AndyH

Effen, I think it is becoming more apparent that the qualified group is much smaller than any actuary. Not even all actuaries who write Answer Books about such topics have the subject mastered, it would seem. And, as you know, cash balance plans are not part of the current EA education program either.

That could be useful.

You are right. There are going to be a lot of mad new clients who will be told very late that their deduction does not match their cash balance proposal, for first year plans in 2008, unless they use a interest credit above 6% to match the segment rates. Some stopped doing them early on as a result. Others are still doing proposals that cannot be backed up without creating a problem for the client. (Unless the law changes and creates a cushion, that is). p.s. to my knowledge, there is currently no automatic approval to switch from an EOY val to a BOY val after 1/1/2008, so I'd tread cautiously on new EOY vals.

Just found out I won my appeal and the official answer is being changed to False. Thanks to all who commented. .......But I also found out the scoring isn't what was officially posted (long story) so I need another appeal (which I am prepared for but didn't think I needed to submit).....in the works.... a few more months I guess. Fun fun. Maybe while I wait I'll grow my hair like Blinky's err Mother?

So is the consensus that end of year 2008 val liabilities and assets are used for 2008 PBGC premiums and due by 4/30/2009? Or is the 2008 accrual somehow backed out? Does seem that the participant count is still as of 12/31/2007. Oh, and does a 12/31/2008 standard termination date qualify for the variable rate exemption if that is the liability calculation date?

Looking a bit closer with these comments in mind, I do see that Corbel's VS prohibits a last day provision if the measurement period is annual. Thanks for the feedback with that. Now about those takeover plans ................And the CB answer book. Thanks for all the comments.

I'm looking at this issue also for the first time in a long time. Tom, how old are those audit guidelines? Did they predate the final 403(b) regs? Is Regulation 1.410(b)-7(f) still in effect, which I think says that 403(b) contributions are excluded from testing of 401(a) money and that 401(a) money and 403(b) deferrals may be excluded or included in 410(b) ABT testing of nonelective ER 403(b) allocations. This is how I always understood the rules. Did the final 403(b) regs eliminate the line of separation? (After further review I think the rules are unchanged, but if I missed something I'd like to know that)

TAG has a pretty good analysis that also says it is prohibited. It basically says it nothing allows it. I would not accept any one source, but the opinions are beginning to converge.

Thanks Merlin. Anybody know the authors of the Cash Balance Answer book personally and can get their opinion(s)? Daniel P. Schwallie, J.D., Ph.D. Barbara J. Hogg, F.S.A. Paul W. Rangecroft, F.S.A., E.A.

Thanks for all the comments. Now I have an idea how Pandora felt when she opened her box. There must be others out there with takeovers who have cause for concern. p.s. I just looked at the Cash Balance Answer Book again to make sure i had not misremembered it and it clearly states in more than one place that CB plans can require employment on the last day of the period to get an allocation. And the authors appear to be highly credentialled so I don't know what to make of this.

It "embedded" a reference to 1.401(a)(26) which deals with exclusions for terms < 501 hours and has a reference to last day employment, but I don't see the applicability other than that 401(a)(26) somehow contemplated such a provision for some reason. But at least I am comfortable that I not the only one to have seen these animals.

Effen, the last time I cited a Corbel provision, they were quick to deny it represented legal authority, so I don't consider that as proof of anything, just another piece to the puzzle. But certainly we can ask them to comment, it just won't be me and it won't be as soon as I was looking for an answer by.

I just looked in the cash balance answer book and that says that some cash balance plans require last day employment. It insinuates that such plans are not basing the allocation on a "year of benefit service" but on something else, employment on the last day of the year. I would concur that a year of benefit service cannot be denied under these circumstances, but that would seem to be a different issue, the argument seems to be. Hmmmmm. Anybody got the current EOB handy?

Well, I've seen a bunch of them. And I know it is an option under Corbel's volume submitter. More opinions please. I don't understand how it would be permissable myself, but it appears to be a common practice ......

Some cash balance plans allow allocation provisions such as last day employment requirements. What is the justification for that when a year of service is defined as 1000 hours? Or is there one? Can a cash balance plan that has a last day employment requirement be amended during a year to freeze benefits (with 15 or 45 day notice) and avoid a contribution if such allocation is conditioned on last day employment? Help please. These are not hypotheticals.

Is there currently a requirement to notify PBGC if a quarterly is missed for a plan with 101-499 participants on every day of the prior year and in the case where missed payments are less than $1 million cumulatively? What about a funding deficiency under $1 million for a plan of the same size? As far as I can tell, a plan under 100 participants is exempt and a plan 101-499 is exempt because a PBGC Notice under ERISA 4011 was not required for both the prior and current plan years because ERISA 4011 was repealed effective for plan years beginning after 12/31/2006. But I keep reading outlines and publications describing reportable events for missed quarterlies as if the rules are unchanged. How do others interpret this situation?

The cash value is not necessarily the "swap price". There is a revenue ruling from a few years ago that you would need to reference. A Google search would locate it. Or, better still, ask the insurance company what the appropriate amount would be in such as sale. Or put it on the agent. I believe the appropriate figure would be internal and you would need to get it from the insurer. And, yes, you definitely have a discrimination problem. I would surrender the insurance pronto before any filing.

Janet, do they make you do your own financials for the audit report yet? If not, you have that to look forward to.

"So an EBAR cannot be used to show compliance with the ACP test when it fails under the normal method? " For this, perhaps playing an E-Bow while sobbing and sipping an EDRINK would be more appropriate. Now, that is a song idea for Tom. "E-Bow the K test" to the tune of "E-Bow the Letter"

I experience new and different levels of over-zealousness from auditors each year, but that is a new one.

I agree that in the final analysis the regs do say that the lump sum is not reflected in the mvar, but with all due respect I disagree that it is clear. I think the path to that conclusion is murky and filled with potholes.

So in Mike Preston's example combined with a.t.a.'s extension, the lump sum at age 65 is the greater of the 5% amount and the 6.09% amount (but not more then 415), and this is discounted to age 45 at 6.09%, right?

I think you are right but also consider that there is a "safe harbor" testing method in 1.401(a)(4) somewhere which I think allows testing similar to if it were a dc plan being tested on an allocations basis. Not the answer here, but something else to make sure they didn't rely upon.

Thank you.

I know this contradicts a recent ASPPA issuance, but 10/1 is too late as I understand it. Isn't this correct?