dmb

Does a profit sharing allocation that is a points based allocation based on service where participants get a share of the contribution based on the ratio of their years of service to the total years of service of all participants meet any kind of designed base safe harbor? It's basically a pro rata allocation based on service. Thanks.

Non-Safe Harbor 401(k) plan has (non-statutory) class exclusion for the employer.match. They are not excluded from salary deferrals. Must the employees of the excluded class be counted in ACP testing? Thanks.

This is not a Cash Balance plan.

Sorry, below is a bit more information: Defined benefit plan has a benefit formula that is "Formula Without Wear-Away" under 1.401(a)(4)-13(4)(i). The accrued benefit under the plan is equal to the Frozen Accrued Benefit (determined as of the day prior to the Fresh Start Date) plus the accrued benefit determined under the current formula (in effect from the Fresh Start Date forward). The accrued benefit under the current formula is determined using the fractional accrual rule. In applying the fractional accrual rule, only years from the Fresh Start Date forward are considered. A Q&A from 8/11/2006 seems to agree that the total accrued benefit can be determined in this manner. Can the total accrued benefit be determined as described in the Relevant Background section? An IRS reviewer is telling us that "the fractional rule cannot be used with formula without wear-away fresh start rule". He is relying on Sample Plan Language. I believe the Sample Plan Language prohibits the total accrued benefit from being determined as the sum of (a) the Frozen Accrue Benefit plus (b)the current formula applied to years from the Fresh Start Date to Normal Retirement Date and the sum multiplied by a fraction, the numerator of which is all years of Benefit Accrual Service to date of termination (including years that were used to determine the Frozen Accrued Benefit) and the denominator of which is all years of Benefit Accrual Service to NRD (including years used to determine the Frozen Accrued Benefit). Is there a specific cite from the regulations that allows (or prohibits) the accrual as described in the Relevant Background Information? Is the wording of 1.401(a)(4)-13(4)(i)(B) "as applied to the employee's years of service after the fresh-start date" what allows the accrual as described in the Relevant Background section?

Can a benefit formula with a fresh start date with an add-on benefit satisfy the fractional accrual rule? It has recently been suggested to us that such a formula doesn't satisfy the fractional accrual rule. Has anyone had any issues with this? If so, a cite would be appreciated. Thank you.

Thanks for the responses. "In this case" is a case of an employee without control of either plan. But how would "control" be defined, especially for a non-profit where there is no ownership? Thanks again.

If a non-profit employer sponsors both a 403b plan and a 401k plan, does the 415 limit apply to each plan separately? That is can a participant actually receive $106,000 between the two plans (2016)?? And taking it one step further, would the participant, if over 50 and the plan allows, be eligible for the catchup contribution in each plan or is the catch up part of 402g limit? Thanks.

Calendar Year Plan. 2016 AFTAP of 79% has been certified Credit Balance of $30,000 not enough to wait to get to 80% At current time, can employer voluntarily waive the credit balance and make a IRC 436 contribution to remove partial benefit restrictions brought on by 79% AFTAP. Thanks for all responses.

We are reviewing a plan for possible take over. There are no HCEs and only three of the about 40 NHCE participants are receiving an employer base allocation where each participant is their own allocation group. If there are no HCEs, is that kosher? Thanks.

This for a for-profit, non-qualified/post-retirement medical plan. Any article or reference would be appreciated. Thanks.

Has anyone dealt with Corporate Owned Life Insurance (COLI) inside a plan as a financing vehicle? And how is treated for accounting purposes? Any guidance, insight or thoughts are appreciated. Thank you.

Thanks again. Agreed on the 436 issue, but there are no restrictions in play here. Thanks again, and yes, maybe that's why no more of the appropriately titled grey book.

Thanks for the response, that was our thought as well. However, I refer to gray book question 2003-28 and ask if this changes your thinking: A participant in a contributory plan terminates and is eligible to withdraw contributions and interest of $3,000 immediately. The present value of the participant's total benefit (including contributions and interest is $7,000 (i.e., over $5,000). The plan does not have a large amount lump sum option. The participant withdraws the contributions and interest, with consent of the participant's spouse. The remaining present value is then $4,000. Can an involuntary cashout of $4,000 be made on the same day the participant withdraws the employee contributions or must the distributions occur in a two-step process in order to meet 1.411(a)-11©(3)? RESPONSE The distributions can occur on the same day. The consent of the spouse is not needed for the “subsequent” lump sum benefit payable that is under the $5,000 threshold.

Does the $5,000 small lump sum cashout threshold apply only to the value of employer provided benefit? How does employee contribution money play into the $5,000 cashout threshold? Thank you.

Employer made election in 2010 to use Market Value of Assets for PPA funding. Can employer now elect to use Average Value of Assets without any strings attached? Thanks.

A DC plan has a dual vesting schedule (result of a merger). Would this trigger availability testing? Thanks.

Would a 401k plan that provides the basic SH match to one group of participants and the enhanced SH match to another group still be considered a SH 401k plan? Thanks.

Employer would like to amend the employer base allocation of profit sharing plan so the current year allocation is based on whether or not a participant worked 1000 hours in the prior year. The allocation is flat 4% of comp. The purpose is so contributions can be made on a pay period basis of the current year. No other requirements for allocation other than meeting initial plan eligibility which is 3 months of service. Would this amendment result in the allocation being considered non-uniform and therefore need general testing under 410(b) and 401(a)(4) or could it be treated as a provision like a last day requirement and therefore only be subject to basic 70% coverage testing under 410(b)? Thanks.

I appreciate the responses, no offense taken. I am an actuary and sometimes I just want to make sure i'm not missing anything, especially regarding the accounting rules and also to try to get a feel for what others are doing. Thanks again.

Thanks. I guess my next question then is whether or not there is a requirement to use other decrements or is it an assumption up to the actuary? And would including the death benefit be a reasonable assumption? Thanks.

For the FAS 87/132/158 ASC Topic 715 disclosure, specifically the 10 year estimated expected emerging liabilities, other than the retirement benefit, should other decrements be included when valuing benefits. For actuarial valuation purposes, we only use the retirement benefit. Sorry if i'm not phrasing this question ideally, but all responses are greatly appreciated. Thanks.

Currently have two plans (4101k and 401a) each adopted by the two employers of the controlled group. Currently non-discrimination testing is performed on both plans together. The plans will be amended to change from a controlled group situation to a multiple employer situation and tested separately. If a participant works for both employers, earns less than the HCE compensation threshold from each, but combined earns above the HCE compensation threshold, is that participant considered an HCE based on compensation? Thanks.

We have a few plans that did not adopt the PPA lump sum rates and instead are on a GATT minus rate. For example if a plan values lump sum based on the 30 year treasury rate minus 2.75%. The February 30 year treasury rate is 2.57%. To value a benefit under this scenario would result in a negative interest rate. We are thinking this ok, but does anyone think there should be a 0.00% floor for this purpose? Thanks in advance for all responses.

For 410(b) testing, terminated participants with less than 500 hours of service during the testing year may be excluded. Is there an option to include some of those terminated employees or is it a all or none situation? Thanks.

Sorry for the confusion. So you're saying the MAP-21 Supplement amounts based on MAP-21 should be based on HATFA rates as it is for the primary part of the AFN and at least for 2014 and beyond, the original MAP-21 rates are not used for any AFN purpose (except looking back to pre-HATFA years).