AndyH

Easy. BIOB. Just blame it on Bush. Everybody asked for relief ......... and Bush said no. Hard to argue with that.

Thanks for the answers. How bout shipping me a few dozen temperature degrees as well. My daug won't walk herself.

I think we agree but here's some more specifics to be sure. The person in question is hired 10/31/08. Plans years are calendar. Assuming semi annual entry in a plan with a 2 year wait he is eligible 1/1/2011, but I think he needs a 7.50% gateway for 2010 because the OEE rule only works with 1 year of service wait 410(A)(1). So, for 2010, he is ineligible but gets a 7.50% gateway. How is he treated in the general test? As a nonexcludable I guess, right? Thanks for the help.

Thanks for the comments. And thanks for the correction to my definition, Tom, I certainly agree. And you make a valid point on the document. In this case however there currently is no document so I can do as I wish in that regard. Allow me to rephrase my questions considering those initial comments and points: 401(k) eligibility is immediate. Eligiblity for DB and PS is 2 YOS. The plans are top heavy. The top heavy minimum is provided in the PS plan. The minimum gateway for general testing is 7.5%. A non-key, NHCE who has 1/3 YOS defers. (1) He must get a 3% PS (not 5% because he is ineligible for the DB) to satisfy top heavy requirements, even though he only had 1/3 YOS, right? I think so. (2) Must he get the extra 4.5% to get to the 7.50% gateway? I think not. In the following year, he has 1 1/3 YOS and defers. He is ineligible for the PS or DB because they have 2 YOS eligibility provisions. (3) He must get a 3% PS contrib, right? (4) Must he get the extra 4.5% to get to the 7.50% gateway? I think so because even though is is not eligible, he has an employer provided nonelective benefit, and the non-excludable rule cannot be applied because that only covers 1 YOS. Agree?

I've been asked to review/comment on a multi-year proposal DB/PS/K and want to make sure rust hasn't totally corroded the brain. DB&PS are permissively aggregated for testing, and a 2 YOS wait is used for both. Plans are top heavy. Since K plan cannot have a wait more than 1 year, an NHCE is included in the illustration with a deferral only. He is indicated as excluded from the PS and DB and at such point would have 2 Years of Service. So, I think a top heavy minimum is being overlooked due to the deferral. Agreed? Second, I have it ingrained in my head that "an employee" must receive a gateway allocation if he/she benefits under the plan, unless he/she is separately tested as an otherwise excludable employee. In this case the employee benefits because he gets a top heavy contribution. He cannot be excluded as an "otherwise excludable" under 1.410(b)-6(b)(3) because that rule is "(applied without regard to section 410(a)(1)(B)" which is the 2 YOS or age 26 stuff. So, does in this fact pattern the receipt of a top heavy contribution generate a gateway requirement? Does that cause a need for inclusion in the a(4) test? Thanks.

Thanks. Case closed, jury dismissed. People I listen to think it'll be a loooooooooong time before we're back in the saddle again.

I agree the thought is intriguing but doesn't a Roth avoid taxes on posititive earnings? When was the last time we has positive earnings over any extended period of time in the stock market ? What is the market index since the Roth was introduced? Wouldn't that be a fun factoid! I think of money I put in "tax free" cruddy accounts for college tuition for my kids. What benefit did I get out of that to offset the forfeiture of capital losses?

I missed the T'Day feast and lovefest but perhaps a couple of New Years wishes and cheers will suffice? First, here's to George getting his websites' construction finished in 2009. Second, here is to Junichi Tazawa lighting up the Greenville Red Sox scoreboards with K's in 2009 and advancing up north. And here's to having April Fools Day renamed PPA day or Benefit Restriction Day. And here's a nod of thanks to Dave Baker for keeping this terrific outlet available to us!

I wish you got some answers to these questions; I'd like to know what to do as well. People are petrified of linking benefits to a variable bond rate with no cap, in this economy. Anything below the effective rate produces an underfunded plan (without the life raft, err cushion in the first year that is). The exotic 3 year cash balance "bailout" approaches suggested at conferences aren't for everybody.

Aaaah, a predecessor plan issue - my favorite. I had to bite for that reason. Seriousness aside, what is an "annual annuity option", and as the esteemed Mr. Rigby implies, is it an option under the terms of the plan? In general, you need to do what should have happened. What were the options 4/1/2008, choose one of them, and do subsequently what would have been done. I don't know if interest is appropriate for an HCE; I suppose it is - anybody know what the self correction programs say about this?. You then need to recompute the VAB at a later date (1/1/2009?) by factoring in both the minimus and the interest. If the RBD date is 4/1/2008, isn't that based on the VAB 1/1/2007? Was there one? I don't know what the next payment date would be because I don't understand the "annual annuity option". If payments were monthly you could just pay 12 of the 1/1/2007 VAB monthly payments by 4/1/2008 and then another 12 monthly based upon the VAB 1/1/2008 by 12/31/2008, it seems to me. But of course the document must be reviewed carefully first.

I find your question to still be unclear but here is another try. For the DB plan, you can choose to ignore or reflect the 415 limits. So, your DB Normal Accrual Rate would be either: 60%/6 Years =10% or 10%/6 Years=1.6667% But if you choose the latter approach, in year two your accrual would be 20%/7 Years=2.8577% and in year three would be 30%/8 years etc. and would continue to escalate thereafter. These are of course simplistic illustrations because there are variables such as compensation averaging to consider. In any case, you would add the DB accrual rate to the DC EBAR which is based upon 1 year, or the PV of the DB accrual rate/Comp/Service to the DC allocation rate based upon one year. Hope this helps.

Why is this? Is the formula 10% x Years of Credited Service (i.e. 60%) but limited to 10% by 415, or is it really 10% x years of participation, in which case the DB percent is 10%? You cannot dilute the DB percentage by using a measurement period that isn't used in determining plan benefits, if that is what you are trying to do. The measurement period must generally either be the period of time that service is credited for benefit purposes or the period of time that the participant benefits under 410(b). If you are trying to use 415 to distort the test, consider year two, where you have double the DB benefit in the numerator but only 14.29% more testing service, so your accrual would be 20%/7 compared to 10%/6 in year one. If you designed the arrangement to pass year one it would likely fail year two.

I have a theory that Blinky rarely shows up nowadays because he's always trying to figure out how do do AFTAPs for EOY vals.

I don't get this. The DB measurement date s/b based upon the years that the person is credited with benefits for, so 5/5 should be close to the PS 1/1, no? I agree that the DC is more powerful, but the reason you cited doesn't work to me.

I don't think you can do it either, as I don't think it meets any of the exceptions to the consistency requirements. I'd have to spend a good deal of time researching it to be certain, but that is my understanding and quick re-read of the regs.

1. What is the CBA period? That determines if the 1/1/2010 date applies, right? 2. Did you see the bill in the newsletter today? If passed it would let you use 10/1/2008 AFTAP for 10/1/2009 if I read it correctly. Maybe that helps, maybe it doesn't. I wouldn't issue any notice until you need to in case this stuff goes thru.

Good thing they shifted some of their assets to equities. Hope they're dollar cost averaging.

I guess you people haven't heard. Al Gore was just nominated to be Secretary of Lock Boxes and Trust Funds.

Now that this thread has completely deteriorated, George, you need to get off this thread and fix your websites. Perpetual construction is costly you know.

Just annuitize them with AIG. Don't worry, be happy. They're fully insured with the full faith and credit of your tax dollars.

Agreed, but if the plan is frozen the quarterly is $0 since you have no normal cost and no amortization. (I should add that this assumes that 2009 is funded at 94% or better or that the freeze was in effect for all of 2008).

Effen, regarding the mortality/death benefit, wouldn't you agree that any ERISA plan that provides at least a REA death benefit is not required to discount the 415 benefit for mortality, except in the case of an employee-pay death death benefit. I understand that your answer is complete and thorough; just checking my understanding. I agree on all counts otherwise, just like A-Rod and Madonna to the poster.

Belgarath, 1.410(a) has some good examples. A simple one, exaggerated but on point: Employer A establishes a plan that covers employees after they retire and does not cover current employees. Any employee who works past age 60 is treated as retired. This plan effectively has an age 60 age requirement, in violation of 410(a)'s 21 limit.

It is not true that deferrals must be included in all cases. Unless the plan is being cross tested (DB on contributions basis or DC on benefits basis), a plan of a different type (i.e. a DC plan when testing a DB plan) may be ignored for purposes of the Average Benefits Test. See 1.410(b)-5(e)(3) Except for some small plans, including the deferrals usually helps though.

I like the alternative responses My point was actually the opposite, that the universe of people experienced in and knowledgeable about cash balance work is a small subset of those who can sign Schedule B's. We shall see more and more errors in this type of work with takeovers as the number of these plans expand. So, referring our friend to an actuary may be insufficient. Maybe the actuary needs help also-it could be a takeover. I've posted many questions here on behalf of others, including actuaries. p.s. I have interviewed or screened a lot of experienced actuaries in the last 2 years or so and a very small percentage claim any knowledge of or experience with cash balance plans.