Blinky the 3-eyed Fish

How is the maximum reduced for a new DB plan from what was available before Notice 2007-28? Please give an example.

Ttott, just out of curiousity, how is Notice 2007-28 affecting your proposals? Before the notice, the IRS had stated all along that new plans were considered amendments for purposes of being able to fund 100% (now 150%) of UCL in small plans, so you wouldn't have been proposing that. You do realize you can still fund 6% in the DC if your DB is limited to the greater of 25% of pay, the min contribution or 100% of UCL? If anything, your proposals should be better as are the opportunities for DB/DC combos with PPA's passage. What am I missing?

IRS no likey. Me not buy.

And that is why he is correct.

Your first statement itself is not correct, but since there are probably key employees in both plans it does turn out to be correct that the plans will need to be aggregated. I agree with your conclusion that the TH minimum is required. An event after the plan year end would not change this fact.

I am surprised that something unclear in the code/regs is surprising.

Keep in mind the 25% limit still references employer contributions to both plans. You definitely count compensation for those that benefit under either plan.

Post-PPA just mandates the cash balance can't fall below the total of the contributions, i.e. no negative return and that no less than a market rate of returned must be earned. That being said, unless something screwy comes out of the defining of market rate of return, I don't see that tying the interest credits to psuedo investments chosen by the participants violates the definitely determinable benefit. The investments are chosen in advance of the interest credits given. The document would define how the interest credits are earned. How is this not definitely determinable?

I imagine they are given the authority via a Form 2848. Why do you think this makes the TPA a fiduciary? Is your answer the same if they sign the IRS submission forms and if not, why?

Words to live by.

The new 415 regs provide no different language than what Notice 87-21 did previously on this topic. One could argue it's impossible to be credited with at least the number of hours of service required under the terms of the plan in order to accrue a benefit for the accrual computation period if the plan is frozen. Because no matter if the participant worked 1 hour, 1,000 hours or whatever, they didn't accrue an additional benefit. Anyone want to look up a Gray Book answer on this?

The quick response is a PBGC covered plan must go through the process to have a valid termination. If you go off that path, you risk invalidating the termination, and if you do that, you most likely have plan distributions without a distributable event. That failure to follow the plan's terms could result in plan disqualification.

Both, the latter specifically because comp from date of plan entry satisfies 414(s).

Q1: I suppose it very well could if you spelled it out correctly in the amendment. What I would have trouble with though is if you could give the NHCE's the allocation without regard to the amendment. So in my mind it's questionable. Q2: That's right. And to pile on you aren't able to add back the sole prop to count the compensation for deductibility purposes since it's after the fiscal year. Long story short, it's no good.

There are numerous discussions on what constitues mistake of fact and whether contributions can be returned, so I won't answer that. Regarding the -11(g), remember two things: 1) the amendment in of itself must be nondiscriminatory and pass coverage. Your proposal does neither. 2) the extra contribution derived cannot be deductible in the prior plan year irrespective if you are trying to re-add back the sole prop as a plan sponsor, which is another issue.

Failure to follow the terms of the document is a serious violation, whether an HCE is involved or not.

I think we have to wait until market rate of return is defined before it's determinable what is permissible in a cash balance plan.

I tried to look up if there were any statistics but couldn't find anything. I have seen 2 LLC's taxed as corporations in 10 years and 50x that as partnerships, so I was surprised myself that you have different experience Effen. Regarding the last post, why is whomever saying there is no termination of service? It seems clear to me from your facts there is a termination.

Yes. Yes, as far as I know.

Yes. The same rules apply as if the participant were taking a distribution from the plan.

A very high percentage of LLC's are taxed as partnerships and so earned income is compensation for the owners. If however, it is taxed as a corporation, then the owners' W-2 wages are compensation.

J&50% basis is correct. I believe if you look in the 417(e) regs, you will find the cite. No time to search for you.

Ah, I see your point. That is truly poorly written.

Q&A-4 didn't surprise me as I never took it to be an end-of-year calc, but rather a calculation at the valuation date and rolled forward to the earlier of the end of the applicable tax year or plan year (a typical 404 calculation). Are you saying if it was a BOY valuation date, you considered compensation and census changes, a true EOY calc?

Just be kind when you find me.