ScottR

Something is wrong here I think. Is that $25k accrual figure $25k of annual benefit payable at NRA? If that's accrued over a 14 year period, the annual accrual would be about 25/14 = 1786 of annual benefit per YOS. There's no way that's worth anywhere near $75k.... more like about $15k. In response to your other question: Yes, I think we now use the current 417(e) mortality table for all 415 purposes. Believe this was effective retro to the first day of the 2008 PY. .. S

Okay, a little cutting/pasting from the pdf of Notice 2008-85, and filtering through some string functions, etc., etc., and so forth -- but no data entry -- produced the attached. Please (anyone) who has the time, randomly check some values. It will be greatly appreciated. Andy - it looks like the last digit of the mortality rates got lopped off for ages 100+. Here's what I'm getting for APRs at age 18, SLA with 5% interest: Male combined funding table for 2009: 232.782 Female combined funding table for 2009: 234.376 Unisex (417e) table for 2009: 233.548 Can anyone confirm? Thx. ... s

Sorry, I don't agree. For a DB plan, what's required is a stream of annual (or more frequent) payments, with the first one occurring on or before 4/1/08. There's no need to "double up" in the first year, as you would with a DC plan. IMO. ... S

Not without specific IRS approval, based on what we know now. You can use whatever date you want in 2008, but any subsequent change requires IRS approval.

I agree 100% with Mike. For the regs NOT to allow deduction of the 1st year theoretical contributions, they'd have to overturn Code Section 404(o)(2)(B).

I don't think there's any prescribed method to "make it right", but I would compute the payment that he should have gotten by 4/1/08 and pay it asap. Subsequent payments should be made by 4/1 of each year. That's the best you can do, IMO.

Agree. But if the person isn't vested at the time the payment would otherwise be made, it may be deferred until he/she is vested.

The 110% Rule restriction applies to HCEs or former HCEs as of the proposed distribution date. But it can be limited to the 25 highest paid HCEs... FINAL-REG, PEN-REGS, §1.401(a)(4)-5. Plan amendments and plan terminations (ii) Restricted employee defined. —For purposes of this paragraph (b), the term restricted employee generally means any HCE or former HCE. However, an HCE or former HCE need not be treated as a restricted employee in the current year if the HCE or former HCE is not one of the 25 (or a larger number chosen by the employer) nonexcludable employees and former employees of the employer with the largest amount of compensation in the current or any prior year. Plan provisions defining or altering this group can be amended at any time without violating section 411(d)(6).

I think you can allocate the assets any way you want, as long as one owner isn't getting more than his PVAB while the other is getting less. IOW, if they're both getting <= 100% of PVAB, do whatever you want. If they're both getting >= 100%, do whatever you want. But you can't give one 110% of PVAB and the other 90%, for example. Looking at it another way, you can't allocate surplus assets to one participant, when there are no surplus assets. I don't think the 50% Majority Owner waiver rule applies, since the plan isn't covered by PBGC. ..SR

We do FAS 87 calcs only upon request by the CPA. It's certainly not required for all DB plans, and the CPAs are in the best position to know when it's needed. Could be because GAAP is required, because their bank requires it, etc.

Check Rev.Rul. 2004-20. If the insurance amount exceeds the plan's death benefit by more than $100k, you've got a problem. Exerpt from the RR... Employer contributions under a qualified defined benefit plan that are used to purchase life insurance coverage for a participant in excess of the participant's death benefit provided under the plan are not fully deductible when contributed, but are carried over to be treated as contributions in future years and deductible in future years when other contributions to the plan that are taken into account for the taxable year are less than the maximum amount deductible for the year pursuant to the limits of §404. LISTED TRANSACTIONS Transactions that are the same as, or substantially similar to, the transaction described in Situation 2 of this revenue ruling are identified as "listed transactions"for purposes of §1.6011-4(b)(2) of the Income Tax Regulations and §301.6111-2(b)(2) and §301.6112-1(b)(2) of the Procedure and Administration Regulations effective February 13, 2004, the date this revenue ruling was released to the public, provided that the employer has deducted amounts used to pay premiums on a life insurance contract for a participant with a death benefit under the contract that exceeds the participant's death benefit under the plan by more than $100,000.

Yes, we are on the same page as in the example there is no shortfall amortization but the contention is there is a minimum contribution in 2009 -- the TNC -- because as of 1/1/2009 assets net of FSCOB are less the %FT. Because you subtract the FSCOB from assets in 2008 for testing whether or not there are quarterlies for 2009, the conclusion was there are quarterlies for 2009. The question is do you really have to futz with quarterlies or can the employer elect simply to apply the FSCOB as of 1/1/2009 to reduce the the entire years obligation? Here's an article that might help: http://benefitslink.com/articles/guests/washbull080428a.html The article suggests that employers who do not make required quarterly contributions may be deemed to have applied part of their FSCOB to cover the quarterly requirements. This deemed election is essentially irrevocable, so the FSCOB will have to be reduced on the Schedule SB even if the employer subsequently makes deposits. Not a big deal if the employer intends to apply the FSCOB to cover the TNC, but it IS a big deal if the employer intends to deposit the TNC later in the plan year.

I've been asked to do a DB illustration for a new LLC, formed in 2008 and taxed as an S Corporation. The LLC is owned 100% by Mr. W. The accountant wants a small W-2 for Mr. W, and a large ($200k+) pension deduction. Mr. W will be the sole employee/participant, and he's 68 years old. Complications arise because Mr. W and his wife formerly owned a law firm. Each owned 50% of that entity, but they sold out to other (unrelated) owners several years ago. The law firm used to maintain a DB plan, and Mr. W and his wife each received lump sum distributions of about $600k when the plan terminated several years ago. The lump sums that they received were nowhere near the 415 lump sum limits at that time, although it should be noted that the plan had been very underfunded and the lump sums that they received were only about 1/2 of their accrued benefits. The law firm is still in existence, owned by unrelated parties, and there is no desire on anyone's part that it should become a co-sponsor of the LLC's new plan. How should the 415 limits be calculated for the new plan? 1. Take into account salary history, years of service, and years of participation at both the LLC and the law firm (since they had common ownership), and offset by the actuarial equivalent of the prior lump sum payouts? 2. Ignore the prior service and comp, and the prior payouts, and treat the LLC as a brand new employer? 3. Other? Option 1 makes some logical sense, since Mr. W owns 100% of the LLC and (by attribution) used to own 100% of the law firm. It would seem that aggregation might not only be permitted, but required, since Mr. W received a benefit from the old DB plan. My concern is that it's going to result in a very large initial 415 limit because (a) the lump sum payout was relatively low, (b) Mr. W had 10+ years of participation in the law firm's DB plan, and © Mr. W had very high salaries at the law firm. This would open the way for Mr. W to take a very low (or zero) salary from the LLC, while making a huge pension contribution. Seems pretty aggressive to me, especially since the law firm is not going to co-sponsor the new plan. What d'ya think? TIA.

The participant must begin receiving a series of annual (or more frequent) payments starting by the RBD. In your example, the second payment should be made on or about 3/1/10. IMO.

PPA requires no more than 3-year cliff vesting for hybrid plans (including CB plans). I think traditional, non-TH DB plans may still use 5-year cliff.

I hope this post is not out of line. If it is, I apologize... please move it to the appropriate forum. As a self employed actuary, I've taken on a bit more work than I can handle, especially in the Cash Balance arena. The growth of CB-401k combos has been phenomenal, and I'm now handling about 50 such arrangements on top of what had been a pretty full workload. I'm looking for an actuary to take over some of this work. I'm flexible as to how we structure the takeover: outsourced. joint venture. Total takeover. This could be an excellent opportunity for an actuary who has started, or is looking to start, a private consulting practice. Please send me a personal email if you're interested in discussing it further. Thx, Scott scott2434@rcn.com

Not so fast. This plan is terminating. The non-responders cannot "hold hostage" the completion of the termination. If they do not respond, and you cannot purchase a deferred annuity, what's next? First, I would make every effort to contact them to let them know that failure to send in signed election form will result in an annuity purchase. If there's still no response, a deferred annuity should be purchased. But it must offer all of the benefit options that the DB plan had offered. It's complicated, but there are companies that specialize in these things. They gather all of the required information about benefit options, and then quote a premium.

Isn't the TNC for 404 purposes based on the "at risk" assumptions? 404(o)(2)(B) If so, this would probably make the maximum contrib higher than the min.

I believe SEPs are treated like other qualified DC plans for nondiscrimination testing. So yes, SEP contributions may be considered in 401a4 testing (IMO).