AndyH

Breakwater, who designed that lovely allocation formula and did he/she come from the light?

I'm for impeaching all of em and reverting to pre-OBRA 87 rules.

Thanks, Dave: The person received $331,472 in 1991 at age 50. He established a new plan several years ago (has 10+ yop aggregated) and has always been above the 401(a)(17) comp limit. He wishes to collect the maximimum in 2006 when he attains age 65. The benefit formula would provide for a payment well above the 415 limit. He wishes to know what his maximum lump sum would be as well as the maximum annuity. (His wife is considerably younger than him so I cannot readily dismiss the 415 value of a J&100 in such case, but that is an aside).

Would you clarify/amplify that? I have one where the benefit might be $1.7 million at NRA 65 but the principal received $300K 15 years ago in a prior plan that had a NRA of 55 (rough numbers and years but real situation). What do you mean by "they want to offset by actual amounts paid going forward"? Is there some new thinking on how to handle such a situation? (Not that there is much consistent old thinking).

I think in the latter case the new regs require 2 years of min distribs if a lump sum is taken but otherwise I agree that some clarity would be useful.

This is confusing to us DENSA Society members. Me thinks there are two points here: 1. This looks like a 410(a) violation. That gets my vote. 2. Gateways are irrelevant to this discussion. That also gets my vote. Do not pass go.

Oops-sorry, didn't mean to attach this picture. Is it spring yet? http://benefitslink.com/boards/index.php?a...ype=post&id=113[/img]

I think you have it right now, although I have been puzzled a couple of times over the years to see a couple of prototype docs that do not have the pre-participation comp inclusion that you reference, but I think that is in error. The pre-participation 415 exclusion has been the subject of much debate. If David Wells can change his mind .....

Agreed.

B, You are without a doubt the most DB-knowledgeable NON-DB-person I know of.

Couple of comments: 1. I think that any plans that run 12/31 to 12/30 are asking for whatever trouble they encounter. It is done normally only to manipulate the 415 limit or to load a plan with life insurance. 2. I think that any plan that uses pre-participation comp for 415 after the issuance of the proposed regs is asking for trouble. Reminds me of the Clint Eastwood scene, "Do you feel lucky today punk?" 3. Remember the pre participation issue is for 415 only, not comp averaging. You can still base benefits on all comp; you just need to compare it to 415 using post participation comp only (if Clint has bullets left). 4. Foulke needs a couple of injections to his head to match those going to his knees, don't you think?

Maybe non compliance with uniformity in insurance levels is another reason why a 412(i) is they way to go.

Mike, the next time I see uniform insurance levels will be the first. It is definitely a BRF issue, but one that is often associated with noncompliance.

Yeah, I agree-the 83 Blended table is probably invalid for testing now-kind of weird.

Just scanning this. The 2001 cross testing regulations added "the applicable mortality table", i.e the 417(e) table, to 1.401(a)(4)-12's list of standard mortality tables. Does that fill in a gap?

If you merged the MP into the PS and the PS was the surviving plan then my vote is no, the MP is essentially a terminated plan that cannot be permissively aggregated because it ceases to exist.

I have still not gotten over the one and only time (last year) I called PBGC about a coverage question-25 person rule for an architectural firm. The official (who's name is seared in my mind but I will omit) went on and on talking about himself in the third person, how these people call him and he tells them he could claim to be a professional this and that after a 2 hour Saturday seminar, just going on and on about how vast his experiences in this matter are. He must have used his name in the third person 6 or 7 times. Then I got to my real question (I took it for granted that an architectural firm was exempt-he did not). I asked how the 25 person exemption limit was determined, i.e. , employees or participants, and as of when, and his response was that they use whatever is on the form (PBGC Form 1). "I'm not an actuary you know. I don't complete those forms so I'm not sure what goes on he form. I'm not an actuary". Ah, feed the kitty with those premium increases.

Thanks, you beat me to the cite. Although I accept the comments about the document as good advice, I am not stupid; but resolving the document question will be somebody else's decision-I am asked to help with the mechanics of the offset calc itself; I cannot rule out the possibility that the plan was properly amended at some point and that the client did not forward to us the most recent document. I added the background only to head off the inevitable question of what was done before, to which my comment is that what was done before may not resemble what should have been done. I Still could use opinions on the calc itself. Thanks.

I beg to differ. I think the deduction limit is the greater of the 412 or 404 deduction limit or the difference between "termination liability" and assets. This was an EGTRRA change. I have not found any meaningful difference between "termination liability" and the PVABs.

You've started a poll. Let's see. I know there are at least 4 of us.

The answer is that you could correct only the number of people necessary. I would advise some method to your madness however, based upon highest hours for example. You can even state the formula without stating the precise number of corrections if you wish, i.e. "the minimum number of people necessary, ranked by hours, to enable each rate group .....". The formula and mechanism should be unambiguous but need not name names or numbers.

yes, EF Hutton agreed above and so do I. You have a plan that satisfies the safe harbor requirements by restructuring.

Takeover DB and DC plans that are top heavy. DC Plan document say top heavy is satisfied by 5% alloc to DC plan. DB plan says same thing. Prior actuary says top heavy provided in DB but offset by pv of dc contributions. Prior actuary produces DB document page that supports such a statement, but this is filled in language that does not provide the specifics. Zero confidence in credibility of past work. How exactly should this calculation be done? Plan is being terminated and satisfaction of top heavy minimums is in doubt. And plan is very underfunded. Possible methods (1) Should the top heavy minimum be calculated each year, and a db supplement added to sustain a minimum 2% accrual for each top heavy year, measured year by year? Or, (2) can we skip ahead to today and make sure that the cumulative DC contributions projected at some interest rate would exceed 2% x YOTHS? Or (3) can we take the post-1983 account balance and calculate the equivalent accrual rate of that, which would effectively substitute actual investment performance from any actuarial equivalence definition and mask any years that DC contributions were not made? Opinions please. Thanks.

Theoretically it works fine I agree. In reality, how are you going to ID the eligible group? Are you going to have no plan for the other group? Note that the other group by itself would not pass 410(b), so you would need to make a second plan (if you had one) more broad and make sure it is a safe harbor so as to avoid the gateway.

Be that a Holiday party?