AndyH

Thanks, Tom. I would still consider this approach to be aggressive. On page 7.288, there is an example of someone not deferring and not receiving a discretionary contribution. It says it such a person's compensation "arguably" may be included in the 15% limit. Plus, this is one person's interpretation of the 404 limit. Granted, it is considered an expert opinion, but it is still one opinion and there are no cites for this section.

Yes. It cannot go down. It is highly unlikely to go up.

My apologies. My post here was intended for a different thread! Of course it is everybody. I meant this question for the 15% maximum profit sharing question. Sorry for the confusion and for making you research this! (Errant message deleted)

I'm not sure about the "at any time in the year" part if the plan has one allocation date. Maybe that's true if the plan measured eligibility periodically, quarterly, for example, but I'm not sure about it with the more traditional once per year allocation date date. I could be wrong but this seems overly aggressive to me.

I took this three or four years ago and work with some people who have taken this more recently. I do not recall any of the reading material being more emphasized or important than any other. I recommend that all of the reading material be covered for C1 and C2-DC. There are some materials for C2-DB that could be skimmed (FAS#87/FAS#132), however.

The timing of a payment is an optional form of benefit under 1.401(a)(4)-4(e)(1) and therefore I think it is a prohibited cutback under 411(d)(6) with respect to benefits accrued to increase the waiting period.

Thanks, Richard. That seems to be the consensus here, but I've had trouble finding that in print except in the gray book cited here where it does say that the IRS does not intend to take issue with this from a 401(a)(4) perspective (benefits, rights and features). But, if not for that 1992 cite, I'd share Harry O's concern expressed here. As usual, it would be nice to have something a little more authoritative or official.

This may seem like a blast from the past. I found this thread as a result of a search. Has anything changed or been clarified with respect to deferrals on compensation which does not pass the 414(s) ratio test? Is it ok to use non-414(s) comp for deferrals if you satisfy the ADP test using gross wages?

BFree, you have the right to a statement of your accrued benefit, not more than once per year. That's the equivalent of a 401(k) statement. You could of course request anything else, including backup information, but I'm not sure the sponsor is required by ERISA to provide it. Maybe so, but I don't know of such a requirement.

There are specific exceptions under 1.401(a)(26)-5(a)(2) for floor offset plans that meet certain requirements.

Here's an interesting discussion of the 401(a)(26) issues: http://www.benefitslink.com/cgi-bin/qa.cgi...id=15&mode=read

I think you were both 1/2 right. Under the prior benefit structure requirements, 40% must accrue or have accrued "meaningful" benefits. So, I think if two separate benefit formulas both provide "meaningful" benefits, you're ok. But, I doubt that $1 would be meaningful. But, nothing says the benefit structures must be the same.

David, I think your idea is a pretty good one provided that no NHCEs become eligible, in which case you'd have some complications.

Whether or not a lump sum is available depends entirely upon the terms of the plan which are specified in the plan document. The plan document may or may not permit lump sums in such circumstances. Small plans such as these almost always do, but again it depends on what the document says.

Maybe I can help with the translations. I think the last question gets to whether the lump sum is valued as an immediate annuity or a deferred annuity. I think most would value it as a deferred annuity as KeithN indicated, although some might do it differently. This is not likely to be defined specifically in the document, it's more of a "commonly accepted practice" matter. And by APR I think he meant multiply the immediate annuity by the annuity purchase rate, which is the immediate, as opposed to deferred, method of calculating the lump sum. And Marino, to be correct in your example, you don't multiply the "value" of the accrued benefit by the APR, you multiply the actuarially reduced benefit, or immediate annuity, by the APR, under the immediate method.

Tom's explanation is most likely true, but it seem pretty strange that anybody knowledgeable in this business would reference the safe harbor percentage in the cross test context. It sounds like the person didn't know the basic rules, and may have been correct only by accident. Did the author seem to be knowledgeable? I'm not familiar with the publication. P.S. Fred, the target is technically the lesser of mid-point or the plan's ratio percentage, which is usually the mid-point.

I don't think so but I appreciate the feedback. It seems to me that the employer contribution would be a separate "plan" within this context. In the worst case, the dc program could actually be two separate plans, one only deferrals and the other being only the 3% safe harbor contribution, because there is no requirement that the safe harbor be in the same "plan". It could be in a money purchase plan, for example.

Is there any problem with the following situation: Floor Offset arrangement with DB benefits offset by actuarial eqivalent of employer contributions to a profit sharing/401(k) plan, where the sole employer contributions to the dc plan are safe harbor non-elective (3% contributions) used to automatically satisfy the ADP test. I guess the more precise question is whether such an arrangement could qualify as a safe harbor under 1.401(a)(4)(8)(d). Anybody see a problem using the 3% SHNEC contribution towards the safe harbor?

Andy, I just happened to research this today (ad nauseum) and I agree completely with the response from Lynn Campbell.

... and, whatever limits applied to a DB plan also applied to a DC plan as well; so if you have DC eligible compensation then that almost certainly would be DB compensation as well.

Thanks. I just found that a little earlier myself. Looks like it was posted today.

Do we still think vesting is not required upon a mp merger into a ps? I thought at ASPA I heard a definitive NO, full vesting is not required. But, now I've just heard that supposedly Jim Holland said YES at a recent ALI ABA conference. Any updated news on this issue?

Good. I have never understood why a plan should be allowed to apply a full pre-retirement mortality discount to a "minimum" lump sum when there is no forfeiture upon death. Maybe I'm just dense, but how is it "actuarially equivalent" when at least a REA death benefit is required? And how is it justified when there is no forfeiture at all upon death?

Yes, I guess you're right. Not necessary. I agree. You just might be showing a $0 contribution to the MP plan if you don't pick up a receivable, but I guess that's not a problem.

Good point, especially if you file the 5500 on a cash basis. But, then again couldn't you change to a cash basis?