AndyH

Yes to both. Blinky, question #2 was about HCEs.

Fred, perhaps some more information could encourage some responses. Who is in the "multiple employer" plan, and what is the relationship of other entities to your client? Are they considered separate (not controlled or affiliated) or not? If separate, must they be aggregated for 415 (the 80% standard drops to 50% if my memory works)? The short answer to your question is that if the benefits from the new plan are aggregated for coverage, they are aggregated for nondiscimination, and thus included in the EBAR. If they are not aggregated for coverage, they are not aggregated for 401(a)(4) and thus not in the EBAR. But there are side issues such as 415, benefits, rights and features, and the question of who of the new plan sponsors must be included if you aggregate to consider.

Dougsbpc, adding my two cents: You should follow Blinky's advice. Not that hearsay is authoritative, but Jim Holland said verbally (and it could also be in print-I haven't looked) as clear as daylight at last year's ASPA national conference that since you are aggregating the benefits, you aggregate the years of participation. Period.

Sorry, my bad. The second part of my question made no sense. Good thing my first vacation day of the year is tomorrow!

MGB, are you saying that 417(e) applies only to part of a death benefit if the death benefit equals the PVAB and the full death benefit can be paid as a lump sum? (Provided that the document reads this way, of course) Would it not also apply to a QJSA? And isn't a QJSA for an unmarried person a life annuity? Or am I reading too much into your comments?

If you are aggregating the two for a(4) testing, then you are aggregating them for coverage. It sounds like 100% are in one plan or another, in which case you pass the ratio percentage test by 100% on a combined plan basis. Watchout for the DB/DC combo gateway requirements WRT a(4) testing.

Sure. If it is not a safe harbor (i.e. needs to be tested at all), then it can be tested under the general test on either a benefits basis or contributions basis, or a combination of the two. And it can be tested either together with or separate from the DC part, but it can only be tested separately if it can pass 410(b) separately.

But check the document. They may not be excluded by class anyway. And for another thing they are not technically leased until a year has elapsed, although I'm not sure how that would work in this situation.

Depends upon what year you are discussing. What was the DB plan year, what is the K plan year, what was the DB termination date, when was the $250 k deposited?

In the Blink of an eye I was beaten to the same comment. Merlin, just curious, how are you going to get a DB net offset plan to pass 401(a)(4) on it's own? Seems like an odd candidate for an DB and/or offset then.

Sorry, (duh) my lousy speed reading skills did not allow the non-PBGC disclosure to register, so yes of course there is no "Standard" or "Distress". Sorry for the confusion. I don't get involved in many non PBGC terminations, but it was my understanding that only an owner could receive less than 100%. Interesting.

But unless non-owners get 100%, it isn't a standard termination anyway, right? How can you do a standard termination "to the extent funded"? I think you can't, so you have a distress termination, and the PBGC will come in and sell the sponsor's assets to make it funded, it seems to me. Or am I missing something?

Yes, that is right. That is why you need to look at each approach.

I think you have 2 choices and you have to see which is more efficient: 1. Increase the PS contribution for non-partners to 2% or 2. Aggregate the two plans and then do an 11(g) corrective amendment increasing the MP or PS contribution to the level needed such that each "benefitting" NHCE gets at least 1/3 or 5% between the two plans.

This was mentioned by Tim Russert on Meet the Press yesterday.

If I recall correctly he also floated the idea of allowing small lump sums only in a manner that only NHCEs might be eligible, for example, allowing lump sums only up to $20,000. Then when the plan is terminated you amend and offer unrestricted lump sums. This might work in some circumstances.

It depends on what the plan document says. Some allow this and some do not.

If an HCE received a top heavy minimum that exceeded what the age weighed formula would have produced then you have a plan that must be tested under the 401(a)(4) general test. The age weighed formula, if done correctly, would have automatically satisfied the general test by design, but an aberrant (is that a word?) HCE would alter that result. Normally it would pass without much trouble, but the test must be done. p.s great name!

To Blinky cc Merlin Ah, now your Phoenix comment has come full circle, has it not?

Perfect, Blinky, thank you. p.s. The regulation sure takes liberties with the Code.

The "conversion" of a DB into a DC is the termination of the DB and the establishment of a new DC. That is clear, IMO. Merlin, I researched your 415 question years ago, but I cannot recall the conclusion I reached. If it helps, I remember Jim Holland's fairly recent response to the question of whether you aggregate years of participation if you were in a db plan, it terminated, and you were in another (of the same employer). His response was that since the benefits from each plan must be aggregated for 415, the years of participation should also be aggregated. In your scenario, you would have had a 415(e) aggregation, but now you have none. So does Jim Holland's logic imply that the answer is no? Maybe. It is at least an argument against aggregating TB and DB years of participation.

Well, then, can a plan have eligibility requirements of age 25 with 5 years of service if it would pass the 410(b) ratio/percentage test? Could those age 22-24 and those with 2-4 years of service be considered an excluded class? I don't disagree with your answers, I'm just trying to better understand the relationship between 410(a) and 410(b).

Would a plan amendment that says that participants hired after a certain date are ineligible for a plan be a disqualifying provision under 410(a)(1)(A)(ii) after say two and 1/2 years have passed, even if the group still in the plan passes 410(b)? This assumes an active, not frozen plan. Is the only way around this to make this group eligible but give them nothing?

Pension222, I need to backtrack on this before I say something incorrect. I am no expert on the MVAR calculation. There is room for interpretation and I have over the last few years collected opinions on this. There are others here who have worked with this much more than me. The opinions used to be 50% say yes, use 417(e), 50% no. I thought it was now 100% yes, but I stumbled on that thread that you referenced where a couple of experts here who's opinions are not to be dismissed said no. But that was before Jim Holland supposedly said yes, 417(e) must be included, so they may have changed their minds. And Jim Holland's opinion on this is good enough for me. Regarding the J&S conversion, I don't know enough about the background to the regs to debate that subject, nor do I particularly wish to. That is just the way that I've read (in several places) is correct. There were a couple of relevant ASPA session handouts that were on their website archives, but I haven't been able to figure out how to access them since they redesigned the website.

Just an update on this subject and a question as to whether any opinions have been altered. I started this thread before last year's 2002 ASPA national conference. Larry Deutch had previously opined that the 417(e) rate need not be considered in the MVAR calculation, but at last year's ASPA conference he said Jim Holland told him he was wrong, and that as a result he had (reluctantly) changed his position. Mike, MGB, et al, have you also now changed your opinions or do you still feel that the 417(e) rate can be ignored?