Blinky the 3-eyed Fish

Why do you think Holland or anyone else at the IRS has reversed their position on this matter? It's a simple concept that if the plan terminates prior to the effective date of legislation, then that legislation doesn't apply to the plan. I am confused why this is confusing. Do you have a sample PPA amendment or 415 from your document provider? That too should illustrate this point by only applying those provisions in the amendment effective before the termination date.

I don't think we are speaking the same language. If you compute an non-precise number, that by definition that is a range certification. So by example, if you compute the estimated number to be 72%, then you have effectively created a range certification from 60-80%. Your final certification must be within that range or see Mike's comment. "For the application of S436, what's the difference between saying 59% Vs less 60%? Or 79% vs. between 60-80%?" Nothing when doing an estimated calculation.

I am curious how others are doing the calculations when the assumed payout is a lump sum. 415 benefit limit BOY = 18,500 415 lump sum limit BOY = 165,000 Plan benefit (w/o limiting to 415) = 19,500 Plan benefit lump sum (again w/o limiting benefit to 415) = 168,000 Plan benefit lump sum (if first limiting benefit to 415 of 18,500) = 159,400 So the question is would you limit the benefit to the 415 benefit limit and then take the lump sum value of that and compare it to the 415 lump sum (i.e. 159,400 vs. 165,000 = 159,400)? Or would you just compare lump sum limits (i.e. 168,000 vs. 165,000 = 165,000)?

Boy val with a 2007 AFTAP around 65%. The sponsor has some participants that they want to pay out lump sums so we are working on getting the 2008 AFTAP done. Let me know if you find fault with this logic. 1/1/08 funding target: 500,000 1/1/08 assets (not including 2007 receivable): 300,000 12/31/07 CB (without 2007 receivable): 0 Client contributes 100,000, creating a 12/31/07 CB of 100,000. AFTAP would be: (400,000 - 100,000) / 500,000 = 60% However, the 100,000 CB is required to be burned to bring up the assets to 80% and lump sums can be paid. Sound right?

1. See Tom's explanation as to why it's not. 2. Favour?

Ak2, can you help fill in the blanks because I am not following? My goal is just to figure out how to fund the full cash balance in the first year of the plan in a situation where the interest crediting rate is less than the effective yield curve. Ignore the cushion amount since technical corrections haven't passed yet. The way I read 404(o)(2)(B) (special at-risk rules) is that the target normal cost is determined as you would for any other purpose. In other words, the special 430(i) loads or assumptions do not apply. (The funding target is determined as if 430(i) applies but of course there is no funding target in my little example.) So, can you explain in more detail how the funding can equal the cash balance?

A range certification is merely a non-precise calculation of the AFTAP. So if you want to do what you are calling an estimated AFTAP, well then the final AFTAP better be within the appropriate range (<60, 60-80, 80+) of that estimated AFTAP.

Two questions: 1) How would it be discriminatory? 2) Are you British?

I have to think the forms will be available from those companies within the appropriate 90 day time-frame.

Look at the 2007 Form 5500 instructions. It states that there is an automatic extension until 90 days after the 2008 forms are available.

That ship has sailed.

First, I assume you are following your document. Second, because (a)(4) must be passed both with and without the QNEC, you do have a non-safe harbor allocation without the QNEC and must run the general test.

The otherwise excludable group DOES NOT have to get the gateway. (Assuming of course you aren't testing that group on a benefits basis.) It doesn't matter if they are getting TH or SH or a punch in the face or a bike for Christmas or a gold star or cavities or a bad haircut or a purple monkey dishwasher.

Even if the TPA issues a 1099 in 2007, why can't the participant have his CPA create a corrected 1099 that effectively wipes it out? Then everyone is happy.

Benefits of two separate DB plans sponsored by the same company need to be aggregated for 415 purposes. Whether it makes sense or not to have the two plans depends entirely on facts unknown to me.

I am not up to speed on this yet so I have just two limited thoughts. 1) I had heard Holland saying that COLA increases counted as amendments within the last two years, but does anyone agree with this? I certainly don't. 2) Adding the TNC in calculating the cushion amount is part of technical corrections.

The statutory rule is that if you disaggregate the otherwise excludable employees for testing purposes and you aren't testing the otherwise excludable group on a benefits basis (you most likely aren't because there probably are just non-highly compensated employees in that group), then you do not have to provide the gateway minimum to that OE group. Of course check the doc to make sure it allows this.

Very well could be a ASG. Probably not a CG. You don't and probably can't provide enough info to be sure. Do any of the entities have NHCE's, including the spouse's LLC?

I am confused. If the plan has that last catch-all "any other immediate & heavy financial need as determined by the administrator in a uniform non-discriminatory manner", does it really have safe harbor standards then? Seems to me it's safe harbor standards plus a little more, meaning it's not safe harbor standards.

Mike, I know, you know and the IRS knows that if a single participant has a fluctuating contribution credit, that participant is the one making the decision. The question is do they care if the decision is documented as an entity level one? Because you never seem to know what you get with each IRS auditor/reviewer, I encourage less frequent changes. By the way, what is your answer if it's a partnership? Gary, you don't have 411(b) problems because an amendment is considered as if it applied for past years.

The restrictions apply as of the first day of the fourth month (4/1 for a calendar year plan) if no AFTAP is certified. Now whether or not you care boils down to a few things. Is the plan in an adverse situation if the restrictions apply to it solely because the AFTAP wasn't certified? As Andy states, if the plan isn't 5 years old, benefits are frozen. Everything I have heard to date is that the unfreeze after the freeze will count as an amendment in the last 2 years for the cushion amount. For a small plan, this generally is of importance to preserve the highest maximum deductible. Also, as Andy states from the first day of the tenth month through the end of the year (10/1 - 12/31 for a calendar year plan) you can't certify to anything, so you are in a period of limbo. In any plan where there are participants, I believe you put yourself at risk should a person not be able to get his distribution solely because the AFTAP wasn't certified when all information was available. Lastly, there are actuarial standards to consider. Are you required to perform the certification if able to do so? The jury's out on this.

Not the latter as of right now (I mentioned it's part of technical corrections). I don't have time to go through the references though to demonstrate it.

The same 5.5% applies. The change to the new mortality table from 94 GAR has not yet happened but my understanding it's part of technical corrections.

Your last comment only applies as a rule under 401(a)(26) in an offset plan situation. Benefits must be uniform in the DC plan to allow a person's benefit in the DB plan to be considered without regard to the offset. There is no mention that this is an offset situation.

You don't have to even state the mortality and rates used if you give the option for the participant to request the information. I doubt you would know the marital status and spouse's date of birth for people beforehand anyway, so you already have to give them the right to request a more specific calculation. That's why to me it seems easier to treat the mortality and interest rates the same way.