AndyH

Before I took the tests, I was told not to read too much into the questions. That was terrific advice. And the points made here about the more experience, the more difficult the questions are very valid. The questions often are geared towards beginners. I had more trouble with PA-1 and PA-2 than I did with any of the QPA exams because I was reading too much into the questions.

You exclude them if you pass coverage. If you do not pass coverage, then you need to take corrective action. You would typically look to the document to see how to go about taking corrective action. Unless the document directs or limits what you need to do, the rules are generally dictated by regulation 1.401(a)(4)11-(g). That could include bringing some or all back in. And you can usually have a number of them in the situation you've described before you have a coverage violation. The standard is 70%, not 100%. And, by the way, I just looked up the ASPA C-2 DC committee and none of them are actuaries, nor do I recall seeing any actuaries on that committee before. These actually are humans who speak English. And, like everybody else, they sometimes make mistakes. But I do understand your sentiments. The questions are often tricky, often ambiguous, and sometimes they are just plain bad. But they don't require you to get a 100 to pass, either.

stevena/Lisa ??? Would you clarify what your question is please. If you are asking if the practice questions make sense, the answer is NO. If you are asking if you can ignore a coverage test failure and proceed to ADP/ACP, you've answered that yourself. NO. If you are asking if people who don't get a match because of a last day requirement need to be included in ACP, I think the answer is NO, but that group needs to pass coverage as you mentioned, or as one possible correction, you might need to correctively alter that provision.

To really resolve this, if you have the ASPA yearbooks, or know somebody who does, you can determine who was on the E&A committee for that test for that particular year and send him/her/them an email. I did that when preparing for one of the essay exams and the authors of the text (who were also on the committee) confirmed that the material contained errors. It does happen, so I would not get too hung up about it.

Those are not good questions. When I took C-2 DC a few years ago, there were several questions that I got wrong that I still think I answered correctly, because IMHO they were bad questions. I found that to be true on all of the multiple choice tests, but much more so on C-2 DC for some reason. And I got a 9 on each of them.

Yes, I agree. Thanks DFerrare. My pre-coffee Monday morning reponse was less than clear and complete. But I still would like to make the point that I don't think that you can generally use SSRA as testing age unless SSRA is NRA. And even if SSRA is NRA (I have one such DB plan), I believe that it is still a gray area if that is proper for testing. For testing a DC plan on a benefits basis, you can either use the 3 tiered rates or you can use one rate (.65% if NRA and TA is 65) for everyone.

No, that is not correct. You are correct. But I don't think we are allowed to test at SSNRA, which is probably related to why your program does not work. This was a gray area for a while, then I think something came out that said it was not acceptable, but I cannot recall off hand what that was. I'm sure somebody else can. But I thought I'd answer your question first.

Outstanding!

Right, Mike, agreed, but doesn't Q&A 7 preclude permissive aggregation if the benefits are not "comparable"? Do I need to do some sort of Average Benefits percentage test for each plan and make sure one result isn't more than 30% greater than the other?

The T-7 Q&A has been bothering me since Mike resurrected it. Mike indicated that if we aggregate for top heavy, we aggregate for a(4) and 410(b). Is this correct? Situation came up yesterday in my office. Takeover client has a ps plan and a separate k plan with two different TPAs. In addition, client has union employees in another plan which I believe is a multiemployer. Not sure if plan 3 is a MP or DB right now. It is one of those. Apparently top heavy minimums have been missed for some people eligible for one plan but not the other. Somebody is proposing permissively aggregating plan 3, which would likely make the aggregated group not top heavy. But since this is either a MP or DB or PS is mandatorily disaggregated from the K for a(4), right? Does that , or does T-7 preclude permissively aggregating for top heavy testing purposes? It's been a long time since I looked at this stuff.

I'm afraid that you will find the silence to be deafening on this subject. Most 412(i) questions here go unanswered; I think most people here are tired of the subject. There have been some very long back and forth debates on 412(i) plans here and they are pretty one sided, so I think most people are not interested in the subject matter any longer. I say this only to be helpful. You might want to do a search of some of the older discussions to see if there is information useful to you. Maybe you'll get a useful response, but I tend to doubt it.

FWIW, I agree with mwyatt's analysis completely.

Good points. But I don't think it matters whether it is the nonelective or the match under EGTRRA. Either are deemed to satisfy the thm.

My understanding is that C would be correct, or more correctly stated, that the 401(k) safe harbor contribution is deemed to satisfy the top heavy requirements for the k plan, and there is no th min required for the frozen DB plan.

Would you also consider the restricted amount to be the same liability for all calculations, i.e. OBRA CL, RPA CL, PBGC CL and the funding liability, even though each interest rate or mortality assumption might be different?

If the restricted amount is not subtracted from assets for purposes of funding other benefits, I would agree that there is no difference. But in such case, I would think that the restricted balance would need to be converted back into annuity form for funding calculations. And at what rate? Surely not the initial lump sum (presumably using 417(e)) rate. And if the conversion rate for funding, current liability, etc. differs from the interest crediting rate, wouldn't that create weird results?

Imagine if you did that a few years ago, the restricted amount represented 50% of plan assets, and the assets declined by 51%.

.......provided the correction takes place within 9 1/2 months of the plan year end, but that is not a EPCRS action. I thought he/she was asking about a period beyond that since there was a reference to a Revenue Procedure.

Blinky, please excuse my terminology, but what I thought the Q&A said is that you can do within the plan what you could do outside the plan if you had the appropriate escrow or bonding, that is take the lump sum amount and put it in an "account", withdrawing the unrestricted life annuity amount when available. Then I thought it implied that the balance would be credited with interest at the initial rate used to compute the lump sum. Is this not right? If it is right, you've guaranteed a certain positive rate of return at a time when a positive rate of return is otherwise not certain. If it is not right, then at what rate do you credit the restricted balance? And in either case, is this restricted amount subtracted from assets for valuation purposes? If not, how is it handled?

The gray book Q&A raises a lot of questions in my mind. How is interest on the seggregated balance determined, at the initial rate used to calculate the lump sum, or based upon actual experience? If the initial rate is locked in, and assets tank, then you've got a real mess. And you could have other complications if the restricted amount is near the 415 limit. Under the Q&A approach, is the seggregated amount subtracted from assets and liabilities for funding and current liability calcs? I have candidates for this Q&A approach right now, but how are these issues properly handled?

I'm not aware of any text book type of material on this subject. There have been a number of outlines prepared for sessions at ASPA conferences that could perhaps be purchased through ASPA. They typically sell post-conference tapes and may have outlines available as well. You might inquire at aspa.org.

And Q&A 25 reminds us that if the restricted amount had qualified for rollover treatment, 20% mandatory withholding would have applied.

Thanks, MGB. I had not noticed that Q&A. That is extremely helpful. p.s. I had gone thru the 2003 Gray Book. I must have fallen asleep before I got to #24. It was pretty dry stuff as I recall.

Well, the saying used to be "that's what makes horse racing"; now I guess it's "that's what makes craps tables". This is the IRS model Benefit Payment Information Pamphlet language: "The following types of payments cannot be rolled over: Payments Spread over Long Periods. You cannot roll over a payment if it is part of a series of equal (or almost equal) payments that are made at least once a year and that will last for: _ your lifetime (or a period measured by your life expectancy), or _ your lifetime and your beneficiary's lifetime (or a period measured by your joint life expectancies), or _ a period of ten years or more. " I think the restricted payment fits this category.

Otherwise, just make the amendment allowing lump sums effective only for any participant completing one or more hours of service on or after _____ date.