AndyH

"Ordinarily under 416 if an employee participates in one of the TH plans he receives that plan's TH accrual/allocation and if he participates in both plans he receives the 5% PS plan allocation." I don't think there is any such "ordinary". It depends. If the DB provides the 2% minimum under the formula, use that. If you know the PS will provide 5% anyways (due to a gateway requirement for example), use that. If some are in one plan and others in the other plan, you might need conditional language. But the language needs to be in the documents whatever the best design is determined to be.

Understood. If you do some searching on the DB board, you will not find any dissent I don't think. I know Mike Preston for one has has clearly expressed that opinion, as have others, that an accrued to date result is 0 if there is no current accrual. Tom, what do you think?

So you have 1,500 NHCEs in the DB and 9000 NHCES in the PS with no current DB accrual or allocation and you're combining them for testing and trying to use the primiarily DB in charachter exception? Is that right? The majority of benefitting NHCES must have a normal allocation rate attributable to the DB allocation in excess of their DC allocation rate. Certainly that isn't true unless you somehow consider the DB NAR to be the frozen benefit even though there is no current accrual. I think it is settled (at least on these Boards) that their is no NAR using accrued to date if the participant has no current accrual. No chance of testing on an allocations basis?

Well, there is still an annuity associated with the balance, right? So wouldn't that annuity need to get increased in the traditional way, and compared to the annuity associated with next year's balance? Maybe the pay credit is frozen and the interest credit is very small. Or consider a vested term. I don't know the answer - just finding this to be an interesting question.

1. You have to provide it to who is eligible for it under the terms of the document, so No is the answer. 2. If you are aggregating the plans for 401(a)(4) and 410(b), yes they must get the gateway (if applicable) because they are benefitting under the combined plan, therefore they are considered "benefitting employees" and must get the gateway. As to top heavy, I think they only need to get the top heavy benefit for the plan that they are eligible for. Anybody disagree?? But if they benefit under either and you are aggregating plans, the gateway applies which is normally higher than the top heavy requirement anyways, so it is a moot point.

Obviously A J Burnett's ERA, salary, and loss total were used as a comp. Maybe the Yankees should trade Jeter for him -he'd have their lowest salary. Him and Bartolo Colon would round out a fine rotation.

And National League GMs who sign Manny Ramirez to new large contracts (and Board Members who advocate for that) Somewhere, Harwood and Willy must be po'd at the turn this discussion has taken.

I was wondering where that sense of humor had gone to!

One "word": 401(a)(26)

Is the DB a safe harbor? You say it is 1.6% of FAP. Are you sure you need 401(a)(4) testing? Does the DB sponsor plan really have 1500 HCEs and 1500 NHCEs? Seems weird. If the DB plan does not require 401(a)(4) testing I'm wondering if it could pass the Average Benefits Test. Have you explored the NHCE concentration percentages by using age and service exclusions? The answer to your last question is no.

I'll add that these "carve out plan" descriptions are not exactly defined in the Internal Revenue Code. What is a "412i/401k plan"? Is this a two headed animal or two animals? A 401(k) plan with a 412(i) plan don't mix together unless there is employer money in the K plan, which is not stated. And as Effen references a (presumably) small DB/DC combination that excludes some individuals requires careful analysis.

So NAR for HCE at 415 limt = 0% (assuming no increase in $195,000). Is that correct? Thanks. If he has fully accrued the 415 limit yes. You should read 1.401(a)(4)-3(d)(2)(B) to make sure you don't have an issue with a provision dealing with 415 increases for past employees. Not likely, but you never know.

Usually yes. But you can do it either way. There may be a year to year consistency requirement in 1.401(a)(4) however; you should check that if you plan to change.

Agreed, thanks. Looks like on the face of it the plan could have been amended up until 12/31/2009 to eliminate the whipsaw at least from August 2006 forward, and possibly change the annuity calculation method also. Otherwise, 411(d) relief on such changes (based on benefits accrued) seems to vanish.

Flashforward to 2011 Takeover plan that has a document that requires that the cash balance be projected to NRD, discounted back, and the lump sum is the greater of the current balance or the pv of the annuitized balance. Plus, the document says that optional forms of benefit are derived from the projected annuity generated from the cash balance account. The plan was amended in 2009 for PPA but these provisions were not changed. In practice, the current balance has been the lump sum and optional forms are an immediate annuity based on the current balance. Can the established practice be justified through a 2011 amendment, or do past distributions need to be reviewed/revised? If so, how far back? (I'm not sure how the 2009 PPA deadline and/or the recent regulations affect this issue).

Good point.

To make the testing work, you give the young employee a profit sharing allocation in a profit sharing/401(k) plan. It ain't gonna work the way it's structured.

Yes, you have stated it correctly. You have to determine the EBAR/Allocation rate associated with the deferrals, subtract that from the aggregate EBAR, inpute, then add the deferral EBARAllocation rate back in.

Maybe I was unclear, but I do agree that the right to retire and collect the same benefit at age 55 with the same choices must be preserved through an early retirement provision. I thought that was what was meant by #1, but maybe not.

Good example, thanks for your comments. This does seem to work despite the backloading; at least I have yet to find where it doesn't.

Maybe. Don't work with that much but you might be right. Let's say I cap credited service at 5 (the participant is 64). 1 x 6% =6% 4 x 10%=40% Total 46% .03 x 1 YOP x 46% = 1.38% needed, have 6%. Does that work?

Thank you!

New plan - one lifer - yet to be written. Optimum formula to match client's cash flow is a unit benefit of 6% of Pay x YOP in the first year, with this changed to 10% of pay thereafter. I don't really care if the 10% formula is retroactive or starts in year 2. I think I have an accrual (133% violation). But I also believe that instead of writing these formulas into the document I could start with the first one, and amend it in year two, removing the accrual violation. I think that is an exception. This seems like form over substance and an unneccessary waste of paper and time. Comments? Oh, and, yes, this is a regular DB plan. The problem could be solved with a cash balance plan but that is not on the table. I could also probably solve it with an annual accrual design. But these options are beside the point - what about the unit accrual design?

I agree with you - it seems that your approach to 3 is the way it should have been written under normal circumstances.

Agree.