AndyH

True enough. FASB is also clear that if the government does not cause DB plans to become extinct, they will.

Assume a DB plan allows new participants to elect to be in a DC plan instead of a DB plan, would the group of people in the DB plan still meet the reasonable classification requirements of the Average Benefits Percentage Test? Opinions or experiences? Different answer for a "soft freeze"?

The plan definitely becomes non-covered by PBGC at some point after the payments have been made. But I think the payments would need to precede the DOT by some period of time. I think there is some necessary time frame but I don't remember what it is. Gary, you need to write a book about some of these client adventures.

Blinky, is that an answer, a non-answer, or a non-answer answer? I have not heard anybody (yet) taking issue with 6%. Oops.

Dittos. There is no <500 hour exclusion rule. There is a term & <500 hour exclusion but that is not available either because (a) not a term and (b) receipt of the SHNEC make her a benefitting employee which foils (holy shnec batman) a condition of the exclusion. P.S. Actually I don't think there is a T <501 exclusion available for purposes of separately testing for gateway purposes anyway, so I should delete this post and just agree with ak2ary but I did like the chance to interject batman so I'll leave it with this postscript.

See, I kept your secret ........ So, just to be clear, "convention wisdom" thinks that 21% DB + 10% DC might be ok, not just 25+6? Thank you. p.s. Now who wants to out Blinky?

Not looking too good, IMHO.

jk, if you have the APR in the document, why do you need anything else? Is the issue a difficulty creating a table in Relius based upon APR(s) that are in your document? How many APRs do you think are relevant to the calculations?

No. First, if you have 2 safe harbors you don't have to general test at all. Second, if one were not a safe harbor and you needed to general test it, you would not necessarily need to include the other. That would depend upon the specifics of how you were testing.

Tom, would you mind elaborating a bit for those of us who do not use that option regularly?

ok, Tom's keeping quiet-probably wants to preserve his "handle" and it is too hard to have a second one so maybe we should start a contest: ...could it be ........ _____________??

Ok, thanks for the info. Your description of Tom's comments does seem clear. Tom is on these boards, so maybe he would chime in. I did not reach the same conclusion that you had from your description of Joan's comments, however. There is more than one way to interpret those comments. I would also welcome "published" interpretations; I had just not heard or read any that I thought support a 21%DB /10% DC situation.

Don't we need to make sure that the non profit has "at all times been exempt from Federal income tax", including non-payment of UBTI? And never have had a taxable subsidiary? These issues are more common than one might think.

himt4, sorry but I feel the need to repeat that you are misinterpreting the rule, IMHO. I cannot find any summary by anybody that supports your interpretation, including that ASPPA session outline that you are referencing And while I did not hear the tape your conclusion does not support the comment IMHO. On the contrary, page 14 of Joan's ASPPA webcast outline has some bullets which include: "If DC contributions exceed 6%, then IRC 404(a)(7) comes into play." It does not say "....exceed 6% and the combined contribution exceeds 25%" I assert that the act of contributing 6.0001% to a DC plan with an overlapped DB plan causes the deduction limit to be the greater of the DB minimum or 25% of pay, not 31% of pay.

On second thought I agree.

No. The common control rules were established to prevent what you describe.

That just does not make sense to me. If and only if the DC exceeds 6% then 404(a)(7) applies. The only thing you count is whether or not you lose the entire DC deduction or just the amount exceeding 6%. Joan suggested the latter. The IRS rep hemmed and hawed and seemed to agree that made sense but did not commit to an answer because there is none. I never heard any consideration of a DC deduction exceeding 6%. Also, this is consistent with prior law whereby certain DC contributions up to 6% were exempt from an excise penalty.

There was an ASPPA webcast on the subject if you are interested which I think would be consistent with my comments. But I would caution if you buy it that the government guest was not on top of his game during the webcast (hey we all have off days).

I definitely do not agree. I think that if your deduction totals more than 25%, then the DC deduction is limited to 6% in all cases.

If the DB is 21% and the DC is 7% then I think that clearly at least 4% is deductible on the DC side. I think it is unresolved whether the additional 2% (to get to 6%) DC contribution is deductible although most informed comments that I have heard or read say the eventual answer will be that 6% is deductible. But I would not rely on that until there is further guidance.

I understand it as SoCal stated, but I would also add that the maximum DB deduction limit itself is altered if the 6% becomes 6.000001% because the 150% of projected unfunded current liability reverts to 100%. Anybody willing to agree or disagree?

How many NHCEs and HCEs are in the statutory group, i.e. what is the ratio/percentage of the otherwise excludables? The solution to your problem one way or another is to test the young HCE on a contributions basis along with a sufficient number of NHCEs and to test the others on a benefits basis.

[Tom, I had not seen your comment when I responded below] Yes. You are doing something similar to , but not identical to, "restructuring and component plan testing". Under typical restructuring, you select different people and put them into different groups. And you can test some one way and some others another way. The critical point is that each group needs to pass both coverage and non-discrimination. I wonder how your "otherwise excludable" group would pass coverage. Doing it your way would only produce slightly different results than typical restructuring, in that the otherwise excludables would not be in the 401(a)(4) test for the statutory eligibles at all, whereas under typical restructuring they would be in the denominator of the NCE "rate group" test and also in the ABPT.

Is the owner not an HCE? I thought HCEs were excluded. Oh, now I get it. He is not excluded. He is a non excluded HCE. TGIF

I understand HCEs that are not Keys. But Keys that are not HCEs representing 60% of benefits? I figured there might be a better chance that ttott actually drank champagne and some afternoon Perrier reactivated the symptoms.