David

For funding purposes, my understanding has always been that you may use the 415 limit in effect on the last day of the plan yr. (plan yr. = lim. yr.). If that's the case, does anyone see a problem setting up a plan with, for ex., a 7/1/01 - 6/30/02 plan/lim. yr. with ret. age = 62 and doing a boy val funding for $160,000? I have a prospective client for which the new limits would be helpful.

I have personally seen the IRS veto an attempt by another administrator to have the 100% owner in a small plan waive benefits in order to meet minimum funding. I would be surprised if there were any gray area in this issue. I noticed you wrote "PBGC termination" with respect to a waiver of accrued benefits in order to make assets sufficient for termination. I don't know if you are planning on submitting the termination to the IRS for approval, but I had the experience with an IRS reviewing agent asking for a restatement of a benefit waiver eliminating any language regarding waiving benefits and instead inserting language waiving the owner/participants share of allocable assets. It accomplished the same thing but he didn't want to see anything about waiving benefits. (I will add that other times I have had "benefit" waivers go thru the IRS plan term approval process with no problem.)

First of all, thanks for your help. I may have been mistakenly thinking of the timing for determining the rate. I remember reading about that. I've been working with plans that either amended for GATT before 12/31/99, in which case, for 2000+, you could ignore the PBGC rates, or haven't amended at all for GATT, in which case both the PBGC rates and GATT have to be considered. Now, I'm still confused about a current amendment for GATT though. What if you did an amendment during 2000, effective 1/1/01 adopting GATT? Is there any grandfathering of the PBGC LS or PBGC rates? If not, how is that different than the 12/31/99 exemption?

After amendment for GATT (after the first day of the 2000 py) I beleive there is a one yr wearaway on the PBGC rates.

What if the lump sum dist. was greater than $5,000 from a plan not yet amended for GATT? Would the LS dist. be the greatest of GATT, PBGC or Act Eq.? (Apologies for the slight diversion.)

Section 404(a)(8) seems to say that a self-employed person can't make a deductible contribution to his/her qualified DB plan for a given year if their net Sch C is $0. Am I missing something? Is there a way around this?

This is new to me, and if I understand you, it could be very helpful for a couple of clients. Are you saying that if the DC plan employer contribution when converted to an equivalent benefit at the DB plan RA is greater than or equal to 2% of pay, then the plan meets the TH minimum benefit/contribution requirement (even though the actual contribution is less than 5%)?

I have a question. If you wanted to exclude the spouse from the plan, can you exclude her by name?

I believe you would have to take the current yrs MRD out before rolling over, after that the IRA can do the MRD's.

I was piecing together info from a few sources and got myself confused, so, in asking the question, I am just being cautious. I really don't think so either, but I am putting in a new DB plan for a client that has a 401K/PS plan in place and I don't want to blow the coverage test. Thanks for your input.

I'm confused by something I've been reading about the alternative flat benefit safe harbr non-discrim test. I'm wondering if using the AFBSH test to pass 401(a)(4) necessitates the use of the average benefits test to pass 410(B)?

Unfortunately, that is not the case. The monthly amount distributed has been incorrect since benefit commencement a few years ago. The factor the benefit is off by is not exactly 1/2, I was using artistic license for simplicity. Seriously, the original benefit calculation appears to be incorrect. We have complete documents, salary history, etc. It looks like the original calc used incorrect salary history when comparing old val reports with W-2's.

It's not a 70.5 distribution and it is payable as a monthly annuity.

Thanks for your input, although I am surprised by your response, I would not have thought that the participant would have to lose out. You may well be right, I just did not consider that. For clarity, the document does not define the benefit as "the 415 limit", it works out by the formula that his benefit at his benefit commencement date is restricted by the 415 limit. Thank again.

A retired participant in a DB plan is entitled to receive a monthly life annuity in the amount of his 415 limit. He started receiving payments a couple of years ago, but the amount paid was only half of the correct amount. How does the plan sponsor make this right? Pay the shortfall brought forward with interest based on the plan actuarial eq. definition? If so, is there any 415 concern in the current year when distributing the 415 limit plus the "make-up" amount?

Can a company contribute, as a corporate contribution to the company's qualified profit sharing plan, the stock of a publicly traded company (not related). The corporation owns the stock and they want to "transfer" it to the plan as a company contribution. They would record it on the corporate books at the market value on the date of transfer, realizing any gain/loss for tax purposes. The company wants to avoid the transaction costs of selling the stock and buying it again for the pension trust.

Can a company contribute, as a corporate contribution to the company's qualified profit sharing plan, the stock of a publicly traded company (not related). The corporation owns the stock and they want to "transfer" it to the plan as a company contribution. They would record it on the corporate books at the market value on the date of transfer, realizing any gain/loss for tax purposes. The company wants to avoid the transaction costs of selling the stock and buying it again for the pension trust.

Thanks Mary Kay. I appreciate the cite as well.

I have two 70-1/2 MRD questions: 1. If an individual has 3 IRA,s and the MRD from each one is $5,000, can he take $15,000 from any one and satisfy the MRD requirement for all 3 IRA's? 2. If an individual has a benefit in a qualified retirement plan and has an IRA, and he takes a total lump sum distribution from the ret. plan which far exceeds the total MRD requirement from the ret. plan and the IRA together, is an IRA MRD still required for the year in question?

A client has made a contribution in excess of the deductible limit in order to make the plan sufficient for plan termination. The plan is covered by the PBGC and has less than 100 participants. I understand that the excess is deductible over 10 years. My question is whether or not the excess is subject to the 10% penalty?

I have a takeover plan which was amended 12/28/94 from a PIA offset formula to a unit benefit formula. The amendment was made effective 1/1/89. Do I have to grandfather the PIA offset AB as of 12/28/94? Second question: what might one use as assumptions in calculating the PIA in this situation (ex: actual salary history and then a salary scale going back, level future salaries, 3.5% wage base, 3.5% CPI)? I will try to duplicate the prior administrators work, but some background info will help. Thanks.

Thanks Tom. Same thing with the 404(a)(7) calc?

When calculating the 404(a)(7) limitation (25% limit), are 410(k) employee deferrals considered compensation? In other words, is gross comp reduced by deferrals before applying the 25%? If so, is comp reduced by deferrals before or after applying the $170,000 comp limit? Also, regarding the 15% max ER PS contribution, is comp reduced by deferrals before or after applyng the $170,000 limit?

Thanks for your help. Just to make sure I understand, if the 2 DB plans in question indivdually have a safe harbor type formula, but the formula is not identical to the other plan, then 401(a)(4) general (numerical) testing on a combined basis is required?

If two plans are created, each covering a dif ee group, each with one HCE, the ave ben test is passed for coverage by aggregating the plans, does each plan seperately have to pass the general non-discrim test? Or can a safe harbor formula, etc. in each plan avoid the gen test?