AndyH

I was told recently by someone who I consider very knowledgeable that there is a requirement to offer the policy to the participant in a DC plan, of course at the cost of the policy cash surrender value. I have never before heard of any requirement to do so. Is there one?

Mike, do you think this is a good idea? If so, what would you suggest be done in year 6?

Maybe I'm missing something, but aren't you simply saying that 2 NHCEs and 1 HCE are getting 3% and 2 NHCEs and one HCE are getting 11%? If so, don't you pass by testing the plan on a contributions basis, with two resulting rate groups, each with 100% coverage? If so, you pass and you don't need to bother with the gateways. You are testing on gross wages. On a contributions basis. Not cross tested. This is a quick reaction. Am I missing something?

I'm not sure; the basic guidance is here: http://www.benefitslink.com/reish/articles.../fieldmemo.html

What rate does the PBGC have to use to value THEIR liabilities on a present value basis?

If the question is can the offset assumptions be different than the funding assumptions, the answer is absolutely, but I wouldn't think it would be reasonable to use different offset assumptions in your funding assumptions, if that makes any sense. For example, we inherited one which bases the offset at 8.50%, but that is certainly not the rate that we use for funding of the net benefit, just for determining the net benefit.

There is nothing wrong with this provided they can be proven to legitimately "work" the number of hours required to participate initially in the plan, and to be eligible for employer contributions. Plus I'd make sure they were at least at the minimum wage for whatever hour requirement the plan has.

"A solution in search of a problem" is an excellent description of this arrangement.

Again, Bush's email address: president@whitehouse.gov

Interesting question: Plan has liberal eligibility (immediate) for deferrals and 3% SHNEC, and standard 21 & 1 YOS for profit sharing. HCEs get 20% so gateway percent is 5%. If I use disaggregate those under 21 or with less than 1 year of service for purposes of the gateway rules, must they also be excluded from the NCT portion of the general test? In other words, is disaggregation for the gateways also disaggregation for the general test, or can I simply treat those under 21/1 as not subject to the gateway? p.s. After looking at this, it seems that you either disaggregate or you don't. Can't have it both ways I guess. Wishful thinking.

Thank you. Your interpretation (and Hollands) differ from the first two that we were inclined to choose from. But reading it again, I can see that interpretation clearly.

DB plan is funded less than 110% on current liability basis (by any measurement). Former highly paid participant terminated in 1998, reaches NRD in 2003, wants lump sum. Participant was an HCE when he left, about the 10th highest paid. Can somebody clarify the rules for former HCE's for me? Here is the language in 1.401(a)(4)-5(B)(3)(ii): (ii) Restricted Employee Defined. For purposes of this paragraph (B), the term restricted employee generally means any HCE or former HCE. However, an HCE or former HCE need not be treated as a resticted employee in the current year if the HCE or former HCE is not one of the 25 (or a larger number chosen by the employer) nonexcludable employees or former employees of the employer with the largest amount of compensation in the current or any prior year......" I'd like to understand the intent of the second sentence. My former HCE obviously has no compensation in the current year. How is this to be interpreted? Does this just mean that he had to be out of the top 25 every year? Thanks for any help.

yes, because the deferral no longer counts towards the deduction limit.

dmb, a standardized plan document will require that all employees of all related corporations participate. What you want can be accomplished, but not without more flexible documents.

Mike and I are saying the same thing. Note, however, that there is no midpoint test in the average benefits percentage test. That is 401(a)(4), not 410(B). You need to pass 410(B) to proceed to 401(a)(4) in your situation, because you are trying to avoid the gateway in one of the plans.

yes, agree. But, DMB, as Mike said you must separately satisfy coverage for each plan.

Hopefully this 412(i) mania is about to end. Apparently the IRS is about to start issuing "guidance", which sound more like a warning. It is a "very high priority" according to some comments made at the LA Benefits Conference.

kgsingletary, It looks like this formula might be tested on a contributions basis as opposed to a benefits basis. This might work if you have HCEs in the lowest group. And you'd have to test using permitted disparity. The advantage would be that the gateway rules would not apply if, for example, the plan is top heavy and you have some people getting only 3%.

yes, based on your third paragraph.

Absolutely. In fact, they must be included unless they are statutorily excludable.

How is 415 compensation determined when a person has both W-2 and negative K1 from a LLC? Are they netted, or added together, i.e. W-2 plus a negative number, or W-2 plus 0?

let's provide some feedback on his retirement plan proposals. president@whitehouse.gov

Thanks, jevd. Is it April 2? Joking aside, I for one will never vote for Bush again. We should all let him know that. Talk about wacko. Who is running that show? How much confidence does this fiasco inspire? IRAQ? I just changed my mind. We need a regime change, all right. That ought to be OUR policy.

http://benefitreports.com/

You now need an Early Retirement Window to throw people out of when the naked pizza party is over. Wow how things change in a couple of weeks.