Gary

it seems only the 2009 eff rate to discount to 2009 val date.

"they're still processing a lot of apps" That's a good one. What are there all of about 100 EAs left in the US. Being facetious but you follow my drift

Gosh. I guess I didn't get a good night's sleep or something. Salary deferrals were allowed for SEPs established pre 1996 or at least a long time ago. So in that case then the individual could contribute 16,500 to their 401k plan and since it is an unrelated sponsor of the 401k plan, profit sharing contributions would not be impacted by what the other employer contributes to SEP. Unless I missed something. thanks

An individual is employed by two companies. One company has a SEP and the other has a 401k plan. She participates in both plans. My impression is that the total deferral is still 16,500 for 2011 and thus if she defers 8,000 in SEP she can defer up to 8,500 to 401k for a total of 16,500. Is that correct? Real matter is can she defer to both plans? She earns enough compensation for such deferrals. thanks

A valuation software program determined that an employee's AB as of 1/1/2011 was 1,200 per month (as computed from a prior year and preserved) 415 100% comp limit computed to be 1,100 (decreased because after two years of pay in the 3rd year pay was $0 and avg pay for 415 decreased). The program proceeded to determne that the AB was preserved at 1,200 but the 415 lump sum was the PV of the benefit of 1,100. That is, not the PV of 1,200. Does concensus agree with above? Think that AB s/b limited to 1,100? Think lump sum s/b based on PV of 1,200? Or something else? One more piece of info: The employee received $0 comp for 2010 and worked less than 1000 hours and did not receive a year of svc for vesting or accrual purposes. The 415 100% comp limit did not add a year of service either, but just counted the $0 pay in the 3 yr avg. thanks

alleged details. adult children own a company 50/50. they were minor children within past 5 yrs. parents are employees and only participants of pension plan. As I present it: since they were minors within past 5 yrs then parents would have had constructive ownership (under 1563(e)) within past 5 yrs and have been substantial owners under erisa 4021(b) and excluded from pbgc coverage at this point. Now back to constructive ownership. Children: Child A and Child B Parents: Parent 1 and Parent 2 So parent 1 can own what child a owns and parent 2 can own what child b owns so they each can own 50% and be substantial owners. That is, parents 1 and 2 cannot own the 50% child a owns due to fact that ownership cannot be passed to parent 1 and then again to parent 2 as double attribution. If each child owns 50% then each parent can constructively own 50%. That is, each parent owns what o Make sense? thanks

agreed. don't recall if you addressed adp test. is it 401k safe harbor?

actually in looking back at the numbers you provide, it seems fine for passing 401a4 ratio test. Only apparent issue would be 401k adp test. if a 401k safe harbor provided than it would seem good.

On a combined plan basis it seems fine for 410b purposes, however, you need to determine that it passes 401a4 on combined plan basis.

i have not gotten a renewal response thus far. thanks

If the maximum deduction to DB plan is zero then I don't believe any contribution to DB plan would be deductible. With that said, I thought somewhere either in 404 or 4972 excise tax rules that excess contributions to single employer DB plans were not considered non deductible contributions and thus not subject to 10% excise tax. That's one interpretation, though not sure if it has been understood that way indusdtry wide.

Say a plan has a 2011 AFTAP of 50% and the 436 contribution to bring it up to 60% is 100,000. Say the sponsor makes a 436 contribution of 100k (adjusted) and a newly certified 2011 aftap is 60%. For purposes of the 2011 MRC plan assets for such calculation will not include the 436 contribution. Is that correct? I located something to this effect in on eof the examples in the 436 regs. thanks

the plan in question is an on going hard frozen plan. so was trying to determine if the 415 comp limit should increase after the freeze date, as applicable? the response appears all benefits, including 415 limits remain frozen, unless a cost of living increase occurs. thanks

Say a plan is frozen as of 1/1/2009. At that time the participant has 3 yr avg comp of 100,000. The dollar limit is 156,000 as of 1/1/2009. NRA is 62 and employee is age 62 at 1/1/2009. Plan provides for actuarial increase for late commenement. Say as of 1/1/2011 employee has avg comp of 120,000 (counting comp for 2009 and 2010 after plan freeze). Question is: Should late ret act increases be limited to 100k or 120K? that is, can hi 3 comp limit increase after plan freeze from 100k to 120k?

Thanks. No worries, we have already cited the cites.

For purposes of this post assume no credit balances exist. 430©(6) says that if the funding shortfall is zero all prior bases are considered fully amortized and be zero. In this calculation for 2010 is the FT computed at 100% or the transitional 96%? 430©(5) exemption of shortfall base: 430©(5)(B) Transition rule: provides that the applicable percentage (i.e. 96% in 2010) of the FT is taken into account for purposes of paragraph (3)(A). Paragraph (3)(A) of section 430© is "the funding shortfall for such plan year". So if the 96% is applied in (3)(A) this could provide a situation (and does) where at 100% of FT plan has a shortfall and at 96% of FT plan has a zero shortfall. And if there is no shortfall all bases are zero. The above seems to raise a case for using 96% of FT to determine the funding shortfall (not just for purposes of a current year exemption), however, the Schedule SB seems to indicate that the 96% of FT is only applicable in determining if there is a current year exemption and is only applied to funding shortfall if there is NO exemption. So there is the no man's land when there IS an exemption and then the shortfall may (or may not) need to computed using 100% of FT. thanks.

the EA regs now require 2 credits of ethics. I have not seen any such course offerred yet. Has anyone identified where such ethics courses are offerred? Thanks.

A company sponsors a db plan and a dc plan. The company contributes more than 6% of covered comp under DC plan thus the combined limit applies. The amount contributed to dc plan above 6% is 20,000. Say the minimum DB funding is computed to be 200,000. Say the 31% of aggregate compensation is 150,000; so the minimum is greater than the 31% total limit. The DB plan has a large pre funding balance of 100,000. Presumably if the DB plan contributes the 200,000 it is deducted, but the 20,000 excess discussed above would not be deductible. However, say the contribution made to the db plan is only 180,000 where 20,000 of pfb is used to meet funding requirement. Note the 180,000 still exceeds the 150,000 or 31% limit. Of course the 180,000 contribution to db plan is deductible. Since the minimum funding was 200,000 does it follow that the 20,000 excess contribution to dc plan can now be deducted reaching the grand total of 200,000? 404(a)(7)(ii) says amount of contributions to db plan to extent it does not exceed minimum funding requirement. So this seems to mean only the contributions to db plan are deductible in this case and not the excess dc contributions. Any thoughts on whether the 20,000 to dc plan can be deducted? thanks.

A calendar year plan has an upcoming term date of 6/30/2011. It has used a 12/31 val date for past years. For 2011, to my knowledge the valuation date would have to be 6/30/2011 until and unless we find out that there is automatic approval for change in val date to say 1/1/11 in this case. Has anyone heard anything new about auto approval for change in val date for 2011? thanks.

a plan has a positive funding shortfall eg. FT = 300,000 Assets = 320,000 PFB = 50,000 FSF = 300,000 - (320,000 - 50,000) = 30,000 So prior base is maintained and not wiped out. PV of future amort installments of prior year base = 50,000 New base exemption calculation (portion of pfb used for funding) = (.96 * 300,000) - (320,000 - 50,000) = 18,000 So new base is = 18,000 - 50,000 = -32,000 i.e. a negative base. If instead the FT were 280,000 the new base exemption would = (.96 * 280,000) - (320,000 - 50,000) = -1,200 thus there would not be a new base established. In other words if the FT were less (i.e. a better funded plan) they would not have the negative amort base as created above and thus have a higher funding requirement. The prior bases would not be wiped out and there would not be excess assets to reduce target normal cost as follows: 280,000 - (320,000 - 50,000) = 10,000 So, in conclusion, a poorer funded plan would have a lower min req cont. I realize they can reduce pfb to increase assets and avoid above situation, but it still seems a bit quirky.

if a plan sponsor changes valuation date from 12/31 to 1/1 for the 2010 plan year my understanding is that such change would be acceptable as provided in the 430 regulations. And as a result when completing line 8 of Form 5500 Schedule R it would be checked as "N/A". Does my interpretation seem on point? thanks

One last practice pointer: Does it seem reasonable for a plan to freeze accruals, or better yet define future accruals as 0% of a plan year's compensation for a benefit that is earned annually and: enable participant to continue to earn years of participation/service for 415 purposes? thanks.

thanks, makes sense. So the 415 limit can be increased if paid as an annuity.

A plan freezes their benefits as of 12/31/2007. Only one participant in plan. As of 12/31/2007 the participant has a monthly benefit of 8,700 and the 415 limit of 100% of avg comp is 9,000. Dollar limit much higher. As of 12/31/07 the participant is also at her NRA. The plan provides under its fresh start rules that if frozen benefit is limited by 415 it shall increase after such date in accord with increases in 415 limit. Plan also provides that late ret benefit is calculated each year as greater of actuarial increase benefit from prior yr and actual AB. So, as of 12/31/08: The actuarial increased ben would be greater than 9,000 and 415 comp limit is 9,000. So what is AB at 12/31/08? I presume 9,000 (or should 9,000 be increased for 415 increase?). If benefit was already 9,000 as of 12/31/2007 then would max benefit be increased for cost of living increase under 415 (i.e. 9,000 *185,000/180,000)? Now for 12/31/2009: Say benefit is 9,000 as of 12/31/2008. Could we increase 415 limit of 9,000 benefit by COLA (195,000/185,000) and compare to actuarial increased benefit and use lesser of the two? Or is AB still 9,000? Of course benefit would not increase after 2009 since there have been no increases to 415 dollar limits. Any thoughts? thanks.

say a 401k profit sharing plan is top heavy. the employer does not make any discretionary profit sharing contributions for 2010 and the plan though not safe harbor passes adp test by having hce's take back some of their deferrals. since the employer contribution is $0 (only 401k deferrals made) are they required to make a top heavy contribution? i didn't think so since the maximum employer contribution for a key employee is $0. thanks