AndyH

ok, this is about to drop off the page 1 news so I'll try and ask the question a little differently. Plan provides that all employees get the greater of (a) and (b) (a) 1.5 x years of service, max 30, accruing on all years of service (b) $18 x years of service, max 18 Someone convinced me that this did not meet the safe harbor requirements for some reason, now I do not recall why. Is it the 133% rule? Another plan provides a benefit equal to the greater of the following: © 1% x Yos, max 35 (d) $15 x Yos, max 30 Is there problem with the safe harbor status of this?

I think you need to read 11(g) further. You do not have any options. Read 11(g)(3)(vii). You MUST provide a QNEC based upon the average ADP and/or ACP for the NHCEs if you fail coverage for the k or m components. And a QNEC is fully vested of course. But as Brian indicated, it is not entirely clear that what you are describing is a coverage failure.

Right, you may not have a coverage failure. But if you do, yes, you need to give them QNECs. See 1.401(a)(4)-11(g).

Blinky, I knew you would; I just wanted an excuse to call you Mr. Fish.

That'd be the NHCEs, Mr. Fish.

I'm hoping to resurrect this discussion because I must be too dense to get it. If I understand Mike's formula correctly, I might get the following hypothetical accrual rates depending upon age at plan inception. Assume accruals are based on participation. Age 55 3.35% per year (Maybe this is the owner) Age 50 2.79% Age 45-Age 32 2.5125% Why instead wouldn't the plan be designed to provide for a flat benefit (or a unit benefit, e.g. 3.35% x YOP, max 10) accruing on years of participation, maximum 14. Under that scenario, assuming a 33.50% flat benefit, the owner would accrue 3.35% per year and everyone else would accrue 2.3929%. Wouldn't that be more efficient? And wouldn't it meet the alternative flat benefit safe harbor since the average NHCE accrual rate is 71.4% (more than 70%) of the average HCE accrual rate. Or am I missing something.

I'd like to recommend that the proponents of this stuff (Pam "I'll slip this in in while Treasury Secretary O'Neill is in Africa with Bono" Olsen et al) be volunteered as the first Mars flight crew, and have em give it a shot in '05 instead of waiting all those years until 2020 or 2030. Then maybe we can test fire the new Star Wars missile defense system at their contrail.

Oh, but I don't agree. The Patriots success has everything to do with the rivalry between the Red Sox and Yankee fans. Many will recall the "Bill Belechicken" and "Tuna Bowl" games.

If my memory service me correctly, this is addressed to some New England people from a Carolina person! How ironic! Actually, they did put forth a terrific effort. Maybe it's just a lack of a championship tradition.

If one is to touch a 412(i), one should wash one's hands thoroughly afterwards. No, actually, my comment is that I hope you guys are selling these things instead of servicing them. Talk about working smart (sort of) versus working hard.

Bet that one of these versions were "written" by a former Boston Globe columnist or a former NY Times reporter.

Those of us in the northeast know that clearly Senator Kennedy has been mis-quoted. There should be at least one "UH" or "AH" or "ARRHH" between each word.

If a participant qualifies for a benefit option, that cannot be taken away in a DB plan; to do so would be to cause a prohibited reduction in the accrued benefit. Why would you think that it could? Are you recalling the old "bad boy clause"? In the old days, maybe you could forfeit something under certain circumstances. Those days are, for the most part, gone.

411(d)(6)

No.

ok, now, who is going to look up stealth first?

MGB, have you seen the fine print of any of this legislation enough to guess where the rate may end up? Is this still to be left to the IRS to develop a formula, or is it contained in the legislation? I understand that the House and Senate versions differ, but do you have any insight into where this may end up?

Well a 412(i) plan is not your typical DB plan and I am proud to say that I have very limited knowledge of them. But what I do suspect is there is not only math involved in your question but also profit (for the insurance company and agent). I suspect that what someone can "run away with" will be a function of what that particular contract allows for. Someone else can possibly give you some more help but again I don't look at this as a mathematical question at all.

Here is one starter publication, if you can get by the BS and bureaucratic rhetoric. http://pbgc.gov/publications/defined_benefit_pens.pdf

"Q. A plan has two normal retirement benefit formulas. One is 40% of AAC for any employee with at least 25 years of service at normal retirement and the other is $30 per month per year of service. At normal retirement, the employee gets the benefit produced by the greater of the two formulas. Prior to normal retirement, the accrued benefit is the greater of 1) the 40% of AAC flat benefit projected to normal retirement age and then prorated by service, and 2) $30 per month per year of service to date. Can this plan meet a safe habor? A. No. The accrued benefit is not calculated in accordance with the fractional rule safe harbor method, nor is it eligible for the unit credit safe harbor." I've been puzzled since I read this several years ago and I've got at least a couple of these that I'm trying to determine whether or not they need to be general tested. I cannot quite understand this answer. Can anyone explain it? From RIA "Understanding Defined Benefit Safe Harbors" article by Peter Christensen, F.S.A. Reprinted in ASPA's "Current Topics for the Retirement Plan Consultant (C4 Exam required reading)

And, Tom, now you've got the MAAAAHLins to root for, or at least more so than 49 out of 50 of us. And how many times have they won since 1918?

You got a point. Could be the P-Town ferry! Maybe they like whale watching. Or maybe somebody told Nomar that the ferry converts to a DuckTours boat and zooms through the Big Dig, up the Charles, and right under the Monster seats and into Fenway.

I can't help you with the Relius part, but yes, it sounds like you are correct that they should be 0%s.

Any new comments on this? What additional disclosures are actuaries being asked to provide? Our accountant FAS#87/#132 requests seem to coming in awful slow this year. Has anybody figured out/agreed to the lines of responsibility?

Mike, I'll feel much better when they name Nomar and Pedro co-captains for the next 3 or 4 years, ala A-Rod!