AndyH

It is clear in my mind that -7(b)(1) tells you how to do it if you are testing under -2© (allocation basis) and -7©(1) tells you how to do it if you are testing on a benefits basis. I don't see any ambiguity. I'll leave the TPG election question to someone else.

1. I assumed you were doing a 401(a)(4) test, in which case the safe harbor percentage is irrelevant. If you instead are doing a 410(b) test for coverage purposes, then I cannot answer your question. I have no idea what would pass facts and circumstances. 2. Re pd, if you test a dc plan on a benefits basis, then you convert the ebar first and apply pd to that according to the regulations. If you test a dc plan on a contributions basis, you use those separate rules that pertain to general testing a dc plan on a contribs basis, or if it is a db you convert to allocations first.

Geez, Janet, be patient. Imporant things must be done first. Today's briefing: Press Gaggle by Tony Snow Crawford Middle School Crawford, Texas 12:07 P.M. CDT MR. SNOW: All right, welcome. Let me just start with a couple of little items of business here, and then we'll go to questions. Those of you who are eating, you may proceed through the line and shout out whatever you want. First, the Department of Commerce has released the latest numbers on wages. Productivity growth continues to be strong. It's 2.4 percent over the past four quarters. Hourly compensation is averaging 5.7 percent over the last four quarters. Today the President got up, had his normal intelligence briefing. He also had briefings from the National Security Advisor and the Homeland Security Advisor. And I believe they're working on a dock today. There will also be other adventures in the afternoon. Questions. Q They're working on a dock? MR. SNOW: They're working on a dock. Q They have a lake? MR. SNOW: I believe that there is no waterway directly to the ocean, so I think a lake or a pond would be a more likely option. (Laughter.)

Thanks. Re terminology, the "theoretical reserve" is the term used in the safe harbor regs (1.401(a)(4)) to describe the make-believe account balance. If the present value of the projected benefit does not exceed the theoretical reserve then there would be no contribution due. In a non safe harbor plan the term "theoretical reserve" might not be relevant depending upon the funding method being used. It seems to me that the simplest solution might be to provide a minimum contribution of x% of pay and you could limit it to those with more than y years of service or greater than a certain age if you prefer. The contribution would be the greater of the target formula or the minimum contribution. You would need to make sure there are no testing problems, but if the affected people are NHCEs then there would be no issue.

mariemonroe, we need more information to provide you with an complete answer. Please specify the benefit formula. Also, please specify whether or not the plan is intended to comply with the safe harbor target rules or is general tested. There are important differences that would affect the post nrd calculation, specifically the requirement that the annuity rate after nra be equal to the annuity rate at nra for somebody past nra in a safe harbor plan, plus the prior theoretical reserve and normal cost are increased at an interest rate of 0% after nra. This means that if the person experiences an increase in average comp, the contribution must increase or it is being calculated incorrectly. BTW, a minimum allocation of 3% or 5% or whatever might work for you rather than messing with the formula.

Are they waiting for a pig roast to sign it this time?

Gary, if the question is do most plans pass by getting all rate groups above 70% then I would say no, that is not a necessary result. I do not think that most plans, db or dc, are designed to that standard. I just would not design a plan that tests with an ABPT close to 70%, which you have acknowledged. It sounds to me that you have set a good goal. But I would also make sure that none of the rate groups are close to the mid point.

...Very effective 4 words! Maybe our resident archivist WDIK can index that one for future use. p.s. I had the same reaction as Blinky but jpod provided a very good answer. Here I am complementing everybody; I must have just returned from vacation!

and ????

If this is happening, then, yes, I agree with you. But I didn't think that was being proposed. Sorry, from your clarification, you are not incorrect, you are simply commenting upon a different fact pattern than I am.

No. That is not correct. http://benefitslink.com/boards/index.php?showtopic=32749

Effen wins the prize. This plan is either not cross tested or it was designed for one NHCE primarily. The plan would by design pass the general test on a benefits basis considering only Normal Accrual Rates but if (as most think you must) you are including a lump sum provision in the MVAR then you may not pass the a(4) test unless NHCE3 is close to in age or older than HCE3 which would make the design make sense only in peculiar circumstances.

I just last week tried this for the second time (first one went ok until PBGC shut it down-"systems problem"). This time the client initiated it and had three "invitations" sent to my office (two actuaries, one administrator). None of them received he email. We checked and checked for spam filtering but were assured they never came. I called the practitioner hotline and the PBGC person said that the filing coordinator (client) never inititated the invitations. The client insisted that it was done correctly and in fact received a confirm which was then faxed to me. PBGC insisted the requests were never initiated. PBGC says that the practitioner needs to get in on the call. I say I am the practitioner and I am calling the practitioner hotline. Then I insist that the helpline "helper's" info is wrong since I have a copy of the faxed confirm in front of me. Can't be, says PBGC. Many minutes on hold. They give me the number of a systems "consultant" who was helpful and told me the PBGC hotline people are clueless on this matter. Great. Eventually, consultant tells me to have client call him, that day or several days later because he is going on vacation. Thankfully client calls him that day and works through it all again with the systems person. Turns out client did everything right. Some glitch in the system. Finally we get the invitations. One down. Only a few hours. Couple hundred to go. Better get to those before the system's consultant's contract runs out. Better get some of those clients to take computer classes. :angry:

Treasury Reg. http://www.taxalmanac.org/index.php/Treasu...28a%29%284%29-2

Thanks for the comments.

I don't think so. 1.401(a)(4)-2(b)(2) defines a safe harbor plan with a uniform allocation as one that "allocates all amounts taken into account .....under an allocation formula that allocates to each employee the same percentage of plan year compensation, ......." An "employee" under these regs is defined as an employee who benefits under the plan. So the 0's are not employees because they are not benefiting. Those that are all get the uniform allocation. Interesting excercise in IRSRegSpeak.

Looking for help with dealing with PBGC penalty assessment-experiences of others. This is the same problem takeover case I have posted about before-actually one of several. Sponsor did not file PBGC premiums for several years; service provider never informed sponsor of the continued responsibility after plan was frozen and never completed the forms. Service provider admits guilt and responsibility but has no money to go after. New TPA completes and sponsor files four years of forms and PBGC sends penalty and interest notice. Sponsor files a request for reconsideration. PBGC responds by waiving 40% of penalties for last 3 years (no interest waiver-they claim they cannot do that). No waiver is granted for 2002, the first non-filing year. Assessment was 100% of premium plus interest. This is the year the PBGC sent a letter that was not responded to timely. It is what awoke the sponsor to the issue and fired the service provider. Question is: Is a 40% penalty waiver following normal TSL and request for reconsideration high, low, or similar to the experiences of others? Should they file another appeal or pay it?

Exactly. Restructuring a 0% group and a 3% group is the same as coverage testing. If it passes coverage, it passes as a restructured safe harbor, if nothing else.

Assuming that you have a controlled group, and that the allocations are in accordance with the document (that sounds iffy right there), and you have one group getting the same percent and others getting nothing, then you have a difficult 410(b) coverage test, not a general test for nondiscrimination. The latter would be necessary if you had more than one actual allocation level, i.e. some get 1% some get 2%.

I don't think there is any uncertainty at all.

Right, except that the k and m portions are treated as separate plans each, so what you do for the PS "plan" does not require you to do the same for ADP, 410(b) and 401(a)(4) testing of the deferrals, or ACP, 410(b) and 401(a)(4) testing of the match. You have a full range of options with each of these (except perhaps for top heavy aggregation purposes-I'm not sure about that).

I'll try and back up a step. First, the same testing group applies for nondiscrimination - 401(a)(4) and coverage testing - 410(b). The same groups are either aggregated or they are not aggregated. IF we permissively aggregate for a(4) and 410(b) then, yes, we aggregate for top heavy testing. BUT, if we are testing for coverage under 410(b) as in Gary's question and we do not satisfy the ratio/percentage test, we still have the average benefits test available. Although this includes benefits and nonexcludables from other plans, this by itself is NOT permissively aggregating. If you can pass coverage without aggregating then you have left your options open. BUT, you still must test for nondiscrimination. If you are NOT permissively aggregating, then the nondiscrimination "rate group test" will include all nonexcludables in the controlled group but they will be treated as if they are getting $0 or 0% (i.e. treated as if they are not benefiting). If instead you are permissively aggregating, then the nonelective employer contributions are counted. That is the difference. No permissive aggregation = $0 or 0% in the rate group test for those nonexcludables not benefitting in this particular plan. If you are doing the nondiscrimination test and you are not aggregating and you can pass the NCT test (all rate groups above the mid point but not above 70%) then you would proceed to the Average Benefits Percentage Test. This requires bringing in all bodies and mostly all allocations including non-elective PS contributions but this is not considered permissively aggregating. This is a mandatory part of the test regardless of what your choice is.

The ABT is not something you use to pass 401(a)(4). It is something you use to pass 410(b). Remember that a(4) test starts with employer nonelective only, not the other stuff that is in the ABT such as deferrals. The question is whether or not you are permissively aggregating two plans for 401(a)(4) testing purposes. If so, then yes, those are aggregated for top heavy testing purposes.

Lunch break at the zoo..... Anybody else wondering how "John Heil's" coming along on this? John Warner? Sam Nunn? Hillary Clinton? Karl Rove? Lani Guinier? Marion Barry? Other names we can drop? Any of them making any progress on this issue?

No, Gary, that is not right. The accrued to date method is a phrase used to describe the measurement period (the current year and prior years) and has no effect on the people in the test or the type of allocations considered (still PS only-not K or M). I would suggest searching for "accrued to date" on the cross testing board or finding some reference sources from one of the conferences as a study guide.