Blinky the 3-eyed Fish

I am wondering why a client is calculating their own contributions. Practioners that would argue this is a scrivener's error worry me.

I wanted to cover myself in case someone instead claimed rights to air. I need no air sucka!

So it just boils down to a MASD issue. No guidance so just do whatever you want. (Kidding.) David MacLennan (sorry if I butchered that last name) should chime in since he wrote those nice articles on the subject.

The idea that anyone has the "rights" to plan designs developed following the guidance of the IRC and Regs. is not possible. On a side note, I have the rights to air, so you all better pay me a royalty or stop breathing!

7.5%

Nifty formula. They didn't teach me that one at actuary school.

That is correct. I think I understand your issue now. You were going to be unable to produce an actuarially equivalent J&75% option because you had no table to make the conversion but you can produce it for the J&50% option. Do you not have stated actuarial equivalent interest and mortality in the plan document but rather some set of conversion tables?

How will changing the normal form to J&100%S help you since the QOSA has to be actuarially equivalent to the SLA?

A poorly defined document mandates comp for nondiscrimination testing. But assuming that is indeed the case, I don't see it as a cutback if changed mid-year. There is the argument for a QNEC cutback, but you don't have a set test yet, so I don't think it's a valid argument yet.

No, as far as the retirement plan goes the company can limit the HCE's as they see fit as long as they are following the plan document.

I am leaving and don't have time to look anything more up but I can tell you this for now. First, in the Overview and General Rules section G, it describes that the certification for the prior year is a 436 measurement date even if made after the first day of the fourth month. All I can say about the (h)(iii) applying to certain ranges, is that for any other AFTAP, the 10 percentage point adjustment wouldn't matter. Somewhere in the prop. regs. there has to be something more. But I will have to leave that for others to discover where.

No question the distribution was not permissible and notices were needed. 4/1 was the first 436 measurement date --- restrictions apply. The date of the certification was the next 436 measurement date --- restrictions lifted if sufficient.

You can definitely certify to the 2007 AFTAP now and the deemed AFTAP will be that less 10 percentage points. I even have a cite handy - Prop. Reg 1.436-1(h)(2)(iii). I agree with Zimbo's comments about how the doc should work. It should freeze automatically so why wouldn't it be made to unfreeze automatically. To do otherwise just creates more work.

Of course if you terminated the plan in 2005 and there is still money in the plan, you are past the one year deadline and the plan may not be terminated after all.

I have a thought: what cite allows you to do it specifically? I know of none, so I would only use actual compensation from date of entry. I can only imagine the software allows you to do it as a means of estimating the results.

This is an example of torturing the law to get a benefit for the HCEs (read money) that goes beyond the contractual intent of the employer as expressed in the terms of the employer's plan document. Ok. I can agree with that. But they are restored to a position of "unhurt" by relating the maximum age and service requirements allowed in the code to their (the employer's) participation guidelines as expressed in the plan for their company. What? 410b your comments make no sense to me whatsoever. I honestly have no clue what you are expressing here. I am quite befuddled. I now officially remove the tracking of this topic. This horse is beaten, shot, stabbed, burned, and the vultures have picked the carcass clean.

My whole issue with 410b is not whether or not his/her position is wrong, it's the fact that he/she is stating the other methodology is wrong. Sorry, it just rubs me wrong to see that sort of hubris (or ignorance). Mike, you have presented a sound reasoning for why the other position is plausible and the methodology many use.

410b, I fully understand you wanting to know the details, but don't you think it wise to take the advice of pension professionals who KNOW this stuff inside and out, rather than thinking you have solved this issue on your own? Listen to Mike (and others) or don't listen, but stop beating a dead horse.

Read Rev. Proc. 2006-27.

Answers found in IRC 416 and corresponding regs.

I was wondering how people are funding for lump sums at the 415 limit under PPA. There are 3 things to consider: 1) Plan AE 2) 5.5% and 94 GAR (maybe changes to '08 Applicable Mortality but not yet) 3) 105% of benefit using 417(e) rates 1) and 2) seem straightforward: compute the LS at the ASD and discount at the single segment rate to attained age (AA). But how to compute 3)? I can see three conceivable ways: a) compute LS at ASD using the deferred segment rates and discount from ASD to AA using the single segment rate * 105%; or b) compute the LS at ASD as if the person were the same age as on the ASD and discount from ASD to AA using the single segment rate * 105%; or c) compute LS at AA * 105%. Not to influence your answer, but I would pick a). Then take the lesser of 1, 2) or 3).

A quick read of the definition of normalization or normalize or whatever it's called in (a)(4)-12 will mention that a standard mortality table is acceptable. That should answer your first question that there is a mortality adjustment along with interest. As to the question about whether or not the normalization is affected if the DB plan has pre-retirement mortality or not, I say it does matter.

Ah, but your service eligibility IS more liberal because of the entry dates. You could have entry 6 months after satifying the 1 year of service requirement. You have monthly (or quarterly) entry dates. Does what everyone is saying make more sense now?

I can tell you two things: 1) Austin Powers will price each of his documents at One Million Dollars!!! Feel free to agree Austin. 2) Not a good idea to ask about pricing here.

I have to say I don't see the problem here. The max benefit is 50% of average comp. 3% of 50 is 1.5% so a participant can never have less than 3% of the max benefit times years of participation.