AndyH

Mega-dittos to Mike's comments.

Well stated. I agree 100%.

I agree with Keith's initial comments. Let's forget for a minute the participant's election. More important is the spouse's election. The plan cannot force a spouse to elect between a deferred lump sum and a deferred annuity because waiver of the QJSA must be within 90 days of the annuity starting date, which I think is the deferred date. Each deferred option must be preserved unless, as part of the plan termination, the option of an immediate annuity and immediate lump sum are ADDED as options, and so elected by the participant and spouse. p.s. I didn't see Mike's comments, but would be curious what they were. p.p.s. , I think that the answer to Keith's #2 is no, because plan termination is a triggering event as well as separation from service for a distribution.

Thanks for the feedback, Blinky. Re-reading that section, I still don't understand what it says, but I appreciate and can understand that interpretation. It says to me that you include in the test those that you must include in the test. Beautiful.

Who is included in a 414(s) test for a participant in a safe harbor plan? The non-excludables for 401(a)(4) and/or 410(b)?

Julie, sorry, but I mis-read the original question. I meant to say that I would pay it retroactive to 11/1, i.e. the first day of the month following the request. This presumes that the plan document has some language requiring an application for payments. I still fail to see any justification for denying such requested payment on account of a merger. Yeah, technically interest would be due but as a practical matter how much are we talking about? And I certainly agree that an actuarial increase would be warranted from the amount that would be due as of NRD.

If you are testing 2 on a benefits basis and 2 on a contributions basis, you treat the other two as non-excludable and not benefitting in each test, i.e. as if they were 0%s.

Of course not. Why would RI judges allow reductions in pensions for legislators when each judge's pension is detemined by separate special legislation voted on by legislators? The RI Supreme Court has made some cooky pension decisions that would seem out of their jurisdiction. I am not a lawyer but I have first hand knowledge of at least one other one that defied sensible explanation.

If there is a rule prohibiting payment retroactive to 10/1/2002, I am not aware of it. I would have made the payment retro to 10/1/2002. The "annuity starting date" rules are convoluted to me in this type of circumstance. Maybe if I'm wrong and payment retro to 10/1/2002 is somehow prohibited, somebody can explain why.

The 401(a)(17) limit is prorated only for a short PLAN year, not based upon a period of employment. Since you don't have any short plan years, you don't have any prorated limits. But the definition that you state is peculiar. Usually average comp is based upon a stated period of time, e.g. the plan year or the calendar year. Otherwise you would have a different measurement period for every employee. I'd suggest reading that definition more closely.

Mike, FWIW, I think that your "ANY" references are on point and make the case for me that the deferrals are ignored for purposes beyond profit sharing limits, i.e. including DB limits.

Another wow.

Agreed, but once again, you may be able to give the kids 5% if you restructure the plan into component plans, test part on a contributions basis and part on a benefits basis. Not for newbees, however!

Yes, I'm questioning the definition of earned income. This is specific to a self employed person (or partner in some cases). Does a deferral reduce earned income (thereby impacting 415 and 404) in the same manner as an employer contribution does?

Mike, could you elaborate on that comment please. Now I'm a little confused. Say you have one sole propietor with no employees and his net income after 1/2 of FICA is $100,000. His maximum deduction to a MP plan would be $20,000, correct? Would it differ if he instead deferred $10,000 into a k plan and contributed $10,000 to a MP plan? Would he then be able to put more into a PS plan? Is that what you are saying? Or as another example, if he defers $10,000 into a k plan, is his DB 415 limit $100,000 or $90,000?

Good point. I stand corrected. But maybe not if NRA is 125, like social security normal retirement age might be after we finish up paying for Iraq.

No, the kids and dad need not get the same contribution level, and in fact should not get the same contribution level if Dad gets more than "all other employees". Generally speaking, the kids should get no more than the "all other employees" group, but even to do that you will need to know all the ins and outs of "restructuring". You'd be better off excluding the kids from the plan unless you know how to test under 401(a)(4) on a benefits basis and contributions basis, and you know how to do both within one test. If you can do that, you would normally set the kids equal to the NHCEs; otherwise, exclude them from the plan or give them a very low contribution rate. So, for example, put the kids in their own group and give them 1%. Then try cross testing and you have a chance of passing. You will have no chance if they get the same contribution as Dad.

Both Yes, if you have the type of document that permits it. No, not if they are in a different class, and the document states that different classes can receive different contribution levels. If you have no NHCEs, you don't have anything to test. If you have NHCEs, you have a lot of things to test, starting with coverage testing and nondiscrimination testing. The testing specifics depend upon who is eligible for the the plan, what the allocations are, and what the benefits, rights and features are. Yes. This stuff is not for beginners. Most people doing this type of work have a lot of experience.

I thought I had already suggested this. I don't see where there is an indication that anything other than 414(s) had failed. I find it very hard to believe that a comp exclusion can't be made to pass using some version of the general test, at least in most circumstances. As I once heard Ed Burrows say, the general test never fails; the client may instead run out of money, but the test never fails. There are too many options to exhaust.

I think that you definitely have a cutback if you are not careful. Have you considered general testing the allocations, either on a benefits or contributions basis? I'd be that you could find a way to make it pass. This assumes that the plan had no language to the contrary.

yeah, 4:29 it says on my computer. Now this makes a little more sense. I was beginning to wonder if you were a vampire!

Blinky, I don't know if we can trust Mike's answers any more. Look at the hours he's been keeping! 4:29 AM?

If you don't aggregate, you'll need to include the NHCE in both the DC and DB.

What does the document say is allowed?

Doesn't the partial termination vest benefits only to the extent funded? That's what I've been told, anyway. Just a thought.