AndyH

Blinky, often Doctors such as this one spend the equivalent of $150 for something worth $10 because then they get wicked cool deductions, get tax sheltering of the $150, plus who knows what these investments might be be worth down the road- dividends could be worth millions. Interest rates are expected to rise you know.

I guess that is reason #52 why we need Mike P back (reason #51 is the loss of MGB). At least I did remember the k plan answer.

Now let's do a poll evaluating WDIK's followup comments pax, you are right, there was lots of discussion of that, but was there actually an answer? I know that was resolved within the context of two plans including a k plan, but a db/dc combo? I don't recall a discussion that was conclusive.

Wow, almost a tie. If I wasn't so long winded I would have won.

Your question demonstrates a lack of understanding of a couple of concepts that you need to know before you will understand the answer. Who is or is not included in a "funding valuation" is completely irrelevant, as is the funding method. They may affect the DB contribution, but not the 25% calculation. The 25% limit is the gross compensation of participants (up to the 401(a)(17) limit) who benefit under either plan. Terminees who do not accrue benefits under the db plan and are not eligible for a contribution in the MP plan are not counted. Blinky or some other denizen will correct me if I have used the wrong term "benefit" as the appropriate standard but this is the concept. The sponsor will most likely need to fund whatever the funding requirements are without regard to whether it is deductible, particularly if the MP plan has no language to the contrary. The insurance question relates to the funding method but has nothing to do with the 25% limit. p.s. the deduction limit may not be 25% in this case anyways, it is the greater of 25% or the minimum required db contribution. Hope this helps.

Candidly Critical wins my vote. But the same reaction is quite valid regarding almost any draft DB plan QDRO and most customized documents written or revised post-Revenue Ruling 98-1, to be totally Candid.

I'm not sure that those regs say what hours are counted for service under a particular plan. They say what must be included and what things may be excluded, but unless the plan has an exact incorporation by reference then the regs may not provide the answer, although yes they will be helpful. For example, the regs say that a plan need not count workers comp time as service time, but I was peripherally involved in a case where a state supreme court ruled that a plan must credit time while on workers comp because a plan did not have specific language excluding it, nor was a reference to it deemed specific enough. (yeah, I know, why did the state have jurisdiction?). So the fact that such regs exist does not mean necessarily that they would answer this type of question which may depend to a certain extent on the language in the plan document.

DB or DC is irrelevant to the question. What does the document say? Exactly what is the arrangement?

See Blinky! Do a little yoga and expand and expound. Then hit the turbo analyzer failsafe button.

Line 27. The FAS#87 accrual is shown, in this case equal to the minimum liability (there is no intangible) and the auditors are saying that is correct. Does not seem right to me, but WDIK?

I have a non-profit client that was audited by the IRS. The IRS agent is asking why the 990 "deduction" did not match the contribution reported on Schedule B for that year. Apparently the 990 booked an "accrued contribution" sustantially equal to the FAS87 minimum liability. The minimum liability was about 600% of the actual "deduction". The client explains this as substantially the difference between a cash contribution and an accrued contribution. Is this right, that FAS87 numbers are used for Form 990? Does this response make sense? Unfortunately we apparently don't have MGB's expertise anymore. Can anybody else help clarify this?

uncle

Thanks for pointing that out, Merlin. I have not seen any discussion of that. Yes, the Q&A's (2005-31 and 2004-25) seem to clearly require pre-retirement mortality (for DB testing only-not DC).

Geez, two days off and I get blamed for mis-quotes of other board creatures by a boiling radioactive fish who is experiencing mirages. There are plenty of 412(i)'ers afloat here with moored yachts who should be able to offer software suggestions without fear of retribution by hot fish or hunters of same.

Hey board regulars, that was (finally) my friend embeem's first post. How about a Welcome. We can use some new viewpoints and his is second to none IMHO.

Please escuse my density. Where under 1.401(a)(26)-5 does it say such a person benefits?

OOPS-WRONG LINK REMOVED -SEE BELOW

Frank, I posted essentially the same question a few weeks ago and every responder said the person is not benefiting for 410(b) (if his avg comp does not increase and he does not earn a year of accrual service if applicable). He/she clearly is not benefiting for 401(a)(26) for the reason you mention.

Doug, why wouldn't that mean 2002, the calendar year beginnining with the lookback year? I guess it's moot, since I do now see that it must be in the document. Thank you.

Yes, good point penman.

Did someone say it was unhelpful or irrelevant?

You wouldn't consider a discount rate of 5% or less a subsidy when testing assumptions are 7.50% to 8.50%? Therein lies the issue. Some people maintain that only a fixed rate lump sum calculation need be included in the MVAR. Due to the uncertainty, I would make sure that it passes either way, and go for a FDL,

No, not correct on the MVAR. As I understand it, in the simplest case assuming SLA and no preretirement mortality, the MVAR would be calculated at the participant's current age as follows: Actual lump sum payable (calculated using greater of plan rates or 417(e)) based upon benefit earned during measurement period, divided by plan's J&50 APR at current age, multiplied by testing APR as current age, projected to Testing Age using testing interest, divided by Testing Age APR using testing assumptions, divided by testing comp, and divided by testing service. That will normally produce a much higher MVAR than EBAR. This assumes that J&50 is the Plan's QJSA. Not everyone agrees that this is required. Most do.

Hi Susan: 1. Does the DC plan also have a NRD of 56? If not, your testing age is 65. 2. You need to test the MVAR, and in most people's opinion, that would reflect the subsidy caused by 417(e). Other than that, I think you are ok (albeit high maintenance).

Well, I wonder how old it is and whether such things have expiration dates. Other than the old proposed 401(a)(9) regs I suppose, which looked like they'd be eternal. And, yes, I know it is controversial , but a few years ago I heard Holland say that the IRS reserves the right to interpret NRD as something other than what the document states.