AndyH

They're hanging? in Salem MA this time of year. Plenty to choose from.

Tom, where is that quote from? And the outfit too?

Thanks Quagmire, That is exactly on point, § 1.436-1(a)(3)(ii)(A) (A) In general. Except as otherwise provided in paragraph (a)(3)(ii)(B) of this section, any section 436 limitations in effect immediately before the termination of a plan do not cease to apply thereafter. § 1.436-1(a)(3)(ii)(B) (B) Exception for payments pursuant to plan termination. The limitations under section 436(d) and paragraph (d) of this section do not apply to prohibited payments (within the meaning of paragraph (j)(6) of this section) that are made to carry out the termination of a plan in accordance with applicable law. For example, a plan sponsor's purchase of an irrevocable commitment from an insurer to pay benefit liabilities in connection with the standard termination of a plan in accordance with section 4041(b)(3) of the Employee Retirement Income Security Act of 1974, as amended (ERISA), and in accordance with 29 CFR 4041.28, does not violate section 436(d) or this section.

I don't think so. As I understand it, the same 436 restrictions that were in effect pre-termination remain in effect other than actions in connection with the termination of the plan such as distributions or annuity purchases solely in connection with the plan termination. I'm not sure if that is from the Code or the regs but I have read that. Am I missing something?

Need to do an Annual Funding Notice for a large terminated plan that is beyond the year that it was last subject to minimum funding. Is there any guidance on what an appropriate format might be? Facts: Termination effective 6/30/2010. Doing AFN for PYE 6/30/2011. In the page one three year grid, is it appropriate to simply put "N/A" for all liability related items in the column for plan year beginning 7/1/2010? And then "Plan's liabilities", under the "Fair Market Value of Assets" would be "N/A"? Is there any informal (or formal) guidance in this situation? What have others done? This is a large plan, so it is important that this be "correct". Thanks for any help.

The September pain is gone. Feels good. Now the pain shifts to the team ownership.

Ok, maybe I misread the question, but I don't think JBones said that. "The 3 participants that the sponsor wants to include are all HCE's" The above Shirley gives me the impression that there are NHCEs. If there are no NHCEs eligible for the plan, as Emily Litella used to say, "Never mind".

I don't think I agree. Why would it not be discriminatory to benefit an HCE through a corrective amendment when an NHCE could have benefitted? I would think such a correction would be subject to testing and if the plan was a safe harbor it would render it not a safe harbor for the year in question. Providing such a correction only to NHCEs automatically avoids this issue because a lower benefit level provided to an HCE is disregarded for safe harbor status. If there are NHCEs involved, I do think it would be an issue to provide something additonal to HCEs only unless you general test it including the correction.

Not for the 401(a) plan. The 403(b) stuff does not get considered. I believe that you can combine for purposes of the 403(b) plan but I don't think this is completely clear.

All good points of course. Couple of add-ons. It is possible that the 9.5 months could be longer if there is a determination letter pending and you are in the remedial amendment period. The 3 year cyle is much more common in DB world. There are adjustments as Tom refences depending upon whether or not you use shortcuts, of various types. But overall I agree that the expectation of failure should cause questioning of the validity of the three year testing cycle itself.

Yes, see 1.401(a)(4)11-(g)

Why? I think you could test them on a contributions basis if that works.

I don't know about "correct" or not, but FWIW I agree with your approaches. I don't think anything official gets into much detail about this. Correct as far as I know. Just one opinion.

What about a plan effective retroactive to the FDOPY with a formula of y% x years of participation, with one hour of service being required for a year of participation? And you can change it for years after the first if no discrimination timing issue.

Mike, I saw the explanation of 401(a)(26) compliance for one of these. You are not overlooking anything. Your instincts are right.

Mike, I have seen a couple of those also - probably done by the same firm. I don't think they pass 401(a)(26) because they don't have a base benefit.

Is the sponsor a non-profit? What is it's fiscal year end?

On what basis would it be deductible for 2010? (It was not paid within the year. If the plan and employer tax year are the same, was it paid within the period ending with extended due date for the employer's tax return?) Looks like a 2011 deduction and contribution for 5500 purposes to me.

I think it simply means a SLA available at both ages, nothing more.

The plan document either says excess reverts to the ER or is reallocated. Most say revert. Amend it at the time of termination, or as part of termination resolution.

It does not work that way; you are describing a deferred 415 limit. When a lump sum applies, the calculation is different. See the references to 417(e) on the flowchart that aTa posted.

That flowchart is interesting and useful but at least some of it is outdated. The 105% part, for example, no longer applies to plans covering less than 100 participants.

This is a very complicated calculation, and it is in part specific to the plan document. The first question is whether you are calculating an annuity benefit or a lump sum. The two calculation methods are different. But in general you are right - there are at least two calculations, and you take the lesser result.

From memory, it is the IRS Notice that first detailed how to apply "applicable interest rates" for determining lump sum benefits. I believe it first introduced PBGC interest rates as a second calculation to contrast with a lump sum based on fixed plan interest rates.

Agree, well summarized. And I'd add that the only real no-no is that it is not a good idea to categorize based on age, especially if it can be demonstrated that older participants get less. IMHO.