Jean

Any help with this test question: Compare a cash balance plan with a traditional DB plan with respect to the following: A. Calculation of accrued benefits. B. Earnings on plan assets. C. Actuarial funding. D. PBGC coverage. You must also describe the concept of "definitely determinable benefits" when applied to cash balance plans.

Point of interest regarding the 1999 form, it does not appear that the determination letter date is a reportable item on the revised form. The description of protoype plan has been expanded to include a statement that the plan is the subject of a favorable notification letter.

I have been searching for this same information but have not been successful. It seems that with so many national providers this would be a standard reference item for them.

Well, that's my first question too. Seems the thought process here is that by using the MP with a small % which you are comfortable commiting to, you can communicate the % to your employees. This is perceived by the employer as having a bigger impact than the PS because you don't commit (and if you do state in writing that a PS contribution will be made -- and the expected % -- then then you probably will be required to make the contribution). So if I adopt a 5% MP for 1998, can I pay 7% for 1998, 8% for 1999, 5.5% for 2000, etc.?

When you use the prior year test method you look back to the NHCEs ADP for the previous plan year. Because your test year is the first plan year, you have an assumed 3% ADP for the prior year. Therefore, your question would assume 3% + 2%

A calendar year 401k plan receives a profit sharing and match contribution after 12/31. If 5500 prepared under cash method is this contribution reported on 1998 form, or in the year received? Does it make any difference if this is a first year filing?

Would I need to include the $4000 in the top-heavy test?

Do most people include the amortization schedule with their loan documents? We would like to eliminate and include just the truth-in-lending statement (includes interest rate, interest $ collected, financed $, total amount paid, # of pmt, amount of pmt, pmt frequency), promissory note, and spousal consent form. Can't find where the amortization schedule is required.

A calendar year plan is established in 1998. The employee deferral and match are made every payroll and are programmed where the percentages are entered by a user. In October a key employee reaches his $10k limit and the user sets his deferral % to 0. However, the user failed to stop the match and an additional $4000 was contributed to the employees account. The error was discovered in 1999 and the $4000 was returned to the employer as an administrative error. The question is, should the money have been returned because the error was discovered in 1999? If it was not returned as an administrative error, the ACP and top heavy would have failed. ACP would have required a 1.5% QNEC and top heavy would have been 2.75%. It is the opinion of the administrator that this was a mistake of fact, and was handled correctly because it was returned prior to the March 15 deadline. Any thoughts?

We have a group of employees that plan to start self-study group for this exam in March. Have told them of this message board, so they plan to use it. Hopefully others will be able to benefit from Q & A's posted.

Agree with all these comments and is the action that we take. What protection is there for a record keeper who has advised the employer that they are wrong with their interpretation? Does a letter from employer stating they have taken CPA advise and choose not to make a contribution protect the record keeper (realizing IRS audit will probably confirm these points)? Or would you drop this employer from your service?

401(k) top-heavy test % is 60.71. The plan sponsor has decided (via CPA advice) not to make a top-heavy contribution because the ".71" can be dropped, thus resulting in a passing % of 60. CPA also stated it is up to employer to pick a method and keep it consistent year to year. Our consistent method has been to include the .71. Can not find any reference to state this is right/wrong. Any suggestions?