AndyH

Problem is, almost no politicians in Washington have a clue what a mess they made.

I have a bunch of those. I think we're out luck if a 1/1/08 val doesn't get done by 3/31 - a notice must be issued and lump sums restricted until an 08 AFTAP is done or somebody ends the insanity with either more favorable guidance or technical corrections. One or more people on these Boards said ASPPA is arguing this issue. p.s. Guess what, next year would be worse. There is no longer automatic approval for a change in val date from 12/31 to 1/1 after 1/1/08, so two val cycles would need to be done by 3/31/09 for a new plan in 2008, instead of using one year of census for two vals (12/31/07 and 1/1/2008).

Right. I understand the IRS says it is neither 0% or 100% (which is unhelpful).

Blinky's always been a forward-thinking fish. We're trying to figure out how/if to do 12/31/07 or 1/1 vals, 3/31 AFTAPS, then 1/1 Target normal cost. April quarterlies are way down the road. BTW, the PBGC hasn't re-instituted late quarterly notices or reportable event fiings for under $15 million (did this change from $50 million?) or under 500 life plans, have they?

Wrong, as I understand it. If you used 12/31/07 data to project to 1/1/07, as some suggest is permissable, you have something that is not 100%. This is unless you have some sort of past service provision. Somebody please correct me if I a mistaken. This is how it understand it now.

Thanks for the info.

I don't pretend to know the answer, but I'd like to understand the question better. Why would you think that such a NRD would comply with anything? (No, I have not read the cases).

This sounds like what was proposed was an aggressive 90's style 412(i), read "Listed Transaction" to me.

There are employer (non-matching) contributions to the 401(k) plan, right? Otherwise you would be permissively aggregating oil and vinegar for no reason.

If you are doing a normal general test on either benefits or allocations, you convert the balances to accrued benefits using AE assumptions, then test using "standard" testing assumptions contained in 1.401(a)(4). If, however, you are using the "modified safe harbor" test in the CB section of 1.401(a)(4), I think you simply test the allocations as if they were DC allocations.

As I understand it, you have no cushion for 2008 so you min equals your max (as things stand now), I would agree. But, after 2008 you have a 50% cushion on the accrued benefit (adjusted for salay scale) as long as your DC does not exceed 6% or your combined deduction does not exceed 31%. So I see this as mostly a first year issue, as long as your DC is 6% or lower. But if your DC exceeds 6%, you have a problem in any year unless you are a PBGC "customer". Just tell the client to go reinvent himself and join the PBGC crowd. (He may tell you to do something to yourself)

Do you mean "underpayment of premiums"? I have two experiences with substantial problem situations. The first, about 10 years ago, they did not waive a penny, and the premium non-payments went back 20 years or so. The second was corrected over the last couple of years. They waived most of what accrued after they issued a "where is the filing" notice and none of what had accrued before they issued a notice. Of course I've seen many smaller situations. I would rate them fairly strict.

I'll leave your first paragraph to Tom. I think that is an interpretation. As to your second, why wouldn't a 12/31/07 val have 1 year of accruals?

I agree there would be a BRF testing issue but normally the DB would be the more HCE-heavy, so to fully vest that due to the SHNEC that presumably benefits more NHCEs could most likely be avoided. But if you want it as simple as possible ...

Sure you could do it (and you may not need to go to 7.5%). Why would you need 100% vesting?

IRS people have cited 411(b)(1)(G) as being applicable here and prohibiting a decrease in the accrued benefit. Some (obviously) disagree. It seems applicable and sensible and safe to me.

Agreed, as long as Tom's presumptive 12/31/07 AFTAP works and is above 90%. Then you can assume things.

....which leaves the use of a 1/1/08 val date as the only way to avoid a freeze and notice in 2008, under current guidance, no? And, I think it is worth repeating, under current guidance you cannot change a 12/31/2008 val date to a 1/1/2009 without filing for approval, unless you are forced to due to going from under 100 to over 100. I confirmed this with IRS National today. (I still haven't found where you can use a 12/31/07 val for a presumptive AFTAP for 2008, but I'll take your word for it that it says so somewhere)

Doesn't the AFTAP need to be done at the BOY and be done as of the val date with the exception of the 12/31/06, 07, and 08 rule?

Do you mean "doing the 12/31/07 val quickly" and "switching to BOY"? Either that or do both at BOY are the only options to avoid the restrictions and (probable) notice. And, I just discovered and confirmed, this is a one shot chance to switch from EOY to BOY for a small (<100) plan, from 12/31/07 to 1/1/08, without filing for approval. See Proposed Reg 430(g)-1(b)(2)(i), (iii), and (iv). See ya Rev Proc 2000-40 (for single er plans).

Belgarath's point works for me.

Interesting. I would have said C, on the basis that Employee X is now eligible not due to a change in the age or service conditions, but by the magic waiving of the 11-(g) wand.

"Do you think the excess allocation is a 2007 accrual even though it technically doesn't happen until 2008?" It sounds like "it" (the accrual) "happened" in 2007, not 2008. If you amended the plan in 2008 to create a new benefit structure to absorb the excess assets, then I think an argument can be made that it is a 2008 accrual, but if you relied upon document language in effect 12/31/2007 or an amendment that was effective in connection with the termination or retroactiver to 12/31/07 then it seems to me that the accrual was in effect in 2007, and 2008 activity is merely paperwork and allocation of post termination investment earnings. All depends on how you define the word "it" William Jefferson Clinton

Mike, does/will the program handle J&S annuity forms?

You don't have one if the val date is 12/31/07. You need to do a 1/1/2008 val or live without one and do the notices and lump sum restrictions as I understand it. Remember, most of the dire consequences don't apply for the first five years of the plan. But, the best answer is to do the 1/1/2008 AFTAP following the 2007 val. (And you may still be 0% unless the client funds by 3/31 or you are willing to certify based on a receivable) Obviously some relief is still possible and is needed.