Blinky the 3-eyed Fish

So you didn't make changes to the prototype's standard language, correct? If not, then the question is do you want the IRS to rule on operational issues affected by the non-safe harbor definition of compensation. The ruling would be good for only 1 year, but would confirm your methodology.

I am betting they won't share that expense.

I see your point, but in this case an amendment to the plan reducing accruals to 0% was adopted. So, any issue of extending the plan year end would not apply in this circumstance.

Katherine, what possible conclusion could you envision the IRS reaching?

I assume this means it is fractional accrual. If so, I agree with what mwyatt says.

Your pre-1999 participant's accounts consist of no safe harbor nonelective contributions. You can identify the source of the contributions, so their vesting is determined under the provisions in the plan. In other words, they are not 100% vested. Now, for the other participants that received contribution post-1999 you have safe harbor nonelective dollars intermixed with regular profit sharing dollars. Obviously, there are different requirements concerning each source. You MAY need to go back and separate the sources, even if on paper. Making the regular PS dollars 100% vested is not enough. There are also distribution restrictions on the safe harbor nonelective contributions. These same restrictions must apply to the regular PS dollars if you can't separate the sources. However, if current in-service distributions are allowable for regular PS dollars, you cannot now impose restrictions and violate 411(d)(6). That is why I say you MAY need to separate the sources. So, in summary to the last paragraph, consult your document and weigh the issues on how you will track the sources.

Now let's be clear. The EXTENDED RAP ends on September 30, 2003 for 99.9% of the VS and prototype plans. For a plan to be granted the extended RAP, they DO have to submit to the IRS by September 30, 2003 if any modifications are made to the standard document language. If no modifications are made, then no submission is necessary.

It depends on what the effective date of the amendment to reduce the accrual rate to 0% is. In this case the last day of the plan year is 10/15/02, so if the amendment was signed and effective before then, then no contribution.

You mean 9/30/03.

Anyone know where he went?

Personally, I never have a set formula for how to handle different clients. One size does not fit all. I have found that EOY valuations work best for some clients, while BOY valuations work best for others. Though, I do like to start off with EOY valuation in general. You can always switch to BOY, but not the reverse, as flosfur mentions.

MGB and David, this is actually a takeover of a one-man plan. The sole owner "retired" and began receiving annuity payments on the plan's early retirement age while keeping the corporation active as a shell. The assets in the plan have been too great to pay out under the 415 limits, but with the EGTRRA increases, it may be possible now to distribute without a reversion. I am now attempting to calculate the maximum distributable lump sum, hence my original question. David, your methodology is what I was thinking as well, being that the dollar limit increases with age, while the value of the comp limit decreases with age. You wouldn't happen to know of any written guidance though?

Because the reg. references the highest paid 25 nonexcludable HCE's, the definition of restricted employee would include all nonexcludable members of the controlled group. That is my literal interpretation. What doesn't make sense is that this regulation is designed to protect the assets of the DB plan from being raided by the HCE's, leaving the NHCE's shorted. By including members of the controlled group in the restricted employee definition, who very well may not be participants in the plan, there is that chance that the 25 highest paid will be outside of the company sponsoring the plan. This would leave the NHCE's without the protection this rule is designed to have. But sometimes these regs don't make total sense, so I have to go with what is says, not what I interpret the meaning to be.

There is also the Rev. Rul. 2001-62 amendment that changes the applicable interest rate and mortality.

I didn't see the plan type was specified, but now I do in the first post.

A 60 year-old participant in a DB plan has been receiving annuity payments for the last 10 years after taking early retirement. The question is how to determine the maximum distributable benefit under the laws of the land under 2 different scenarios. 1 - The limiting factor is the dollar limit 2 - The limiting factor is the compensation limit Specifically, are the past annuity payments subtracted in determining the figure?

I now realize you were talking about the non-union plan. Nevermind.

I was concerned with the union plan's eligibility.

I am sure you know the 412 funding deadline is 9/15. I just thought I would mention it since I had a sole proprietor client fund on 10/15 based on his accountant's advice and contrary to ours.

Tell me about it. I had just had to inform a 3 person plan, where 2 of the participants are owners, that they owe a 4K premium. However, not one dime would be covered by the PBGC under any circumstance in this plan.

You don't state what the eligibility requirements are for the union plan or how long the employee has been employed, but are you sure he is not eligible? Service while employed under an excluded job classification counts toward eligibility. I don't believe there are different rules on this because the exclusion is union or non-union.

One argument for starting a new plan is that the participants with 3 years of service will have the right to stay under the old vesting schedule.

I am just curious what is meant by this paragraph. Are you saying the guaranteed benefit limitations affect the variable rate premium?

I think your getting ripped off. Shop around some more. Since you haven't even yet completed the 2002 5500 for these plans, you are certainly within the timeframe of reasonable for 2003.

I disagree. Just because it is discretionary does not give license to alter the provisions once a participant has earned the right to the allocation. With no last day requirement, it would seem we are past that point I assume. The hourly employees are already terminated, so we are talking about matching deferrals that have already taken place.