5% 3 1.0% .60 5% 4 .4% .70% 5% 5 .6% .50 5% 6 0% .00 5% Average NAR of 1-5 = .58% To use this rule, does it only affect ee#'s 1, 3 and 5 or the first 5? If my Gateway % has to be 6%, I need to increase the DC allocation to 5.42% for employees 1-5 and 6% to employee 6 (assuming plan allows this). Or are EE's 1, 3 and 5 treated as having NAR's of .47 and EE 2 and 4 stay at their normal NAR? You've got it exactly right, IMO. Average NAR = .58% Forget about the 0.5% threshold for purposes of the gateway test. ... Scott

Maybe I'm missing something, but why wouldn't they be? Code Section 430(j) seems pretty clear. .. S

I guess it's a moot point now, but I'm wondering whether basing the projected benefit on current high 3 average comp represents a reasonable funding method. In any event, we have an explanation for the disparity in results between the old and new methods. In my view, the PPA calc is generating the more realistic result. Never thought I'd say that! ... S

Has anyone been cranking out Schedule SB's on Relius govt forms system? I tried a couple, and seems like the system is rife with problems. For starters, it carried forward last year's data into Schedule MB, even though virtually all of them had been marked as single employer plans last year. That wasn't very user friendly. On line 3, the totals aren't working correctly in column 2. I had to override to get the proper result. Lines 7-13, column (a): How do you enter the FSA credit balance at beginning of current PY? I think you have to override the 13(a) amount, which seems clumsy. Lines 14-16: Can't enter funded percentages of 100% or higher, even with override. This is a major problem, since these are the AFTAP amounts. Anyone else having these problems? or other ones? ... S

No annuity purchases so AFTAP = FTAP. However, I read that since the FTAP computed w/o reduction for credit balances is 459,050 / 467,345 = 98.2%, which is above the 92% threshold for 2008, so my final AFTAP that I certify is 98.2%. YES One, is this adjustment correct or what should I certify for AFTAP for 2008 87% or 98.2%? I don't see anything in Section 430 that allows us to ignore the credit balance for AFTAP determination (unless we "burn" the credit balance). Can you point me in the right direction? (I agree with you that the minimum required contribution is zero in the example given). Thx, Scott

Here's what I think: - Start with amount on line 14A - Subtract Section 179 deduction (line 12) - Subtract any partnership expense the partner paid personally and deducted on Schedule E. - Subtract oil and gas depletion, if applicable. - Subtract partner's deduction for 1/2 SE tax - Subtract partner's deduction for pension/SEP contributions = Result is partner's Earned Income. May add back salary deferrals to get plan compensation, if the plan so provides. ... Scott

The above would suggest that the comp earned in the latest year was huge, since it pulled his average comp up from 28667 to 47667. Shouldn't your projected benefit for aggregate funding be based on the latest year's comp (possibly with salary scale), and not the current high 3 average? To do the latter would essentially mean that you're projecting that future comps will drop dramatically, so that the current high 3 average will also be the average comp at NRA. ... S