Blinky the 3-eyed Fish

True, an -11g would be an exception. Of course that deadline has passed in the example.

Don't insult me.

Think of what you are testing in a DC plan - annual additons. If it's not an annual addition, it isn't in the test for the year.

No is correct.

Care to elaborate? I am curious.

Actually I believe the letter of the law allows you to convert a DB into a DC plan. However, with the 411(d)(6) issue of perserving DB benefits in a DC environment, it makes absolutely no sense. It is much better to terminate the DB and start a new DC plan.

I answered the criteria in my last post. To the second question, the answer is no. Vesting and eligibility credits, yes. She is not an excludable employee and thus is in the denominators of the 410(b) calculations, yes. Yes. Sigh. I won't spend too much time on this. How about this example, related employer with 2 plans. Vesting and eligibility for both plans count while performing service for either related employer by statutory rule. Is each person who met the eligibility requirements a participant in BOTH plans? No. Same question if union and non-union. Same question if in an excluded class. It's the same! Huh? Your position is that vesting service is credited service and vesting service continuing to accrue means that they are in employment covered under the plan, then how is the first not met by the second in your world? What did I mis-state?

Your hang-up is employment covered under the plan. Recall the instructions that states "active participants include any individuals who are currently in employment by a plan and who are earning or retaining credited service under a plan. You asked "How does someone who is excluded not meet the "...currently in employment covered by the plan".", because they are earning vesting credits. But that is not the criteria for "in employment covered under the plan." This instead is referring to those who are eligible to participate in the plan (i.e. not excluded). Try asking yourself why would the instructions say AND if the first stipulation was automatically satisified by the second? Then I am hoping this will make more sense.

My last post was short and unclear. Part of credited service is vesting service and of course that continues to accrue if the person is employed but excluded from the plan. No you don't wipe away the vesting service they earn. Additionally, if they continue to work for the employer, they continue to earn vesting service. I went and looked up the 5500 wording and to be an active participant the individual must be currently in employment covered by a plan. Thus, if you exclude that individual, they don't meet that criterion. Active participants also include nonvested former participants who are earning or retaining credited service. However, if the person has no balance, they aren't earning service toward anything and are not participants any longer as stated in the next sentence on the instructions. The eligibility and vesting work the same way by simply excluding someone as the way it works if a plan covered only non-union employees and a person went union. They no longer are an active participant. They continue to earn vesting credits. If they have a balance in the plan, they are now terminated vested participants. If they have no balance in the plan, they are no longer participants at all. Does that help?

If excluded from the plan, they are not earning credited service under the plan.

Roth counts too as an annual addition and must be returned as a 415 violation in this case.

Something is correct.

The annual addition limit is NOT a per person limit like 402(g), rather a limit that applies to the plan sponsored by the entity, including plans sponsored by related employers. A person in two plans of unrelated employers effectively can double the 415© limitation. (edited because I mis-read the first post, )

Eligibility is not a protected benefit and therefore can be taken away.

You are getting technical on me pax. First, "deductions" and now cumulative. By 2% DB minimum, of course I mean the 2% per year of participation up to 10 years. I just didn't want to type all that. I didn't understand what you read differently though.

1.416-1 M-12, states that the 2% DB minimum can be offset by the DC balance to determine if TH is met. A literal reading is that the cumulative DC balance can be used. Thus, if the DC plan was around for years and years and the DB is new, a large offset is available for many. It's almost as if the DC TH is doing double duty and it doesn't make entire sense to me, but... Anyone disagree or know of a Gray Book answer either way?

PPA changed this when ER contributions to the DC are not greater than 6% of pay. I posted the language in my first post to this thread if you want to read it.

To further the point as to why an -11(g) amendment is not needed just for failure, consider there is the requirement for the amendment to separately pass coverage and nondiscrimination under the component plan rules. Thus, it infers you are able to give benefits to highly compensated employees as part of the amendment or it would certainly pass by default. If -11(g)'s purpose was solely to correct failure, there would be no availability to give HCE's additional amounts.

I will take Mike's opinion (I happen to have the same one) over TAG anyday.

I would recommend against trying to deduct the portion of the contribution generated by making the amendment until the following year. Otherwise, Mr. IRS may not like you.

Remember that the TH minimum is the lesser of 3% or the highest key EE %. So for 2007 if they limit the key employees' 401(k) deferrals they can try and lower their liability. If that is their objective that is.

The last sentence of Q&A - 9 states that 404(a)(7) applies only to contributions to the defined benefit plan. In your example, 25% was greater than the min or 100% of UCL. You are able to contribute up to 25% because of 150% of UCL but only up to 25% of comp to stay within 404(a)(7)

The answer I glean is the DB would be 25% of pay because the 3% DC would be disregarded. Since there is a DC contribution, the DB is subject to the greater of 25% of pay, the min funding or 100% of UCL. I agree the answer should be 40% from your example, but it's not, well, at least not right now.

Isn't "those plans" always following the mention of contributions to defined contribution plans? The wording of the code states that the 6% determination is based on benefiting participants in the DC plans, so I think Q&A 8 is consistent with the code. Thus if you have a participant only benefiting in the DB plan, you don't count his compensation in the determination of the 6% figure.

He responded to my email. Sorry I can't share the content but I am sure the word will get out soon enough. BTW, the explanation didn't change my mind. (Spelling error)