AndyH

You are probably right; I am probably wrong, but the last time I looked at this, which was a while ago, I thought that the regulations defined the alternatives to "the standard", not "the standard". And I agree that 2080 was not an alternative in the equivalency regulation. All were indeed higher. But I did not take from that that 2080 is not acceptable. I'll look at this again when I get a few minutes, and I again I am speaking from recollection only. I though I remembered reading somewhere that a salaried employee who was expected to work 40 hours per week could not claim credit for 45 hours if he/she worked more than 40. Again, only from old memory, but this is why I asked.

QDROphile, would you please elaborate on this comment? What is the source?

I think he thought he was doubling his odds of being nominated for the best BenefitsLink user name. And to think I nominated his alter ego. I think.

Or check with as-yet-unnamed super secret regional compliance coordinator.

I don't disagree. (I'm stealing that line until the owner reappears)

No, actually that is right on, Tom. Thanks. I've always used attained age also, but I've always felt that if necessary, NRA could be used for the exact reason specified in the cite that you provided. Use of an age later than NRA will inflate the EBAR and that can cause allocations to be altered, solely on account of aging beyond NRA. And that raises obvious discrimination issues. And if you think about other plans, safe harbor target plans must use the same APR if someone ages beyond NRA. And in an age weighed PS plan you would not want to use a lower factor for 66 than 65 or the allocation will decrease, again raising a discrimination issue. So I was curious what others do. So, to pmacduff's question, the answer is that going from age 64 to 65 will affect the EBAR by one year of interest but going beyond that will inflate the EBAR if you use testing age as attained age, but IMHO you can avoid that by using the NRA factor permanently if you are not abusing that rule.

That might be called dazed and confused. Even those of us dense and confused can confirm that!

Well, that sounds like two slightly different answers, which raises a question that I'm interested in: If someone with a NRA of 65 attains age 66, do you use the Age 65 Annuity Rate or the Age 66 annuity rate? I think you can use either provided that you are not intentionally manipulating the results by using age 66. What do others think?

Yes, thank you very much. I was confused by comments I've read welcoming this change, therefore assuming that it somehow increased the maximum lump sum. That is what I couldn't figure out. But a (potential) decrease is being applauded. Go figure. Everything goes in circles.

Actually Tom, eliano may be right or almost right if his plan only recently was issued a Favorable Determination Letter. You have extended time if an FDL is pending, I believe 90 days following issuance of an FDL. See 1.401(a)-(11)-(g)(3)(iv)(B). Then you need to follow the additional cite of 601.201(o), wherever that is. I did find it once and it was worth the effort. I only learned of this last year myself. I don't think it is commonly known.

Good one, pax. Could of argued for Mike P also but he must be on an extended surfing excursion.

I've done many of these and I don't think 417(e) is a major issue. I think it is more of a hassle than anything else. The effect of 417(e) is to inflate the MVARs of younger participants more then older participants, for whom the arrangement is usually established. This all depends upon the demographics, of course, but I have found that the elevated DC contribution requirement caused by the gateway rules has a much more profound effect than the declining 417(e) rates. The EBARS for younger NHCEs should usually more than offset the impact of 417(e) on an older HCE's DB unit. And regarding adding a lump sum provision, obviously you shouldn't do that after many NHCEs have quit and it is time for the HCE to collect, rather, if you want to do that I heard Larry Deutch suggest putting a provision in that allows for lump sums under, say, $25,000 only. Then lift the cap later. That way the amendment won't affect many if any NHCEs and also the testing can be done without the lump sum affecting the HCE's MVAR. Just a few thoughts.

Who is "our regional compliance coordinator"? IRS? DOL? Your company?

I'm among the dense people who have not yet figured out exactly what changed and why with the 5.5%. Would Blinky or someone else mind giving a simple example (or 2) of the maximum lump sum based on the following: Applicable GAR rate 4.9% Plan actuarial equivalence for monthly payments 7%, UP84. Lump sum computed as greater of GATT/GAR or plan rate 7% (UP84). No preretirement mortality Participant age 54 NRA age 62 and a second example NRA age 55. Thanks.

I think the comments by GSHASC, whoever he or she may be, are terrific.

"Inartful" is being very kind and diplomatic. I like that. Some might substitute inept or incoherent or worse.

And notify participants. Some may not be happy that they cannot get a distribution. I wonder what would happen if someone really made an issue out of that.

Blinky, did you have a liquid lunch today that caused you to discuss pink elephants?

I am the last person to agree with anything the PBGC does, but any waiver requires the consent of the spouse within the waiver period, me thinks.

It is unlikely to be an issue but could be, for example, in the context of a doctor group. Only an issue or possible issue when ratio percentage cannot be passed for coverage. Not a major consideration; a minor consideration.

I think it is just a matter of time before the operation of plans with this design becomes an issue with the IRS, and for that reason plus potential coverage (reasonable classification) issues I strongly caution against single person allocation groups.

Blinky, we lost Mike P again. What to do? Must be a summer siesta. Last year if you remember, he returned with a big frown. Hopefully this year will be different. I have appointed myself in charge of nominations this week. As such, I nominate Tom and Blinky as "co-big guns of the month". Unless of course we have other interested candidates.

Ronny RayGun would certainly agree. And he liked nothing better than getting up on that high horse. Appropriate comments

David, would you mind elaborating? I understand your first sentence of your second paragraph but am curious about your second. I find these rules to be less than clear.

Am I reading this correctly, that an insufficient DB plan was terminated in 2003 with the owner waiving. Then in 2004 another DB plan is being started? Is this really being considered, or is it just hypothetical? Talk about flip flop funding!