Blinky the 3-eyed Fish

If they are not classified as QNEC's, they can be used in nondiscrimination testing.

You fail 401(a)(26) if Z is not in the DB plan accruing meaningful benefits. Z is an HCE and key. He is a 100% owner. You don't water it down.

The solution is to make the plan effective 1/1/07 and the 401(k) portion of the plan effective 1/1/08.

I agree. In this case with no ER contributions going to the associates' plan, they are not counted at all in the employer's deductible limit.

The plan document of course will control and I would recommend reading it carefully. That being said, the typical fashion in which this works that I've seen in documents would be to first determine the benefit without regard to the fact she took a prior distribution. Compare the plan benefit earned and the actuarial equivalent of the benefit for being past retirement age (this can be calculated different ways too depending on the doc). Take the greater of the two. Reduce the amount for the actuarial equivalent of the benefit paid. If her compensation earned after coming back in 2001 would have affected her benefit, she would be due an additional amount. Again though, check the doc.

SVP, you can't make sweeping comments that all required amendments get 411(d)(6) protection. Some do and some don't.

One could attempt to argue that or one could re-draft the amendment to be specific so one doesn't have to argue anything because it is clear to everyone. By the way, from the wording of the amendment you shared, I wouldn't attempt to argue the position they aren't participants for purposes of additional funding.

I haven't seen any guidance on the name issue (but I haven't really looked). Is there anything?

I agree with that interpretation. Just playing a little devil's advocate. Fully-insured plans stink. I don't want a yacht anymore.

And here is that language from 1.412(i)-1(b)(2)(v): "Except as provided in the following sentence, all premiums payable for the plan year, and for all prior plan years, under the insurance or annuity contracts must have been paid before lapse. If the lapse has occurred during the plan year, the requirements of this subdivision will be considered to have been met if reinstatement of the insurance policy, under which the individual insurance contracts are issued, occurs during the year of the lapse and before distribution is made or benefits commence to any participant whose benefits are reduced because of the lapse." Please give me your thoughts as to why you feel so strongly that the premium payable for the plan year in my example means the plan year is 2006.

A calendar year fully-insured plan begins in 2000. The sponsor makes their first annual premium payment in September 2001 and deducts it on their 2000 corporate return. This pattern continues. Then when it comes time to make their premium payment due September 2007, they cannot do so. My question is when is the plan considered to have lapsed from being a fully-insured plan - 2006 or 2007?

In response to how you could amend out those that entered the plan after it was frozen, how about excluding "those participants who did not enter the plan before XX/XX/XXXX"? Then the $0 benefit people are no longer participants and don't have to receive SPD's, etc. It would be the same concept if a plan suddenly excluded a class of employees.

I think you can point out the absurdity of the prior TPA's position to them with a simple example. They divided the plan into 2 components with HCE's and NHCE's and considered them separately. Instead why didn't they divide the components with all HCE's in one and all NHCE's in the other. That would pass under their line of thinking automatically every time. Then why wouldn't they do that for all their plans. Wow, now every single plan has no possibility of being discriminatory. Those long (a)(4) regs are just a silly waste of time I suppose. Freedom for all plans is here because this TPA has found the perfect solution! Ridiculous.

Two things struck me about the prior posts: 1) I didn't realize some people had issues with whether or not a person with zero benefits constitutes a participant for PBGC premium payment purposes. 2) Even if a plan didn't freeze participants, they could always do so immediately, effectively kicking out those people with zero benefits from the plan. It's a correctable situation because eligiblility is not a protected benefit.

If participants don't respond and their balance is over $5k, they get the QJSA form of benefit and that's it. Their choice to take a lump sum ended with their lack of response.

The calculations of the ABT must use a compensation that satisfies 414(s). Absent a plan provision mandating compensation for this purpose, you can certainly use comp from entry for both divisions. It doesn't matter what the plan uses for allocations.

My understanding is the actual deadline is the due date of the tax return for 2006. Of course, the new 401(k) regs must be satisfied. I don't recall any special 411(d)(6) protection, so you very well could end up with a very large QNEC that must satisfy both the document and the new 401(k) rules.

Logically why would you include someone in the denominator who has no chance to be included in the numerator? It doesn't make sense to do that and by doing so you are watering down the fraction. I can't see arguing the determination is made any other way than considering active (i.e. people employed) participants.

There is no RMD for 2007 under the plan. Keep in mind that the IRA now has the assets and he will take a 2007 RMD from that source, so it's not like he's getting away with anything. The litigation proceeds are treated simply as investment gains that will be picked up for RMD purposes in 2008.

What does it mean that you can't support a QJSA benefit?

My recollection is a loan to the plan lasting over 3 days is a prohibited transaction. Whose idea was it to loan money to the plan?

I am confused too. If the plan has no participants, how is it covered by the PBGC?

I like it when we agree. Let's hug now. Grab my fins.

I have the exact opposite opinion. I would get a FDL on every offset plan.

Did you not get a determination letter covering (a)(26) at the onset of the plan? Also, this whole reasonable and unform issue is still up in the air, so why not wait until it's resolved? That being said, I can tell you with certainty that the proposed correction will NOT be to give shareholders more benefits.