SoCalActuary

http://benefitslink.com/boards/index.php?showtopic=52072 This was covered in some detail a few days ago. You might get by with a 9/17 date if you are not covered by Title I of ERISA, which requires the contribution to be made within 8 1/2 months.

I don't see any justification for ignoring 3 years of benefits due. If the participant is now age 65 and the plan has a suspension of benefits rule, then the participant might have forfeited the benefits. Otherwise, I don't see it.

I would go with the accumulation value.

Exclusion allows you to limit testing and accrual issues easiest. Alternative is to negotiate the pay for total compensation, including pension and direct pay.

And, it is not the Plan Administrator's job to worry about the client's tax consequences. One choice: create a savings account on behalf of the participant, pay the J&S benefit, less withholding, and send the 1099. But be certain that the participant does not have an exemption from receiving the benefit under the document. The old 242b elections, still employed exemptions, etc.

IRC 7503 expressly extends the time for performing ANY act required under the IRC to the next business day which has been confirmed by at least two court decisions. As for the DOL deadline for plan funding I thought under Reorganization plan #4 of 1978 the authority to issue regulations under Parts 2 and 3 of Subtitle B of ERISA were transferred to the IRS. The funding provisions of ERISA 303 correspond to IRC 430. Therefore IRS regulations governing the timing of when contributons must be made to the plan under IRC 7503 apply to the time contributions must be made to a plan under ERISA 303(j). There is no need for the IRS to create confusion on a simple question of when contributions must be made instead of following the literal provisions of IRC 7503 as applied by the courts to extend the time for making contributions to the next business day after the 15h. To avoid any questions of timeliness, plan sponsors should make plan contributions by the 15th day of the month or if they want more time send the contributions by certified mail return receipt requested to the trustee on the 15th which will add 3 or more days before the check is delivered. MB, please bring this up with the ASPPA Govt Affairs Cmtee. They might be able to get either DOL approval or Congressional correction to this issue. If your plan is not subject to DOL jurisdiction under Part I of ERISA, then you interpretation would be safer. Otherwise, I hold to my earlier position on all Title I plans.

Andy, the immediate "uncommon sense" answer is that the EBAR for NHCEs is 0/0, an impossible item to test. So there is no discrimination under 401(a)(4) because no NHCE fails the test.

Why not use the plan's stated actuarial equivalence rate? I assume this is a DB plan, since you are in that forum.

You could change the accrual to elapsed time in months, and change the average compensation to calendar year.

The regs discuss this, pointing to the compensation of those who participate in the DC plan.

I have read that reg long ago, and not trying to keep all the regs in my head, so my answer is "both"

I will assume for this purpose that the separate account is updated as a DC account with its changes solely based on investment performance of the trust. In that sense, it is a DC plan, and the RMD is to follow the DC rules.

Only time I did one of these was between two parties in the medical field, so it passed the related business smell test. Pick the right group and you might get a good outcome.

Form extensions go to next business day, but not contribution requirement for minimum funding. Get the check written by Saturday and it can be deposited on Monday.

Your plan doc will govern. Most use months of actual pay.

After 5000+ posts, you don't know if the PBGC complies with tax law?

The code is NFW - stands for No Frigging Way - because the participant has not incurred a taxable event. The trustee has simply transferred the liability.

This is a party-in-interest transaction and a tax issue. GM does this type of thing because they lawyer up and ask for advance approval. But it is also a sale and a purchase. The taxpayer is responsible for the tax treatment of the stock sale to the plan. The plan will report the stock at its current market value. So the client is simply trying to avoid transaction charges for the risk of a big PIT penalty.

Ultimately you will know the exact earned income, after the contribution is deducted. Then you prepare your valuation, check for minimum funding and maximum allowable deduction. Until the payment is made, you are just guessing.

I would agree that the proper and safe thing to do is to add an amendment clarifying which interest rate is chosen. The justification of course is to clarify the reference to the law. I will be making that recommendation to my CB clients who use such rates.

Welcome to the world of 415 calculations. You do the math in your plan document for a specific annuity starting date. This requires knowledge of the plan's actuarial assumptions, the 417(e) mortality table in effect, the potential 417(e) maximum distribution (only when interest rates are much higher than today), the pay history, and potentially the normal form of payment. Remember that you can have a nominal accrued benefit which exceeds the 415 limit for distribution in a cash balance plan, so long as you don't pay it out and you don't use the excess benefit for funding calculations. From this information, you can see that you have some research to do.

Yes. The more complex detail of 1402 rules and 1.401-10 regulations also discuss this. Which companies produced the income? Are they adopting employers? Did they have reductions to earned income for those contributions? If you don't know the answers to these questions, how do you know what compensation to count?

Would like to help you with the tax research, but the issue is simple. You want to use compensation for plan purposes based on prior years. Each of those compensation amounts must meet the definition of earned income. None of those years provided any exemption from the general rules that earned income is adjusted for self-employment tax and employer -provided retirement contributions.

Do you mean single employer collectively bargained plans instead of multiemployer? No. I treat single employer plans the same in this code section, whether negotiated or not. But your question is interesting.

Your client could consider amending their plan..... Do you also use the old mortality basis as well? Just curious. The PBGC decision process on picking rates is their own internal decision, so I have no good ideas here. My understanding is that they network with insurance companies to find the current pricing.