AndyH

Blinky, for the benefit of the class, not me of course, are the owners in the DC plan or not? I'm still not sure of the specifics of your question. Are they (1) not in the DC or (2) in the DC but not subject to the offset in the DB in your question? It seems to me that (1) is ok but (2) is not. I take it you don't agree about (2). And to Doug, I don't follow your comments about safe harbor. Because two plans are safe harbors certainly doesn't mean that they are uniform. If you have a safe harbor DB plan covering everybody and a safe harbor DC plan covering one NHCE and the DC plan offsets the DB, is that uniform?

Dougsbpc, how would it to be uniform and reasonable if the owner is the only one who does not get offset? I don't think Blinky is saying he is out of the DC, just that the DC does not reduce the DB for him.

I could be wrong, but my damaged memory banks seem to think that MGB had pointed out in some posts on this subject that there was some type of mistake in the law that has the effect of not requiring PBGC coverage for this rule to apply. You might try a search if nobody else is clear on that off hand. Are you D.T.?

I agree with Gary's comments.

I'm glad you raised this because I've been meaning to look it up. It appears that this would qualify as a concurrent offset arrangement and it appears that 1.401(a)(26)-5 requires that such an arrangement provide benefits to employees on a "reasonably uniform basis". I think thats the problem with doing as you propose. Please let me know if you agree after reading that.

I did, but it is gone. I'll see if I have another.

Would "Hobo in the windshield" be plagiarism?

I sent my two Senators that voted against this legislation very strongly worded emails and I would encourage others to do the same. Imagine if this had not passed?

I think you got it right, Jed. Just one idea, and I don't know if it works or not. How about contributing the full amount by the minimum funding due date but only contributing and deducting 25% of pay by the tax return due date. This is just a shot in the dark. I'm not certain without researching it if the second part would be deductible in year two as it would for a DB plan. Also I'm not sure if there are other issues that might result. Just a quick thought.

6.55% http://www.ustreas.gov/press/releases/archives/200404.html

Thank you. Very helpful and timely as usual.

No, if you look at 415(b), the fraction is always at least 1/10 in the first year for both the service and participation limits. It is 1/10 at January 1 and December 31.

YES 78-19!

Does anyone know if the IRS has decided upon a formula for a new rate for 1/1/2004, or what the lead time might be? Might there be a temporary notice to give us something to work with if there is need for a period of public comment?

I ran into one of these several years ago, around 1998. Where there is smoke there is fire. In the case I was involved in, the missed PBGC filings were the tip of the iceberg. The client needs to hire an attorney to represent them and help them make business decisions. In the case I was involved in, two PBGC representatives (one an actuary, one not) flew in for a week, although they did not show up at the client's office each day. It was summer and the client was located in a prime summer vacation area. I am not joking. But for all I know, they may have been taking legitimate vacation time. I was told by the client that the two reps showed up the last day in beach attire to collect the amount due. My role was to calculate all the premiums due and estimate the interest. There was no leniency that I was aware of on the unpaid premiums and penalties. They were paid in full retroactively with interest. And all of this was while the client was represented by very good legal counsel. But other, much more serious issues were discovered that all began with PBGC and 5500 issues, so, where there is smoke .....

Thanks for the post, Mike. Either the EOB or Corbel appears to be wrong. I think it's the Corbel language.

Blinky, I'm with you on 412(l), but is your 412(m) cite right? Never mind, I found the connection. Thanks.

Mike, that contradicts my point. Can you upload that language? I would think that a careful reading would support my point. No?

But, you would need to recompute 2003 at 105% if it were relevant for 412(l), and also you need to recompute it for 2004 quarterlies, wouldn't you agree, Blinky? Or do you think not? I am told yes, but I haven't looked at it closely myself.

Effen, FWIW, my company decided, after much debate, to use 1 as a rule. Much consideration was given to adding something like 2 through plan amendment, but not done. And if the person dies, he/she is subject to the death benefit governed by the election. But the election forms would also provide the right to the lump sum, of course, conditioned upon the bond or escrow being satisfied. But I don't disagree with Blinky's and MGB's approaches being valid alternatives.

I don't agree. The numerator of the fraction always equals at least one, so 1/10th of the full limit is always available.

From the ERISA Outline Book 2004 edition chapter 9 part A.6 (page 9.93) "Compensation History taken into account .......... "The compensation history instead may begin on a date which is later than the employee’s original employment date, such as the effective date of the plan or the date the employee’s participation in the plan commences, so long as the compensation does not end earlier than the current plan year. However, if the compensation history taken into account is for a period which is less than the stated averaging period, compensation before the start of the designated compensation history period is taken into account to the extent needed to equal the averaging period. If the employee’s entire period of employment is less than the stated averaging period, then average compensation is determined over that entire period of employment. These rules are found in Treas. Reg. §1.401(a)(4)-3(e)(2)(i)."

I would urge you to re-read them with this interpretation in mind. I agree that you are allowed to use average compensation only based upon participation, but only once the averaging period has expired. Have one with some language you could post? I'll look also.

Yes, sorry, I missed that. To me, that makes it less likely that it is a 412(i) plan. I'm sure some of us will explore it if you wish to detail the provisions. There is some question of whether a general tested 412(i) is a 412(i). I don't think we'll resolve that here but it might make for some interesting discussion. Jim Holland said at ASPA National in either 2002 or 2003 that if it needs a corrective amendment (i.e. failure of general test) then it is probably not a 412(i). Now that is not specific, but still. But the plan you reference may have features that make it not satisfy IRC 412(i), so if you wish to pursue it perhaps you could elaborate on the design. There are many here more knowledgeable about 412(i) plans than me, but I have trouble understanding how a 412(i)/DC could pass muster because of the accrual rules for one thing.

My colleague heard back from Sal and the EOB will be changed, starting with the online version. As usual, MGB was right. Thanks again, Mark. We need to check some citations to paraphrase Sal's comment correctly but first read of his comments is that the notice needs to be issued within a reasonable time, and there is some question as to what that means.