Blinky the 3-eyed Fish

FWIW, I agree.

Interesting IRS position on when the restrictions apply. When did they say that? Since I wrote my last post, I re-stumbled upon the 10/4/07 ASPPA ASAP stating that it appears a certification can cause for earlier restrictions. Was the IRS' position stated after that since the authors of that ASAP hadn't taken that position? You do make a good point about perserving the FSCB if needed. Of course notices and restrictions will apply until the 2008 certification and that may be undesirable. I am still avoiding that range certification if possible. Maybe though if a client commits to a contribution for 2007 knowing the ramifications if not made, that could prove useful. I am just trying to continue my streak of not disqualifying any plans.

True you can use the receivable, you just might not know what the receivable is and that could be the determining factor as to whether or not you have enough FSCB to burn. As to your next question, it seems to me that the certification prior to 4/1/2008 triggers the restrictions at that point in time potentially. I am reading in the 8/31/07 proposed regs that the mandatory reduction of the FSCB occurs on the date when benefit restrictions apply, the 436 measurement date is the date that starts or stops the application of limitations for 436(d), and the EA's certification in the first 3 months of the following year is a new 436 measurement date (i.e. sometime from 1/1/08 - 3/31/08 for 2007 AFTAP). I don't see any special provisions for this first year that offsets this, but I haven't gone through it all enough to be sure it isn't there.

Boy val with a 2007 AFTAP of 79% is certified 3/1/2008. The plan offers lump sums so it must burn the FSCB at that very moment if that will bring the funding status up to 80%. Without a 2008 AFTAP, the deemed AFTAP will be 69% at 4/1/2008, so again more FSCB is burned to bring up to 80% (if available). However, it's very probable not to know what the FSCB is before 4/1/2008 to know if restrictions apply. My assumption is that without the information, one must assume that there is no FSCB available to burn and restrictions apply. Once the information is then known and if the FSCB is sufficient, restrictions can be lifted. How are other people handing this? I am trying to avoid any range certifications at all cost.

I guess what I didn't look at closely, but have now is as Mike says, the amendment increases only affect the cushion amount. Since the increase in the funding target increases are all able to be flowed into the maximum deductible amount, my original question is moot. Thanks.

I will knock them because they deserve the knocks. If I were to spell out all the problems we've had, I would write a novel. We are switching firms with the EGTRRA DC restatements.

1/1/08 Funding Target (pre-amendment) = 240,000 1/1/08 Funding Target (post-amendment) = 290,000 1/1/08 Assets = 180,000 CB = 0 AFTAP pre-amendment is 75% so the amendment is allowable if the increase in the funding target is contributed but doesn't count toward the minimum required contribution = 50,000 Minimum required contribution = 150,000 Maximum deductible contribution = 150,000 (i.e., not higher than minimum which would be common in a situation increasing benefits for HCE's) Thus, it would seem as if the only amount that can be deducted is 150,000, yet the total amount contributed is 200,000.

Sample owner-only plan has an AFTAP between 60-80%. The desire is to amend the plan to increase benefits retroactively and prospectively. Of course under 436© to allow for the amendment a contribution equal to the increase in the amendment's increase in the funding target must be made. This contribution can't count toward the minimum contribution. Let's assume the maximum deductible contribution is equal to the minimum required because we can't considered increases in benefits for HCE's in the last two years. It would seem then that the amount required to fund the increase in the funding target is not deductible in this year. This of course makes sense or one could easily skirt the two-year requirement. Anyone disagree? I would presume the 436 contribution would be a carryforward deductible in future years as allowable and that no excise tax would be required. Of course I haven't lengthened my research to that yet.

What are others doing? I suppose you could take the argument that there is no funding target and therefore no funding shortfall and therefore no late quarterly. I am not inclined to do that though.

Does the attorney really believe he needs to amend the plan for provisions effective post-plan term? If so, may wisdom be suddenly bestowed upon him. If not, and he is submitting to the IRS, why wouldn't he amend the plan how he feels it should be amended and if the IRS doesn't like it, he can change it. That is one of the perks of the submission after all.

Any updated/additional thoughts on how to determine if quarterly contributions are required for 2008? My inclination would be to measure 2007 CL and assets to determine if there is a funding shortfall, but of course this is not in the Code. I see guidance nowhere.

I have never, and I mean EVVVVEEEERRRRR, heard another interpretation and gladly so. It is entirely too logical to think that law changes would not apply to a plan after it had been terminated. (If anyone gets the source of that quote from my first line, I will be impressed.)

It's a general rule that if a plan terminates prior to the enactment of a law change, that plan is not subject to that law change. There has to be many threads here that bring up that if you want to search. Me no time to.

The plan terminated pre-PPA and thus PPA changes don't apply to it. On a side note, I have heard some argue that for all plans the restrictions do not apply once the plan has been terminated. There's nothing definite on this though and can't remember if this is a technical corrections inclusion. Of course it makes sense.

Assuming your termination proceedings actually included a resolution to terminate the plan, well the plan isn't subject to any of the AFTAP crap.

Plan provides SH match 100% first 3%, 50% next 2%. They want to provide an additional match that avoids the ACP test. I understand this additional match must be limited to 4% of pay per person and be based on comp no greater than 6% of pay. My question is this: does the plan explicitly need to have a formula that caps compensation or otherwise spells out a match formula? The current language is very flexible discretionary language with no references to a formula or cap.

Well I could counter argue that it is being allocated in the plan year of transfer and that you certainly can't allocate it "in" a year prior to the transfer. It's just being allocated for the prior year. I could too argue that the language "in the plan year in which the transfer occurs" is the first option because the second option is to set up a suspense account if all the money is not allocated in the plan year of transfer, and that the language "in the plan year in which the transfer occurs" is merely a mechanism to distinguish it from the suspense account option. Of course I don't really know or I wouldn't have posed the question.

I mentioned the 404(a)(6) timeframe because allocations of excess assets in the DC are annual additions and you can't have annual additions past the year of termination. That's all. As to your other points, forget about the suspense account. I am not concerned with a 7-year window, when there is only an immediate window. I didn't quite understand why you don't think it will pass muster.

DB and DC plan are both terminated 12/31/2007. DB plan may have some excess assets. PS plan will have an employer contribution for 2007. If the excess is transferred to the PS plan (a qualified replacement plan), there is the requirement from 4980 below that the DB plan allocate the excess assets in the plan year the transfer occurs. (Obviously, there is can't be a suspense account with the PS plan terminated, so that option is out.) © Allocation Requirements. -- (i) In General. -- In the case of any defined contribution plan, the portion of the amount transferred to the replacement plan under subparagraph (B)(i) is -- (I) allocated under the plan to the accounts of participants in the plan year in which the transfer occurs, or So does anyone see a problem with using the excess to reduce the 2007 contribution deposit assuming the excess is transferred to the PS plan within 30 days of the due date of the tax return so it counts as a 2007 annual addition?

What story are you looking for? A gateway amendment is only needed out of necessity where the gateway minimum is required and you have no way under the plan to provide the proper allocation. What I don't know is if LRM's for EGTRRA restatements will require gateway language in docs.

General test initially fails and the cheapest solution is to do an -11(g) amendment to bring in a new hire who otherwise is not eligible. My opinion question is this: let's say the amendment simply grants employee X as eligible. Who are now the non-excludable people for testing, keeping in mind that when you have two separate eligibility requirements, the lowest rules? A. Is eligibility immediate and everyone is in the test? B. Is eligibility whatever minimum would let employee X in and those who were hired before in the test? C. Does the test just include everyone in the original test and now employee X? D. Other What if the amendment were crafted differently and granted a year of service to employee X? Would that change your answer?

I always forget who people's real names are. I am telling you about a webcast in which you are speaking. I feel silly.

The comments I heard did not support his approval of that concept. I did directly ask him that question. Maybe they will address questions asked and print some tangible answers.

He didn't answer me directly, so what you heard is what I heard. What was your idea?

There's webcast with Jim Holland in a little over an hour. It's on funding, but I am going to pose this question and see what he thinks.