AndyH

So am I. I thought the AB is the prior account projected at the crediting rate to NRA, then converted to an AB using actuarial equivalence. And you test that AB using the standard (7.5-8.5) rates. And you fund the AB using the segment rates. No question that the use of 417(e) rates produce both a disconnect to funding, 415, and testing rates to the extent that they differ, and to the extent that the rates change with interest conditions. But I see that as a problem with the decision to use the 417(e) rates (not that I have a better idea). I thought that using 5.5% for all, which the IRS does not like but some advocate, minimizes the problem. But, these disconnects are why we need the 150% cushion on the NC, IMHO, to bridge these gaps. But maybe I'm way off because I don't pretend to be a CB expert and don't disagree with Mike lightly.

But isn't that what PPA 2 year smoothing is for? Those Einsteins anticipated the 2008 market collapse.

"How can you have a "Hi 3 grandfathered around $300K" when the current max comp limit is only $230K?" The final regs provide for a grandfather rule of the hi-3 comp limit for plans that as of 4/5/07 did not limit the hi 3 to the 401(a)(17) limit. "The 415 $ limit is determined based on the current year and the individual's current age. What happened in the past doesn't impact that. Once you know their current limit, you may decide to offset it for prior distributions, or not." This is the answer that I am looking to confirm. Thank you. I think I found it in 1.415(d)(4)(iii). Thanks for all the comments. And, yes, this is confirmation that there is one overfunded plan in existence, but only because it was a TRA-86 casualty that was never terminated and kept a ridiculous NRA - I said age 55 for simplicity but it was actually earlier and needs to be "fixed" also.

Thanks for the comments, Effen. There were no past NHCES (all same family)- so no discrimination issues. I think I understand the Hi-3 comp rules - the new 415 regs are pretty clear about how that works. In my case it is merely a side issue - Hi 3 grandfathered is around $300K and the 415 dollar limit is less, so I am still focused on how I increase the dollar limit - for both age and inflation or just inflation. I think both but it creates a huge increase that feels weird.

Regardless of what you do with the penalty, correcting it is the first step, IMHO. Has anyone ever heard of the IRS actually assessing the 50% penalty? I have not.

Participant (owner) "retires" and starts pension -life annuity form - at age 65. NRA was 55. At the time the pension started, the amount was at the 415 dollar limit, which was less than the hi 3 comp limit. Plan is grossly overfunded. Owner happens go back on the payroll for several years (he did go off the payroll when he started his pension). Children are now active in business with owner limited involvement. Decision is made to maintain plan and increase benefits dramatically, by doing so allocating maximum excess assets to owner, taking into account 415 dollar increases since pension started plus increases in 415 on accounty of later age. Previously, the plan stated that any increases would be offset by the pv of payments made - this language is being removed. Also, subsidized 100% QJSA is being provided to owner (and any other participants). There are no NHCEs so no discrimination issues. Question: Is there anything wrong with increasing pension to reflect both the later (call it age 71) age-based 415 limit as well as inflationary indexing of 415?. Something doesn't smell right. I don't think we have 415 ASD aggregation since the payments were and will continue to be made in annuity form (with a lump sum there might be an issue). Is this ok? Opinions please. Thanks.

As acknowledged, "What does the document say?'" If it says the lump sum is the "present value of the accrued benefit" and the "accrued benefit " references the deferred nra benefit then I vote for the deferred benefit, which is the minimum under 417(e) as the lovely a.t.a. indicated. If the lump sum section references the early retirement benefit then that requires closer scrutiny, IMHO.

I'm with you until you near the end when you reference the gateway. If you are testing on ABT for coverage only, gateway does not apply. I suspect you will need to test the DB for the ABT sooner than you think, but with aggregation that should be passable; 401(a)(26) would be the likely show stopper as you note.

I know that Mass Mutual sets these up, even now for new plans, for either PS/K plans or DB plans.

But (by?) George, I'm looking at 401(f). Look at the description of Code Section "401"

Ned's never heard of this, but the Fiduciary Answer Book Chapter 8 (8.58 and 8.59 in my version) provides some discussion, cites, and cross references on this topic.

George, what a pleasant surprise. If you look at the Code 401(f) cite, you see that the reference is to a qualified plan, not a life insurance policy.

Thanks for the vine and cite jpod. I'll revoke my description and call it "dandy".

The situation you describe is fine. I questioned it multiple times when I first ran across one. The assets must be all held with an insurer. No problemo. p.s. I think it is prudent to engage an investment advisor to advise the sponsor on the selection of investments within the available arena, if they have an acceptable menu. I am not commenting upon fiduciary issues. The ones I have seen are with top companies, which while still not my choice are better than fly-by-night insurers.

Ain't no braniac like some others here, but I think you have it right, except one more exception, where you apply the otherwise excludable rule.

If you can produce a 2007 AFTAP that says it is 100% funded, then it is presumed funded at 90% until 9/30/2008 and you had no freeze, notice, or amendment. That was my point. Otherwise, you have blown the notice date that took effect 4/1/2008, to begin with.

Why would that matter? Any 414(s) comp definition can be used for testing purposes, during one of the intervals desribed under the Plan Year Comp definition under 1.401(a)(4)-12 (including participation), can't it? (Unless of course the document were more restrictive and defined testing comp for some reason). p.s. Actually my comments agree with those of J. Simmons and cite a different part of the same cite.

a.t.a., thanks. You colorful client educational bulletins and forms clearly evidence enjoyment of the new law and regs. I can't wait to see the instructions to your quarterly client election forms that specify whether or not each quarterly contribution will be satisfied by use of the credit balance. p.s. no election for mortality table or asset method I presume?

Can't you do one based on the 2007 Sch B and use that less 10% for 2008, or at least until 9/30/08? Or get the prior actuary to do the same? How could you take over a plan with no current or prior AFTAP without expecting to generate one?

Here is one. http://benefitslink.com/boards/index.php?s...SEP+aggregation

Are actuaries generally requiring written elections from clients regarding PPA funding elections before signing AFTAPs for 2008? I'm referring to asset method, phase in election, lookback month, etc. Anybody willing to comment on how this process is generally being handled, i.e. formally or informally? Are there any advisories or published guidelines on this subject? We're requiring formal elections in advance and I'm wondering if others are doing the same. Thanks for any comments.

From memory only, I remember a discussion of this a couple of years ago in the IRA Board where I thought the informed consensus was no, a SEP is not aggregated. I have not looked this up; this is simply from memory so i could be mistaken. But my un-researched reaction is no.

Is there a 2007 AFTAP?

You are not going to be accused of advocating excessive conservatism too often, not to worry!

Ditto.