AndyH

Oops, lost sight of the proverbial forest. Thanks for reeling us back in. What's a PBX rule and how'd you misquote Mr. err Rugby?

Mike (W), didn't you leave the at-risk part of the calculations out of the maximum in your summary above? As I understand it (not well be any means), the max that you derived would be checked against the at-risk minimum that would apply if the plan were at-risk, so you technically need to evaluate any and all subsidies before you can say you have the "real" max. (Not that this will always be done in practice). Apparently we're not the only ones trying to figure 404 out and deal with software issues (not to mention client requirements) at the same time.

Good point. That approach makes sense.

I have a plan with a rank and file employee (among others) earning a benefit of x% of pay for life starting at age 57. If I change this so that the same benefit being earned is not payable until NRA is 62 how is that not a significant reduction in the rate of future benefit accrual? p.s. This is an 8/1/08 -7/31 beaut. These designs are probably all former insurance plans so many will be off calendar.

Not directly on point, but related to the timing, wouldn't a 204(h) notice be required? I would think so.

Google "Pension Prison" is the most up to date suggestion I have.

Why the "owner" distinction? What if it were a two person plan, a Doctor and a receptionist. Not covered by PBGC. Would the answer be the same? I'm just trying to parse the difference between PBGC coverage and ERISA coverage. In this case, it would be an ERISA plan, just not one covered by Title IV, right?

Well then it is not a QNEC and the question is moot, right? Nobody is saying that a nonelective ER contribution cannot be used for gateway. How could you forget Belechik's line, "It is what it is"? Which is it?

I agree. Also, it is the safest approach.

Spock?? No, I don't see that being relevant. Each rate group needs to pass coverage to pass a(4) - and the coverage percent need not be 100% to pass. 70% passes ratio/percent, e.g. 3 NHCEs with an EBAR above the HCE and one at 0% would work. Or using the Average Benefits Test, if available, might permit a lower threshhold. Logical?

"I am where Young Curmudgeon was on his first Jan 23 post." Well, that is a much better position than Blinky is in above. The gateway requirement applies to anyone who benefits under the plan. A zero allocation recipient is not an "employee" under the cross testing regulations and therefore is not subject to the gateway. Weird wording but that is the key. p.s. By "allocation" I mean allocation of discretionary (non-employee and non-matching) dollars.

Oh, thanks. Got it now. I saw that show - if floats. 1.401(a)(4)-13(d). But the question is ambiguous and that cite may or may not be useful. Depends on the document. As Mike W said.

How's that for saving time Merlin!

What is "CAS"? Has it been on Letterman's "Will it float"? That's my contribution to the issue until I understand it.

"What interest rate are you using to project the account balances? Do you have authority to use a higher rate?" That is an interesting comment. Maybe that could be an 11-(g) correction, a "bonus" interest rate. Good stab at those "market rate" requirees.

I'm not sure you can permissively aggregate an active and a terminated plan. I guess that is what your question boils down to. I don't know any prohibition but sometimes you don't know what you don't know so other opinions would be welcome.

Interesting question. If the excess asset allocation formula is not a safe harbor, then I would think it would need to be general tested, but what if there was no comp for example or you were allocating excess assets to former employees?. That would get weird. Keep in mind you never need to combine a DB general test with a PS general test as long as each plan passes 410(b) and 401(a)(4) separately, at least for the NCT part of the test.

There could be other benefits to Mr. Investment Advisor other than the obvious fee. He could get "asset awards", or other less obvious benefits from this deal. I think you are asking for trouble unless you require him to get a legal opinion and do not complete Form 5500 for him without pointed questions that are directly answered by an informed client.

I have high confidence in our resident archivist WDIK to have the prior comments readily indexed. And, yes, that was the idea. Now who else would have thought of such a thing?

I was thinking of a formula change after the allocation requirements had been met but without a retirement. Never mind. I think you just need to give him the same amount that he would gave received without the change. Sorry for the confusing comment. It seems pretty straight forward.

I'd amend it and make sure the retiree gets what he would have pro-rata. A more aggressive approach would be to preserve what the pro-rata allocation would have been based upon comp through the retirement date. I woudn't do that but I'm sure others would. I think I remember Mr. P. proposing that here once, but I won't name names just in case my memory is faulty.

Nope. Maybe we can do one with collaborative effort. How's this for a start. (First, Blinky's picture must adorn the top right corner. The top left corner is open to suggestions. Perhaps a bottle of Grey Goose vodka would work) Dear Victim of the Pension Protection Act of 2006: We regret to inform you that although this plan used to offer "accelerated payments" such as lumps sums, we need to slow em down until we burn our credit balance or otherwise elevate our AFTAP net of prefunding balance to 80%. Although this may sound confusing, we assure you that we remain fully committed to terminating the plan as soon as reductions to your lump sum benefit are fully phased in and serve to eliminate the plan's underfunding, making the dream of termination possible. We will keep you informed as we progress towards these goals.

I was speculating "what if" the employer decided he liked his plan frozen except he wanted to credit an arbitrary 8% per year for example. David's question could stem from either type of situation.

I agree with David (just so we can all hold hands). But it's a reasonable enough assumption for me due to the dollars involved.

Would you mind elaborating, Tom? Is there a valid argument that such a plan is technically not frozen for 410(b)/401(a)(26)/401(a)(4) purposes?