David

The sole participant in a MP plan made a rollover (with notarized spousal consent) of his entire acct bal to a rollover acct within his DB plan. Question 15b on the 5500-EZ says "did the plan make distributions to a married participant in a form other than a qualified joint and survivor annuity". It seems like the correct answer would be yes but that seems like a huge red flag. I'm wondering how other administrators answer this question or if anyone has any information on this. The instructions don't say much. Any input is appreciated.

I agree with mwyatt. The only large plan work I ever did was many years ago as an entry level actuarial analyst so I am not really familar with exactly how these things work. That being said, I wonder, for a company such as GE that is recogonizing a large pension asset each year, what is the likelyhood of GE recapturing those funds and putting them to use to actually create revenue? And, would they be able to recapture all of the overfunding or only a portion of it? It seems to me that it is misleading to use the pension plan overfunding as such a signifiacnt source of income.

Mike, I think the appropriate rate to use depends on when the annuity which is being converted is defined as being payable, end of year, beg of year, end of month, beg of month, etc. If the actuarial equivalence basis were "GATT" mortality and 8.5% interest, I would use the 9.34676 if I wanted to calculate the single sum value of an annuity which is payable once a yr. at the first day of the year and further that is payable now (in other words not defered, I am trying not to use the word "immediately"). I think I once heard an explanation of why "annuity due" and "annuity immediate" were adopted as standard actuarial terminology but it sure seems counter-intuitive. Also, the only 83GAM tables I have plugged in are the GATT basis and 83GAM(M & F) so I can't develop the other factor you mentioned.

FWIW, the 9.34679 number is the value of an annual annuity due rather than an annual annuity immediate. 9.34679 is the number I get based on the q's given in Rev Rul. 95-6 (GATT table). Actually I get 9.34676. The annual annuity immediate is 8.34676.

I have a plan sponsor that is changing to fiscal year = calendar year. Previously the fye was 7/31. The accountant wants to deduct the 7/31/02 plan year end contribution on the 2003 tax return. Based on 1.404(a)-14©, I do not think this is allowed. Is there any way to do this?

About a year ago I submitted an underfunded plan to the IRS for a favorable determination letter upon plan termination. I included a Waiver of Benefits signed by the owner. The IRS reviewing agent simply asked me to reword/retitle the Waiver to say the owner was waiving his "portion of the allocation of distributable assets". The words in quotes came directly from the agent. He said that this would avoid conflicts with 411(d). That is my experience. The plan was not covered by the PBGC.

Regarding top-heavy minimum accruals, note that EGTRRA exempts frozen plans from the top-heavy minimum accrual rules.

Just answering the part of your question regarding the value of a deferred J&S, if there is pre-ret mortality, taking each piece seperately would work. Remember to discount the .5 a ra:ra with joint-life D's or do (lr/lx)(lr/lx)(v^r-x).

With respect to the "speed issue", I sat for the May 2001 EA1 exam and they increased the number of questions to 29 total (2-1/2 hr exam) . It had been 25 questions for at least the prior 12-15 years. In addition, having gone over every exam from 1989 to 2000, it is clear that they are increasing the difficulty of the questions in general. So they are making the questions more difficult and giving you less time to do them. I don't know what the pass rate has been historically, but the May 2001 EA1 pass rate was something like 28%.

We have a new client that has both a MP plan and a PS plan which he wants terminated. The plans have been around over 10 years and he has always been the only participant. The last document updates were for TRA86. After explaining that the IRS requires plans to be current with the laws in effect at the time of termination, he said he thought that seemed silly and thought he might risk not having the plans updated and simply would have a termination amendment. I have to say that of all the many times I've had this discussion with clients, this is the first one that's balked. Theoretically, what could happen upon audit? Practically, I would hope the IRS would let you correct the problem, but I don't know if or how much financial penalty there would be. Any help on the potential penalties would be appreciated. Thanks.

HCE1: Age 61, comp = 170,000, desired contr = 75,000. HCE2: Age 38, comp = 85,000, desired contr = 20,000. DOH = 1/1/99 for both. Regarding the life of the plan, right now the older HCE thinks he will keep working past 65, what will happen past that depends on the situation at that time. Generally, we work on fairly straightforward, small size DB plans. We do not have any DB plans with separate benefit formula's for different groups. Although I don't see why this would be a problem in this case with respect to coverage, participation and providing a meaningful benefit, etc., I would like to know what others think.

We have a plan with 2 HCE's. They are the only employees of the company. One is much younger than the other. In order to meet each participants goals, I'm wondering if using separate benefit formula's would fly? Thanks in advance for any help.

Question. Why is it no interest in either employer? What if he was an owner of one business and an employee with zero ownership in the other (unrelated) business? I know there are guidelines on these types of situations and I would like to get up to speed, for instance, what about a Dr. that has his own practice and also teaches at a not-for-profit institution? Any cites or references would be appreciated.

Regarding pre-approved plans, I understand that if you sponsor a DB and a DC plan, you have 12 months from the latest IRS approval. In other words, if your DB plan is approved later than your DC, you have 12 months from that date for both the DB and DC plans.

For discussion, I believe I read somewhere that if the plan allows lump sum's, and the participant makes an election including spousal consent to receive a LS at actual ret., then the MRD could be an acct. bal. type. I would be interested to hear what others think about this.

I have a husband and wife that closed their corp. and terminated the DB plan and rolled their lump sum distributions to a segregated acct. in their new sole proprietorship DC plan. My limited understanding of loans is that loans are not allowed from a qualified plan of a sole proprietorship. If that's true, in this case does it apply to the segregated acct. as well?

Thanks Tom.

WRT Doug G.'s post, if you had a safe harbor plan that could not pass the ratio percetage test because of a non-benefiting participant, can you then try to pass coverage with the ave. ben. test and if successful not have to worry about non-discrim. testing because it's safe harbor. I am actually working on a plan in this situation today. There is also a DB plan, which I believe would have to be included in the ave. ben. test.

David M.- Yes, I'm aware of the excise tax issue. I saw your post the other day. I hope some others respond. I think EGTRRA takes care of this in 2002 wrt ee deferrals.

Also, 1.416-1, Q&A T-10. Specifically the sentence that starts with "However".

This is a fuzzy memory, but I seem to remember an ASPA study manual teaching the "year at a time" approach.

Thanks to all for the help. It makes sense that they can't be ignored (but we know about the IRC and common sense).

This is a discussion within our office, is there any specific guidance on this scenario in the regs, etc.?

Given the following situation: DB and 401(k) plans which are top heavy, same ee's covered in both except two non-keys excluded from DB, 401(K) has only deferrals and match, TH minimum covered in DB. Question: what about the excluded ee's that are not getting the TH min in the DB? Do they need a contr in the DC?

Thank you for your helpful response. One question though, why wouldn't the 160k limit simply be incorpoarted by reference to Sec 415 in the doc?