dmb

I've been asked to help with a QMAC calculation, though i've never done one. Does the unrestricted up to 5% of comp apply to QMAC as i think it does for QNEC? Can it be targeted or bottom up as long as it''s no more than 5% of comp? Sorry, not sure where to start, and this seems a reasonable start. Thanks.

Under the current circumstances, is it acceptable to file a scanned EA-S with e-signature (if we can get signature on the form), rather than original? Thanks.

Thanks in advance for help. 2019 Funding Requirement $100k, Carryover Balance $0 Prefunding balance $150k Employer elects to apply $40k of PFB towards funding requirement, but later makes $80k contribution (let's forget about discounting for this) This results in excess contribution due to credit balance of $20k. Does employer have option to add back the excess contribution to PFB, adjusted for actual return on assets? Thanks.

That was my understanding, but a little confusion lately. Thanks.

Currently active DB plan with about 25 active participants. Employer will be hiring about 100 new employees later in 2020 and then more in the near future. Employer would like for those employees not to participate in DB plan. He will start a 403b plan in near future. There is one HCE in DB plan. If DB plan is frozen to new entrants effective say, 4/1/2020 and new 403b plan is established, will 401(a)(26) still apply to DB plan. And if so, if DB plan is also amended to freeze and exclude HCEs, will 401(a)(26) still apply, or will plan satisfy 401(a)(26)? Thanks.

Sorry, i'm asking about a 403(b) plan. Thanks.

A church plan employer is looking to exclude bonus from compensation for salary deferrals. Are church plans subject to 414(s) testing. I've received mixed responses. Thanks.

We are looking at a prospect, small law firm, one 100% owner, his wife and about 6 staff. Entity is an S-Corp. It's been a while since i've dealt with an S-Corp, but back then i remember the S-Corp owner being paid by W-2. I remember, I hope correctly, that they had be paid by W-2 for plan purposes. This S-Corp has K-1 income. Can that be used for similar to partnership calc for retirement plan contribution purposes (without SE tax)? Or must it be be W-2 comp? Thanks in advance for all replies.

Thanks. I guess our issue is would that be a non-definitely determinable benefit from a money purchase perspective?

We have a money purchase plan with two allocation groups. It satisfies the minimum allocation gateway. There is a non-standard definition of compensation which leads to my question which is, can a money purchase plan include a minimum allocation? For example, if the two allocations for the two groups are 7.5% of eligible comp and 5% of eligible comp, can the plan also provide that regardless of above no participant shall receive less than 2.5% of total comp? Thanks.

Our interpretation of ASOP 51 is that it is not applicable to ASC 715 reporting, but we wanted to see if others had the same interpretation. Thanks in advance for all responses.

We are reviewing a 403b plan that has a service based employer base contribution. The plan year ending 6/30/18 fails NDT due to the HCEs basically maxing out on their 403b deferrals and the NHCEs not deferring very much. So the NDT failure is with the average benefits test. If it's possible, the least costly solution would be returning a portion of the HCE 403b deferrals. Is that possible and more importantly, within the rules?? Thanks.

I'm looking at a plan currently with pro-rata allocation. Plan includes both union and non-union employees. Employer is considering giving different allocations to union and non-union. If union employees are eligible for plan and allocation, can they still be excluded from 410(b) and 401(a)(4) as statutory exclusions? Thanks.

We have a plan that had an AFTAP of 76% for 2017, but we recently completed the calendar 2018 plan year actuarial valuation and the AFTAP is now over 80%. That determination was made 6/11/18. A participant making a claim for their benefit elected not to defer the election due to the prior restriction and decided to take the 50% lump sum and monthly payment for the balance. The plan has a lump sum option and purchases annuities for monthly benefits. The benefit commencement date for this would be 6/1/18. In this situation our procedure is to pay the lump sum portion, and pay the monthly benefit portion from the plan. If/when plan comes out of restrictions, an annuity would be purchased for the benefit being paid from the plan. The benefit is about to be processed, but has not yet been paid. Would it be reasonable or even legal, to contact the employer (who is in very early stages of terminating the plan), explain the situation and ask if we could contact participant to ask again if they'd like to withdraw their current election so they could receive full lump sum? Thanks

Has anyone heard or read anything further on above questions regarding mortality table assumption for funding for a plan with lump sum option if employer delays use of new mortality tables? Thanks.

All the responses are appreciated, but BRF testing or no??? Thanks again.

We have a 401(a) DC plan that changed the vesting schedule from 100% immediate to a graded schedule only for employees hired on or after 2/1/2014. The 100% immediate schedule continues to apply for those hired prior to 2/1/2014. Is BRF testing is necessary? Thanks.

Thanks for all the quick responses. I posted this for a coworker and more facts have come to light. It's a start up profit sharing plan for calendar year 2017. If we make effective date 1/1/17 and not add last day requirement until 2018, it's my understanding that we can include all 2017 comp the terminated participant since he will be eligible for an allocation. If that doesn't sound right, we appreciate any further advice. Thanks.

For DC plan deductible limit, in a plan with a last day requirement, does eligible compensation include compensation of participant who terminated before the end of the plan year? Thanks.

Has there been any news on which mortality tables will be used for funding and lump sums after 2017? Unless we missed something, we would expect to hear something soon regarding this matter. We know the proposed regs are out, but nothing final yet. Thanks.

Understood. And thanks.

1.401(a)(4)-5 provides that benefits otherwise payable to restricted employees (generally the 25 HCEs with the highest compensation)under a defined benefit plan are limited if the plan is not at least 110% funded after the distribution. If the value of the benefit is less than 1% of the plan's current liabilities, the restrictions do not apply. Is the 1% exemption only applicable at benefit commencement date or (like the "110% Test") is the 1% exemption applied at every payment date and the full amount can be paid once the value falls below 1%.

Can you elaborate on your opinion that this amendment would not be allowed. Under the proposed amendment the minimum PPA lump sum basis on the full plan benefit, including future mortality improvements under IRC Section 417(e)(3), will be protected. This protected minimum lump sum value will be compared to the enhanced lump sum value of the 12/31/2008 accrued benefit using the 30-Year Treasury Rate minus x% and the 2017 Unisex Table. The plan will pay the greater of the two lump sum values. No current benefits earned and lump sum basis are being taken away from anyone, and a 204(h) Notice would be issued explaining the estimated effect of the plan amendment on future lump sum values calculated after 12/31/2017.

A plan is amended to adopt standard PPA lump sum rates and remove an enhanced lump sum basis equal to the 30-Year Treasury Rate minus x% on benefits earned through 12/31/2008. The enhanced lump sum basis is being protected on the 12/31/2008 benefit, including the Mortality Basis which is the Applicable Table incorporated by reference, including any subsequent pronouncements. Can this plan now amend the enhanced lump sum basis in 2017 to state that the mortality table for the enhanced lump sum protection is and will be going forward the 2017 Unisex table? In essence do future mortality improvements under IRC Section 417(e)(3)need to be protected on the enhanced lump sum calculation on benefits earned through 12/31/2008. If the plan can be amended as described, is an ERISA Section 204(h) Notice required?

Yes, agreed, Mike's rephrasing of the question would have been better. Thanks for all the responses. This is a prospect and i am waiting to see employee data to see how it turns out. Thanks again.