AndyH

Shucks, you had me looking up things that end in "spective" but I did not find anything sufficiently postable in time. What question(s) were answered here, anyways? Mike seems to have answered one narrow question. What were the others?

Cheap shot on judges, eh, SoCalMoe?

Well, let's see. When did the IRS issue the 2006 rates? The PBGC? What might they have been waiting for?

Moe/Moe2?? I think you can figure out how additional time before 9/15 and 10/15 might be helpful with plans subject to 412(l), accountant's opinions, quarterly contributions, top 25 restrictions, and PBGC premiums without me laying out all the details for you. Or did you tell everybody that the pre-PPA rates were in effect?

Ha. Where does it say that?

There is somebody in my office that brings a large empty suitcase when she goes to ASPA conferences, and fills it completely with booth stuff. She should be taxed. What personality type is that called?

Thank you. I'd prefer it to be a bit more specific, but it does seem to say that.

Is this repealed effective in 2006 or 2008?

What you describe is often referred to as the "account balance method". This was very common for DB plans although the IRS now says it never sanctioned such method for DB plans. Unless a mechanical mistake was made, nobody is going back and changing prior calcs on account of this. But is must be changed prospectively.

Friday wisdom: A DB plan that needs an actuary costs more to administer which produces an extra deduction which makes such a plan much more attractive to the typical 412(i) candidate which is why 412(i) plans should not exist. Plato? So-Crates?

Assuming you can get by pax' question, which is valid, it sounds to me like you should absolutely get a coverage determination. It could be memorable. The one time I called in this regard, just to get the details of how the 25 employee/participant rule was properly applied, I had among most bizarre conversations that I can recall. The PBGC rep, who I think said he was a lawyer, must have used his name in the third person 8 or more times, like "Well, when people call here and ask _____ about this, _____ says .....". I will certainly never forget his name. And his answer to my question eventually was, "it's whatever is on the form. Whatever number is there. I'm not an actuary you know." And he was unable to tell me the name of the form to which he was referring, i.e. PBGC Form 1. Go for it!

Geez, could this timing have something to do with the fact that he returned from vacation 5 days after our posts? This was in fact sat on for 2 weeks, which I and many of my clients think is outrageous.

Thanks. That makes it less of a weird discussion than I thought.

No, not for a non qualified plan. Anything could be used (provided that it is stated in the document). It could be changed, but wouldn't that raise the possibility of contractual issues?

Thanks, it is clear to me. But I have yet to see this clearly and authoritatively stated in print anywhere.

Bullseye for RTK and dittos to mjb. To my knowledge, normal payments must be paid when normally due. Only payments that become due on account of the termination can be held pending the termination. I think this is commonly misinterpreted and perhaps that is what is happening here to the poster.

Thanks, that does help alleviate some of the confusion, but then what was "confirmed"?

Thanks, Jay, 2© is the question. Who is answering? Note that this question still could have been misinterpreted because of the "instead of the QJSA" comment. Some would advocate that the lump sum converted to a sla is the normalized MVAR. That is not true, and that could be the source of the NO response. The lump sum normalized to a QJSA is the correct method, if the lump sum must be considered at all. So I'd like to know who answered the question and would want further evidence that he/she actually understood the question. Mike, to answer your followup, I am asking both questions. 1. If the lump sum is based upon a plan fixed rate, is that considered in the MVAR? That is why I used 2% earlier as the plan rate for lump sum purposes. Obviously the testing rate is between 7.50% and 8.50%. 2. If the lump sum is a 417(e) conversion only, what then is the answer? Joan G and Norm L had an ASPPA textbook (C-4 study guide) example a few years ago which included a plan with a 6% rate for lump sum conversion. It was left unspecified (intentionally ambiguous I think) whether that was a flat plan rate or a 417(e) rate. It did not seem to matter to them. The subsidy between the test rate and the lump sum rate generated the MVAR. I am trying to determine whether this is now untrue in the eyes of the IRS and whether it depends upon whether the lump sum is a plan rate or a 417(e) rate. I have been asking this question to many people for years, and the responses have been split right down the middle. I thought I had become good at asking the question but I guess not. Blinky, do you follow my questions?

Mike, would you please elaborate? Would you not agree that this is a subsidy subject to inclusion in the MVAR calculation? What is being "confirmed"?

I will try again. Plan A and Plan B are identical except that Plan A offers a lump sum subject to 417(e). Benefits are available only at NRA. Testing assumptions are identical to the plan's equivalence assumptions for converting benefits from a normal form of life annuity to a QJSA. Each plan has one participant. They are identical twins. They make the same money. Do they have the same MVARS in the general test?

Here is one of the discussions. I took the discussion on a tangent in comment 9: http://benefitslink.com/boards/index.php?s...c=22676&hl=

Perhaps I should restate my question because the answer to my question has never been clear before. Has some light been turned on out West? Here is an example. Three plans with identical census. Plan A has no lump sum provision. It has no subsidized optional forms of benefits. Any benefits paid early are discounted at 8%. Plan B is identical except that it offers lump sums that are computed using the 417(e) rate. Plan C is identical except that it offers lump sums that are computed using the 417(e) rate or a flat rate of 2%, whichever yields the highest result. Each of these plans are general tested. Assuming the same testing asssumptions and demographics, would the MVARs be the same? I can tell you that ASPPA sponsored text books say no. I can also say that many ASPPA session speakers say no. I can say that Larry D. used to say no until Jim Holland told him he was wrong. What would the differences in the MVAR be now?

Mike, for the benefit of those of us who still don't know how this was "settled", and I am one of them, may we ask you to provide your interpretation? Doesn't it still boil down to how "beneficiary under a trust" is interpreted? Is this settlement in print somewhere?

What is confirmed? That a 417(e) lump sum need not be considered as part of the MVAR calculation? If so, was this authoritative, and is it in print anywhere? Would anyone elaborate please? Thanks.

Chester, with all due respect I must disagree. This happens to be a pet peeve of mine since I see takeover targets all the time that are not done using average comp and I think they are wrong. A safe harbor target plan must use average compensation, not projected average compensation. There are a couple of threads about this subject going a couple of years back if you are interested in further discussion. The cite is hard to identify in my copy of the regs with the changes to 1.401(a)(4)-8 in recent years. Prior to the changes, the cite was 1.401(a)(4)-8(b)(3)(iv)©(1) which references 1.411(b)-1(b)(3)(ii)(A). I think that Penman should consider the two or three options and then use the one that benefits the participants. Several methods could be used, but if they are not in the document then an amendment could be to the detriment of the participants unless it happens to be the most favorable amendment. I think a reasonable procedure is sufficient.