AndyH

What is the "testing" to which you refer and why was it required? What feature made that test necessary. I think if you figure that out then you'll approach the answer to your question. A safe harbor plan does not ordinarily need 401(a)(4) testing. If it is not a safe harbor plan, then you should determine why not. It may not qualify as a 412(i) plan in which case the answer to your discrimination issue question might be NO.

The availability of the ABPT would depend upon whether or not the group of people who benefit (receive an allocation) are determined based upon a reasonable classification of employees, "based upon objective business criteria". I would think that you could argue both for and against former employees being a reasonable classification. It is not a classification that the regulation speaks to as either being a yes or a no. I wouldn't use the ABPT without either an FDL on the issue or some written guidance. But that would probably be a conservative approach.

The following is on page 13.135 of the ERISA Outline Book, 2004 edition. This appears to be in error? We're sending Sal an email. Any ideas where this came from? 2. Notice of missed funding payments. If the employer fails to make a required installment or other payment required under the minimum funding standards, a notice of such failure must be given to each participant and beneficiary (including an alternate payee under a QDRO). ERISA §101(d). The notice is required before the 60th day following the due date of the installment or other payment. The minimum funding standards apply only to defined benefit plans, money purchase plans and target benefit plans. There are no caviats, exceptions or exemptions that follow. MGB, any thoughts? I agreed with you until a colleague found this (not that I still don't but I have to wonder where this came from).

Thanks for the feedback, pax. And you're right about the color of course, but mine are both xeroxes so I could call them gray or black and white. I didn't attend the conference, but someone from my office who did said that finding ways to reduce PBGC premiums was a popular topic.

I have an opportunity to reduce a PBGC variable premium for a client by $30,000+ by recharacterizing quarterly contributions for the next year as for the prior year. Because I have a receivable not paid until the due date for the prior (premium year), this would cause the quarterly contributions to be considered missed, and because the amounts are high, result in an overdue filing of PBGC Form 200 by five months. Form 200 says the PBGC can assess penalties of up to $1,100 per day. PBGC Q&A 13 from the EA meeting addresses this exact situation and says they would not assess penalties in this situation as long as Form 200 were filed within 10 days of the Schedule B filing date (due 4/15). The intro to the Q&A says that the answers to these questions cannot be relied upon by any person for any reason. Hmmm. What value does that answer have? Opinions? Obviously I'm going to point out the positives and negatives to the client and let them decide. But what do you think?

Yes, agreed. Excellent clarification. Kind of weird but it is correct.

I believe that the regs require you to use average (3 year +) compensation unless the plan is an annual accrual (i.e. career average) plan.

Not if Companies A and B can separately satisfy 410(b) and do not elect permissive aggregation.

I'm not sure if we're saying the same thing or not. I don't think that a plan that is a safe harbor can be written as flosfur's first sentence states, unless it is a career average plan. Example, a plan can define average comp as high 3 starting at DOP provided that average comp until the participant has 3 years of participation is averaged from date of hire.

flosfur, I think that a non-design based safe harbor might be a DB plan using the Alternative Flat Benefit Safe Harbor which requires a test less complex than a general test. I don't get into submissions much, but it looks from the instructions that a plan that is restructured into component plans, each of which is a safe harbor would also fall within this category. On the DC side, an age-weighted PS plan might fit this mold.

Well, then that would probably not be earning a year of service, so I would not think that any cap rule would apply, i.e. not benefitting because 11 years of service limited to 10. But if this is a fractional accrual plan and the denominator has decreased then some would argue that the accrued benefit has increased, therefore the participant is benefitting. I was involved in a discussion on this subject on this board with Mike Preston among others last fall. It was new information to me, but quite interesting. If that is applicable, you could search this board to find it.

If your plan provides benefits based upon service but excludes comp prior to participation, it is my understanding that such an exclusion is not permitted until such person has pay at least equal to the averaging period. But maybe I assume too much? More detail would help.

Frank, could you clarify your first paragraph? Why does he not earn an accrual? I find the situation a little unclear. How do benefits accrued under your example?

Good point, Mike. And I wonder what the surrender charge might be for these things that are funded by annuity contracts and need to be prematurely unwound for the sunset issue or any other business reason. Can anyone speak with experience on how these contracts might be typically structured with respect to surrender charges if a lump sum is desired? And admittedly, I've seen mostly old school annuity contracts and there may very well be more modern ones in these products that do not have the surrender charge as such an important consideration. Is that now a non-issue?

Excellent comments, Lame Duck, especially your second paragraph. Thanks to David Rigby et all for getting this back on the right plane. To anyone, assume a 412(i) without life insurance. Must it be funded with annuity contracts, and if so, is there any advantage to the purchaser of such product within the DB/412(i) plan?

Gee, Dom, and to think that I was actually looking forward to your response. I figured you could have come up with something a little more clever than the junior high recess retro again. And of your 3 employees, two of them are actuaries? Boy, you work these people to the bone with all those plans that you do. What's that, 1000 each? But now that this discussion is off pensions it's closed. And congrats for earning all five of those badges, BTW. Shall I link that? I'm out.

Hey Dom, before you go, how about the names of your two actuaries and also the name of your firm so we can see if you are blowing more hot air? And how many of your 3000 clients that you "do" are "deemed 401(k) safe harbors" because some of the employees are covered by a DB plan? http://benefitslink.com/boards/index.php?s...t=0entry70382

Terrific perspective, Mike. That analogy is great.

Ok, I'll come clean. Besides humor there was just a bit of sarcasm. But definitely mostly humor. But Blinky is being kind; honest disciples don't push 412(i) plans. Maybe as a side show to 1/1,000,000 of the population, ok. That'll make , what, 500 or 600 sorry soles who can't beat 3% long term? Better than the Lottery I suppose. And 3% plus still beats the casinos. So, set up a 412(i) sales shop in a casino and even I'll sell them. Now that's an idea. But this is the 1960's insurance argument; forced savings. It is a little dated, isn't it? Retro from buy term and invest the rest. All things go in circles, some say. Again, Blinky is being nice, but the reverse is true. There may be a couple of good apples in a real rotten bunch, not the reverse. And I'm not calling Dom a bad apple. Clearly Dom, you've tried to educate yourself, and hopefully you've tried to educate your customers. I can't judge your intentions, but no way can your industry's behavior in the last few years in particular be justified. It merits ridicule. And anyone who denies that wears the 412(i) mask of post-EGTRRA. I wish I had recorded some of the calls I took on the subject. One question, though. What are the PS-58 costs using IRS tables for a jumbo 415 level 412(i) with maximim incidental insurance? And I don't mean illegitimate off the shelf; non-marketed premium tables. Real tables. Now that would be informative..

I second Blinky's comments as right on. I've looked into this before and this was my conclusion. But I'd caution to make sure you don't have an issue with discriminatory timing of the amendment, e.g. after other participants have left employment. But it sounds like that is not an issue for you.

meant in humor, not in a combative way. There are far more jokes on these boards about actuaries and pension geeks than there are about 412(i) salesmen. And with representations from your colleagues like the one I linked to, how can we not be humored? Go back and read the back and forth in your earlier posts. Nothing combative except from you. This is combative: "....self-righteous,pernicious and venomous attitude prevalent in ASPA and espoused by the more vocal demi-gods' Time to lighten up, Dom.

Seconded-great name!

Careful guys: http://www.jawsmovie.com/images/temp/quint1.gif

Sure. Everything but the kitchen sink is in the test, i.e. deferrals, matches, after tax, ps, db, esop.

Oops, it slipped by me (but not by Blinky) that he's self employed, so salary is irrelevant unless he's a cash-only dentist. The FICA Lock Box will be happy.