emmetttrudy

If the hi-3 avg is only $50,000 then we're looking at a maximum monthly benefit of $4,167 commencing at NRA. This would be approximately a $620,000 lump sum at retirement. So obviously a contribution credit in excess of $100,000 for 6 or 7 years is going to end up in a lump sum greater than the 415 limit (assuming compensation remains about $50,000). Is your funding limited each year to the 415 limit? Or can you fund in excess of the 415 limit for a year, just as long as when distribution time comes the participant does not receive a distribution in excess of the 415 limit?

Are there any tools out there that could provide me a good estimate based on compensation that isn't at the max?

Everything I have read and seen regarding Cash Balance contributions is that they are strictly age-dependent. I've come across a couple of different maximum calculators that tell me a person born in 1956 could put away about $135,000 per year and a person born in 1963 could put away approximately $80,000 per year. Is this true regardless of their compensation? For example, if you had a 2 person plan (both owners), at the ages above, could the credits be $135k and $80k, respectively, even if they are making only $50,000 each?

2008 AFTAP is 95%. No 2009 AFAP was certified by October 1, 2009. On October 15, 2009 the AFTAP was certified as 132%. Were accruals frozen as of October 1, 2009, or based on WRERA could they have relied on the 2008 AFTAP to prevent frozen accruals? WRERA provides that for plan years beginning during the period October 1, 2008 through September 30, 2009, the prior year’s AFTAP may be substituted for the current year’s AFTAP (if the prior year’s AFTAP was higher) for purposes of applying the restriction on benefit accruals. So what if the 2009 AFTAP was not certified by 10/1/2009? Is the 2009 AFTAP considered less than 2008's and so 2008's can be used?

Just to clarify what I am asking, is the TNC computed without taking into account a plan amendment that is adopted after the plan's valuation date?

If an amendment was adopted 10/1/2009 changing the cash balance credit from $500 to $1,000, effective 1/1/2009, does the Target Normal Cost take this into account for the 1/1/2009 valuation? Or am I understanding correctly that the TNC calculation is not forward looking like it was pre-PPA, and the TNC should not take into account the change from $500 to $1,000.

Correct, as mentioned in the first post this is for a Cash Balance Plan. So if a participant had 4 years of vesting service - 2005, 2006, 2007 and 2008, at 1/1/2009 they should be 100% vested, correct? Regardless of the prior vesting schedule.

This CB plan was effective 1/1/2004 so the 3-year cliff vesting requirement must be effective for plan years commencing 1/1/2008 and forward. Does this apply to only accruals from 1/1/2008 going forward? And the accrued benefit through 12/31/2007 remains on the old schedule? For example, an employee is hired 1/1/2005. The plan originally had a 6 year graded schedule. At 1/1/2009 would he be 60% vested (2005, 2006, 2007, and 2008)? Or would he be 100% vested in the entire benefit because he now has 4 years of vesting service? Or is he 60% vested in his benefit through 12/31/2008 and 0% vested for the benefit he accrued during 2008?

You're right. Thank you for verification!! http://www.tagdata.com/quotes/pbgc-premium-payment.htm

Don't the attribution laws apply? If his parents attribute their ownership to him, then they are all substantial owners...

A DB Plan has 3 active participants, the two owners (husband and wife) and their son. Is this plan required to be covered by PBGC?

thank you, that's what we did as well.

Plan terminated in 2008, so the final actuarial valuation was performed for the 2008 plan year. However, the assets were distributed in 2009, so we are preparing a Form 5500-EZ for the 2009 plan year. For Line 10i(1) "Is this a defined benefit plan subject to minimum funding requirements" is the correct answer Yes or No? It is a defined benefit plan but it is no longer subject to minimum funding requirements, especially in the 2009 plan year. The directions indicate if you check Yes then you must have a Schedule SB. But there won't be a Schedule SB for 2009, none is required. So would the correct answer be No?

This particular Cash balance Plan excludes non-owner HCEs, and has dual entry. Let's say an employee is an HCE and meets the eligibility requirements on 6/1/2009. Normally they would enter on 7/1/2009 (next entry date), however they are NOT an owner, so thus excluded from plan participation. However, they become an owner on 9/1/2009. Would they then become a participant on 9/1/2009, or would they become a participant on 1/1/2010? The plan document isnt specific on this situation, and it seems like it could go either way. Thoughts?

Can a plan sponsor make a contribution and allocate it towards 2009, and then make contributions after that and allocate them towards 2008? For example, let's say a plan sponsor makes a contribution of $10k on July 1, 2009 and would like it to count towards the 2009 plan year. But then makes another contribution on 9/15/2009 that he would like to count towards the 2008 plan year. Can the 2008 Schedule SB show the 9/15/2009 contribution and the 2009 Schedule SB show the 7/1/2009 contribution?

In a defined benefit plan is it okay to have the participant pay the distribution fee out of his/her accrued benefit? For example, if the lump sum was $1,000 and the distribution fee is $100, can the participant only be paid $900? My feeling is that this is not okay since you are now paying the participant less than their accrued benefit.

It is the same Trustee and Plan Sponsor. We had given them instructions for the account to make the deposit to via email but the 401(k) Plan account # is one digit different and so they misread it. We had them transfer it as soon as we realized the mistake and have a letter signed by the trustee to the vendor asking them to transfer the money because a mistake had been made. So I think it's pretty well documented.

A plan Sponsor inadvertently deposited their DB contribution into their 401(k) plan (plans are with the same vendor). When we noticed we had them transfer the assets from the 401(k) Plan into the DB plan. Later on I was told that this in fact can disqualify the Plan. The money should have been pulled out of the 401(k) plan as a mistake of fact, and then redeposited into the DB plan. Is this true? And what's the difference? I could argue if we had them pull out the money from the 401(k) it looks like the assets reverted back to the employer, which is a no-no also. What would be the correct way to handle this, by law?

What if he contributed the 2007 contribution and any 2008 required contribution by the 9/15 deadline. Then would a Form 5330 need to be filed?

A plan sponsor failed to make their $97k minimum required contribution for the 2007 Plan Year. Up until 2007 we had been doing end of year valuations. We switched to a 1/1/2008 valuation date for 2008 and the plan was frozen effective 1/1/2008. We filed a Form 5330 for 2007. However, my question is do they need to file another Form 5330 for 2008 if he makes no contribution for 2008 either? Does he need to keep filing Form 5330's until the 2007 MRS is contributed in full?

Can someone give me an idea what a reasonable fee for a DB Plan audit is? $15,000??

OK, so back to this question. Option #2 the client does not want to do because this means the employer would have to pay the additional premium. The employee is an HCE but not an owner. Option #3 the employee obviously won't go for since that's money out of his pocket. So that leaves Option #1 which I am struggling to understand a little bit. The life insurance contract is 100X the normal retirement benefit. So let's say the face amount must be $1 million. Is Option #1 saying find out what the premium would be for $1 million face amount at the standard coverage rate, and then use that premium to buy as much coverage you can at the higher insurable rate?

Thanks!! He is an HCE so if he didnt have the life insurance I dont think we would have a nondiscrimination issue anyway.

it says "For a Participant who is found by the Administrator to be insurable only at a mortality classification other than standard, the Trustees on a uniform and nondiscriminatory basis shall either (1) purchase an insurance Contract, with a face amount that can be purchased at the standard rate for coverage as provided in Section 5.5(a) for such Participant if such Participant could obtain such coverage, (2) purchase such insurance Contract, and pay the additional premium attributable to the excess mortality hazards, or (3) allow the Participant the right to pay the additional premium attributable to the excess mortality hazards. If a Participant is determined to be uninsurable, no life insurance Contract shall be required to be purchased on the life of such Participant."

Have a DB Plan with life insurance. Just found out from the insurance broker that one of the employees is not insurable!! Are there any other options? If so, what are they? Have never encountered this before.