dmb

Thanks Tom. We are currently working on group descriptions so they don't overlap, but my main concern is do you think the "age 55 with participation in prior DB plan" is discriminatory?? Thanks again.

A propspective New Comparability plan is considering the following groups: Group A = Director of Finance (NHCE) Group B = Highly Compensated Employees, Employees with at least 20 Years of service, or Employees over age 55 who participated in the prior Defined Benefit Plan. Group C = NHCE with at least 10 years but less than 20 years of service Group D = All other employees Is the age 55 with prior DB participation requirement discriminatory?? Any other comments are appreciated. Thanks.

In the DOL guidance http://www.dol.gov/ebsa/regs/fab_2006-3.html the 45 day deadline for issueing benefit statements seems to speak to DC plans. Defined Benefit plan participant benefit statements are referred to after the 45 day deadline is mentioned (in item 3). Does the 45 day deadline apply to DB plans?? Also, does the 45 day deadline also appy to the alternative notice provision for DB plans?? It looks to me like the DOL guidance specifically states the 45 day deadline applies to individual account plans. Any clarification is appreciated. Thanks.

A multiple employer plan (calendar year, two employers) is spinning off one employer effective 1/1/07. Effective 1/1/07 there will be two single employers each with its own DB plan. For 2006 the multiple employer plan had over 500 lives. The assets will not be transferred until April or May. Is the 2007 PBGC 1-ES required to be filed for the original employer?? How should participant counts be determined for the final Form 1 filings due in October?? Does the fact that the assets have not been transferred yet have significance?? Thanks.

Are church plans subject to Required Minimum Distribution Rules?? Thanks.

Can someone confirm if my thinking is correct: If after a DB plan is funded to only meet minimum funding requirements for the 2007 (calendar) plan year (no credit balance) it is 65% funded based based on PPA interest rate. Is it true that the only way to avoid the benefit restrictions would be for the plan to be sufficiently funded at 92% based on assets less the pre-funding credit balance (which would be $0 at 1/1/08). If the plan did not meet the 92% threshold, the assets used to determine the funded percentage for the benefit restrictions are reduced by all credit balances so any additional 2007 contributions would only be a wash in regard to the benefit restriction funded percentage calculation. Any guidance would be appreciated. Thanks.

I know that compensation of participants that are eligible to defer, but elect not to, is included for determining the maximum deductible contribution to a 401(k) plan, but do not have a referral cite. Does anyone have a cite that refers to this?? Thanks.

Thanks for the responses. I do have access to CCH, etc. Thanks again.

IF a plan freezes accruals for participants whose age plus service are less than 50 and freezes accrual service for those whose age plus service is at least 50 (but recognizes compensastion increases), must that plan fully vest the under 50 group?? Thanks.

A client with a DB plan is interested in adding a Age plus Service based PS plan. Deductibility isn't an issue. My concern is regarding non-discrimination. The DB plan is a standardized prototype plan. Can the plans be tested separately for non-discrim?? I'm fairly sure they can, but the one thing i come back to is the average benefits test. Would the DB benefits need to be included when performing the ABT on the PS plan??? Thanks.

I've seen a few summaries that say the repeal of the PBGC variable rate premium full funding exemption is effective for plan years beginning in 2008. It was my understanding this provision is effective for plan years beginning in 2007. Coudl someone confirm the effective date of the full funding exemption repeal. Thanks.

This is a different subject than what's been discussed. I've been asked if the new 417(e) rules will still include the "lookback" and "stability" periods. I have read about the interest rate, but have not seen anything else. Thanks in advance for any help

Calculating quartlerly contribution penalty for 2006 calendar year plan. Contribution of $50,000 made on 4/1/06 for the 2005 funding standard account. For the 4/15/06 quarterly requirement, it is my understanding that the contribution made on 4/1/06 receives interest from 4/1/06 and not 12/31/05 even though it is part of the 12/31/05 credit balance and made before the 4/15/06 quarterly due date. Am i thinking correctly or not?? Thanks.

Does anyone have a copy of the "Padilla Memo". The memo issued by Carol Gold on March 13, 1998? Thanks.

At this point we're not sure what to recommend yet, but the goal is to recommend what is best for the client, whether it be plan termination or the plan to plan transfer. We would not recoemmend doing something different than a competitor just for the sake of competing. I just wanted to find out a little more about the plan to plan transfer. thanks again.

Thanks for the help. This is actually a prospective client. A competitor is suggesting this method of going from a DB to a DC plan. We think they are only doing this to keep all the assets intact. We would suggest terminating the DB plan and going forward from there. Thanks again.

An employer with a frozen DB plan is considering terminating the plan with a plan to plan transfer (rolling DB assets as a whole) to a start up DC plan. Does the plan to plan transfer require IRS approval or any other special requirements? I assume the DB plan must be sufficiently funded before the transfer can take place. Thanks.

If a DB plan was amended to freeze accrual service but allow for compensation increases, would the new formula be considered a safe harbor formula? I believe the fresh start rules call for at least a 0.5% of comp formula, but any other thoughts would be appreciated. Thanks.

Thanks for the response. I'm not sure how we will be providing the DBRA yet, but i guess another question is can we have all or some of the participants who recieve the DBRA in one group since the replacement allocation for one particpant may be a different allocation as a percentage of comp than another particpant? Thanks.

When setting up a New Comparability PS plan using DBRAs to replace a DB plan, and rather than meet the Broadly AVaible GAteway, we will meet the 5% or 1/3 gateway. Can one group receive an allocation of "the greater of the DBRA or 5% of comp" or would each participant receiving the DBRA need to be their own group?? I'm not sure if my question makes sense, but any help would be appreciated. Thanks.

I have few questions: Is it true that there are no discrimination testing or 5500 filing if there are only employee deferrals and no match or employer contributions? Is it true that if there is any employer contribution, including match, a Form 5500 must be filed? If there is a match, there is no ADP testing, but only ACP testing required? Thank you.

Can someone help interpret the answer to Question M-19 under 1.416-1 regarding matching contributions treated as minimum top heavy allocations? The last sentence of the answer states that the contributions must meet the nondiscrimination requirements of 401(a)(4) without regard to 401(m). If a plan provides a 50% of deferral match up to 6% of comp in a traditional 401(k) plan, i assume that this meets 401(a)(4) because it is a unifiorm formula and is not discriminatory, but after reading the Q&A of M-19, i'm not so sure that the match doesn't have to be general tested. Thanks.

That is the reg i was looking at, but according to the definition of former HCE, this participant would not be considered an HCE or former HCE in the year of separation (2007). The definition of a former HCE is "a Highly Compensated Former Employee" as defined in 1.410(b)-9, which defines it as "a former employee who is a highly compensated former employee within the meaning of section 414(q). 414(q)(6)(A) states that a former employee shall treated as a HCE if such employee was a HCE when such employee separated from service. Again, this participant will not be an HCE in 2007 (year of separation) if they earn $80,000 in 2006. According to the definitions (at least i read them, and I may be wrong), a former HCE is not someone who was an HCE at any prior point. It is someone who is an HCE in the year of separation.

Thanks for the responses. It was my understanding that a "Highly Compensated Former Employee" for a determination year is a former employee who had a separation in a year prior to the determination year. So if a participant earns, for example, $80,000 in 2006 and therefore is not a HCE (or a foirmer HCE) in 2007. This particpant then terminates/retires in 2007 and can receive a distribution since he/she is not considered a restricted employee. Please advise if i am incorrectly reading the definition of a Highly Compensated Former Employee. Thanks again.

This started out in the "Retirement Plans in General" section, but i think it needs to be in the DB section. It seems there is a window of opportunity for a restricted employee to recieve reduced compensation in the year prior to termination/retirement/distribution to take them out of HCE status so they can receive a lump sum. If a non-owner active participant who has been earning more than the HCE threshold recieves less than the HCE threshold in 2006, they would not be considered an HCE in 2007 and therefore could retire and receive a lump sum distribution in 2007. Is this considered an acceptable loophole? I don't think the intent was for the 110% test to be circumvented. I'm not sure if this is something that needs to be discussed when a restricted employee is thinking about retiring and taking a lump sum. Any thoughts would be appreciated. Thanks.