dmb

What was provided to me in an e-mail was that "the Decree provides that the parties are to each receive a portion of the pension equal to 50% of its value" as of a certain date and they want to know how much the current benefit needs to be reduced based on that.

The participant began receiving payments prior to the divorce. The participant is looking for the amount of reduction of his benefit after his former wife receives her half of the value of the benefit.

A participant (age X) is currently receiving a monthyly benefit payable as a joint & 2/3 Survivor benefit with the cavaet that if he outlives his spouse (age X-1) he receives a $100 increase in the benefit. Per divorce settlement, each party is to receive half of value as of specific date. I know i haven't provided many specifics, but does it sound reasonable that after the settlement the participant would receive a monthly benefit that is less than half of the original amount?? I can provide more info outside the board. Thanks.

I took ove a defined benefit plan that has been using Unit Credit funding method, can I change to Individual Aggregate without filing for approval of the change? Thanks.

I actually was thinking that the life annuity portion was actuarially equivalent to the J&S portion and therefore would not need to be accounted for in addition to the J&S value, but I'm told that one of the attorneys needs to see how the life annuity portion is accounted for in the calculation. Thanks.

I have been asked to value a benefit as of a certain date for a divorce settlement and haven't done something like this one in a long time, if ever. A retired participant is currently receiving $1,000 per month as a J&S annuity. The benefit also provides that if the participant outlives his former wife his monthly annuity would then be $1,100 per month as a life annuity. While it is easy enough to value the J&S portion of the benefit, how do i value the increase if the participant outlives his former wife?? Any help would be appreciated. Thank you.

I appreciate all the input. fyi: The plan is currently High 3 yr avg. Thanks.

A one life (sole prop) DB plan, end of year val. Client wishes to terminate and roll money into IRA before end of 2005, but expects considerable income and would like to use income and make a contribution for 2005. Since self employment income is considered earned on 12/31, is there a way to terminate the plan prior to 12/31, but still use the 2005 income?? Thanks.

A client had a calendar year profit sharing plan that was amended to a Safe Harbor Matching 401k plan with the 401k provisions effective 7/1/04. The client is a partnership and therefore has partnership income. Is it possible/legal to provide matching contributions on compensation earned from 7/1/04 thru 12/31/04 rather than the entire year?? And if so, is there a way to do that with the partners' income since they do not receive a salary?? Thanks.

If eligibility is more liberal for 401k contributions than (X-tested)profit sharing contributions, and a participant is eligible for 401k but not for PS, does that participant need to be included in the rate group (midpoint) testing for the profit sharing portion?? I know the participant must be included in the avg. bfts percent test. Thanks.

Thanks, I searched a little, but found one message that didn't have any replies. Thanks again.

When calculating the "benefit compensation" for self employed or partnerships with employees, at the start, do the employees' salary deferrals get subtracted from the self employed or partner's net income along with the employer contribution to the employees??? Any help is appreciated. Thanks.

Thanks Tom, that was exactly what i was asking. Sorry I wasn't totally clear.

Is it allowable to base the Facts and Circumstances test on benefits but base the average benefit percentage test on allocation percentages??? Thanks.

Corp A is owned 100% by Owner A who is the sole owner and employee, who up until August of 2004 was also a 70% owner of LLC A. LLC A sponsors a 401k plan, to which no employer contributions have been made for 2004, including match. Owner A, who now does not have any ownership in LLC A, but is still the CEO, would like to set up a DB plan for 2004 for Corp A. This info may be a little vague, but its a start. Are there any controlled group or plan aggregation issues that would keep Owner A from setting up a DB plan for Corp A for 2004?? Thanks.

Corp A is owned 100% by Owner A who is the sole owner and employee, who up until August of 2004 was also a 70% owner of LLC A. LLC A sponsors a 401k plan, to which no employer contributions have been made for 2004, including match. Owner A, who now does not have any ownership in LLC A, but is still the CEO, would like to set up a DB plan for 2004 for Corp A. This info may be a little vague, but its a start. Are there any controlled group or plan aggregation issues that would keep Owner A from setting up a DB plan for Corp A for 2004?? Thanks.

Thanks. Could it be deemed discriminatory if i used calendar year comp for 2004 and then amended to "participation comp" effective 1/1/2005???

I searched for this topic and am still a little confused. corp formed April 1, 2004, fiscal year is calendar. Plan year will be calendar, first plan year is 4/1/04 - 12/31/04. If limitation year is set to calendar year and compensation defined as "compensation while a participant" is it correct that niether 415 or 401(a)(17) need to be pro-rated for initial plan year?? If not, please advise. Thanks.

The owner and his spouse are both over 57, their two children are around 30 yo. There is one NHCE who is 49, 5 or 6 other HCEs that are under 47 and the rest are NHCEs all under 47. Some other issues involving the children have come up and right now we are on hold. Thanks for the input.

Thanks Tom, i appreciate your help.

I didn't set up this plann, we took it over, but i'm not sure you answered my question. does the fact that allocations rates have to be changed to pass the ABT change the status of the plan being "smoothly increasing" and therefore require the 5% gateway allocation to the top heavy only participants??

Thanks for the response Tom, here is some more details that may explain why the plan is failing. The allocation tiers are Age 57 and up receive 21% of comp, each year younger receives 2% less, so participants age 56 receive 19%, age 55 receive 17% and so on until you get to age 48 and under receive 3% of comp. Besides the owners, there are only one or two participants over age 48. Also, the main reason the plan is failing the ABT is due to the 401k portion. The wife and two sons of the owner are all deferring almost 25% of comp (they never deferred until this year, and i don't know why they started this year). Also, there are employees (both HCE and NHCE) that have waived participation in the plan. The rate group test isn't a problem.

I have a top heavy plan that passes gateway using "smoothly increasing" bands. The allocation rates range from 21% of comp down to 3%. The plan fails the average benefits percentage test to the point that the lower allocation groups need to be increased to the 8% range. I also have a few active participants that have not met the hours requirement for the 8% allocation, but must receive a 3% top heavy allocation. My question is if i have to increase the allocation rate for some of the bands to 8% does that prevent the plan from using the "smoothly increasing" method to pass the gateway?? Must i then give 5% to the Top Heavy only participants?? Thanks.

Yes, the coverage ratio is above the safe harbor ratio.

Thanks Andy, the plan does pass the Average Benefits Percentage Test as well as the Modified Facts & Circumstances portion of the Average Benefits Test.