AndyH

Everett, would you educate us on what weight such a proposed regulation has?

That sure was painful.

Such a car should be valet parked at the Hotel California. You know, you can check out any time you want, but you can never leave.

Or the doctors might want different contribution levels. One might want to contribute $40,000 while the other might want to contribute a 1948 Pontiac. You wouldn't want to give the NHCE either of those two, would you? (I once handled a doctor's plan with assets that consisted entirely of loans, accrued interest on loans, and a 1948 Pontiac).

OK, my two cents. Effen, if NoName knew what FYIFV meant, he might fire one at you. Otherwise, I think you guys are being too judgemental. I see nothing wrong with non-actuaries asking questions. It is often true that non-actuaries do all the mechanical work, including calculating CL and Sched B entries for the review/signature of the actuary, whether in house or out of house, so there is nothing wrong with that. I think that condescending replies are wrong-not that that is happening now, but it often does on this board. The quality of work/compentence of both many actuaries and many firms that farm out such work is ripe for criticism, but I don't thing that such comments should be directed at people trying to learn on this board. Learning (and a little entertainment now and then) has always been the value of these boards.

If the plan was designed for the former owner and he is gone and the new owner is either a new employee or was an NHCE then it could very well be not top heavy for a while regardless of the design.

I'm testing a 7/1/2003-6/30/2004 (large) plan and trying to determine who are HCEs. Under the plan's terms, service is measured on a plan year basis but compensation is defined as calendar compensation. For 7/1/2003-6/30/2004. I seem to be able to use calendar 2002 pay to determine the HCE threshhold by using the calendar year data election of IRS Notice 97-45. There does not seem to be any documentation or amendment requirement to use this, except for consistency among plans and that the election, "once made, applies for all subsequent determination years unless changed by the employer." Questions: (1) Am I right that I would use calendar 2002, not 2003? (2) This is still an option, right? (3) How does an employer make such an election, i.e. is there any documentation requirement that I have not found and am unaware of? Thanks for any help.

Goes towards the salesman's yacht club dues.

right. Nice power word, don't you think? Still haven't figured out the peanut reference yet, though. The AC in Blinky's trailer must be broke.

Unless you choose to invoke 1.410(b)-(5)(e)(3) in which case you do not have to include the MP at all. Ha, just happened to have that out!

Sure. What does the MPP plan have to do with it? If it is not being aggregated, nothing. Would they be in the general test with a 0% if there was only a DB plan? What you are being told does not compute.

The impression I was getting was that the Owner would get his total benefit in Year 1 because a large DC contribution would be made and the two would be tested together, and then years thereafter would be a snap. For example, give the owner an accrual of 80% of pay in year one and try to test that over all years of service so the EBAR is low. Clearly 404 would be an issue, but clearly also 415 would be as well. But I never got to the point where I understood exactly what was being proposed so that is merely a guess.

Ok, I was trying to help but I give up. I have no idea what you are proposing. It makes zippo sense to me. What do DC allocations have to to with DB 415 limits? Blinky again you were wiser than I. Roman, only trying to help. Towel now thrown in. Never mind. You seem to have found your answer.

Yeah, the 5 year issue is a problem but aside from that you seem to think you can pass testing and I do not see how. Have you considered 415?

Well, we don't disagree often but I think that if they have less past service then their testing service will normally be less so they would not have a lesser accrual rate. In fact, the opposite may be true depending upon their salary history and what you use for testing comp. Now this all comes back to how you define testing service, and clearly there is some leeway but generally I think you would agree that it must relate to how benefits accrue or it must relate to what service is credited under the plan. If benefits accrue on participation, for example, and there is preparticipation service then I don't think it is legitimate to use all service as testing service.

Huh Wa? Mind splainin your second sentence Blinker? Is that a new heat based testing theory? Roman, all Blinky's (other?) comments are right on as usual but to put it more compactly there is a year that your owner accrues his benefit and that benefit accrual must be in the test for AT LEAST one year and that is the year you will FAIL. Any testing method must include the current year so unless that benefit was accrued in a prior year in which you had a safe harbor formula (which is of course not possible) or in a year prior to a fresh start date (which also required a test) then it had to be subject to a general test and that test could not pass. Yeah, next year you can use the annual method and you may have a 0% for the owner but so what? It is the year of the accrual that'll get ya. Does that help?

Related question: What happens if the sponsor of a PBGC covered plan goes bankrupt and there is insufficient funds of the owner to waive and the corporation has unsufficient funds. Can the PBGC claim assets of the (closely held business) owner personally?

That is well stated, thank you. No argument from me. Just the $950 per hour experts.

I have a major law firm representing one of my clients that has taken a different position, that annuity options are required for a pension worth $1,001 because the $5,000 is simply being reduced to $1,000. And I am told that this is a consensus view; not that of one lawyer. They are, I believe, reevaluating their position, but as of this morning an annuity option was required. On the timing question I agree with you and am unclear as to the position of the law firm, who at first did not agree. Thanks for the comments. Hope your AC is working. Maybe theirs is broken.

Nothing new, and I have no experience testing cash balance plans so I can't help there. But I do wonder how such tests are properly done. One troublesome aspect of this lack of guidance is that using 417(e) in the MVAR really isn't "safe" because it tends to inflate accrual rates for younger people who typically might be NHCEs. It just produces strange and inconsistent results.

Assume a plan is amended to reduce the involuntary cashout level to $1,000. Does that mean that a plan must allow an annuity option if the pvab is $1,001? Second question, when is the under or over $1,000 determination made? At the time of termination of employment, or at the time that a cashout would be made under the terms of the plan. What if the pvab is $1,001 this year and $999 next year, can it then be cashed out?

Wow, vicious. Are you one of those snakehead things?

Let's all email him and tell him to send Kirk some business! Especially anyone nominated for the Benefits Link user name Hall of Fame! Imagine receiving a string of emails starting with Blinky, jusducki, anonymous coward, Death and Taxes, QDROphile, quinn, quint, Disco Stu, Max Power et al.

Mike, I gotta believe that was a drafting error. Call it a scriveners error, perhaps. Nobody would do that intentionally. I think the answer lies behind whatever the intent was, if there was one. Identifying the drafter is half the solution, IMHO.

What would be your recommendation? Should we start saving for college? Or maybe we should avoid that discussion.