Blinky the 3-eyed Fish

I can direct you to the plan document.

Why wouldn't you just have them sign an 8905?

I don't like the use of Sal's option 1 unless you account for that contribution and salary in testing in the year of termination. If you don't account for those dollars, you have contributions that go untested and that bothers me.

1/31/07 is the deadline from everything I have read. I assume you adopted an EGTRRA document.

For a new plan you can elect to make the premium snapshot date either the adoption date or the effective date. Thus, it's a no-brainer that you make the premium snapshot date the effective date of 1/1/2006 and you have no premium due the first year because no benefits accrued as of that date.

Try reading 1.401(a)(9)-6. Where did the avatars go? I miss my fish.

Bird, I was responding to to J2D2's post.

There is no question the person is terminated and must receive the RMD.

Note that if you amend the plan, you will have to submit the amendment to the IRS by the end of the remedial amendment period.

Andy, you are thinking of 1.401(a)(4)-9(b)(3) copied below: (3) Optional rules for demonstrating nondiscrimination in availability of certain benefits, rights, and features--(i) Current availability. A DB/DC plan is deemed to satisfy section 1.401(a)(4)- 4(b)(1) with respect to the current availability of a benefit, right, or feature other than a single sum benefit, loan, ancillary benefit, or benefit commencement date (including the availability of in- service withdrawals), that is provided under only one type of plan (defined benefit or defined contribution) included in the DB/DC plan, if the benefit, right, or feature is currently available to all NHCEs in all plans of the same type as the plan under which it is provided. (ii) Effective availability. The fact that it may be difficult or impossible to provide a benefit, right, or feature described in paragraph (b)(3)(i) of this section under a plan of a different type than the plan or plans under which it is provided is one of the factors taken into account in determining whether the plan satisfies the effective availability requirement of section 1.401(a)(4)- 4©(1). Here is some of 1.401(a)(4)- 4(b) (b) Current availability-- (1) General rule. The current availability requirement of this paragraph (b) is satisfied if the group of employees to whom a benefit, right, or feature is currently available during the plan year satisfies section 410(b) (without regard to the average benefit percentage test of section 1.410(b)-5). In determining whether the group of employees satisfies section 410(b), an employee is treated as benefiting only if the benefit, right, or feature is currently available to the employee. (2) Determination of current availability-- (i) General rule. Whether a benefit, right, or feature that is subject to specified eligibility conditions is currently available to an employee generally is determined based on the current facts and circumstances with respect to the employee (e.g., current compensation, accrued benefit, position, or net worth). I have always had the same vesting schedule in the DB and DC plans because there was no reason not to. We have many clients that have existing DC plans that want to add a DB plan. A CB plan often is the best solution, but they wouldn't want to change to a 3-year cliff in the DC plan. Now I am searching for answers on this question too. In situations where the HCE's are getting large DB amounts and the NHCE's are getting the bulk of their benefits in the DC plan, I am not clear whether the IRS would consider this currently available. That old facts and circumstances is a bear to interpret. And of course effective availability can't substantial favor HCE's.

ak2, you are dead on with your observations. Pippins promised in July the IRS would come out with some guidance in this area. Someday I guess... Dave, get an FDL.

The 401(a)(9) amendment deadline for DB plans is the end of the EGTRRA remedial amendment period -Rev. Proc. 2003-10.

You lost me with that last sentence. How is spousal consent not required when payment is made in a form other than a QJSA? Sorry, I saw a phantom "not" in your post. I am reading too fast. We're good.

SoCal and flosfur, the J&S will not provide a lower payment than a term certain. Also, a term certain without life contingencies doesn't have the reannuitization restrictions. Henceforth, I asked my question why J&S. Andy, how would you differ as to what I said? Flosfur posted while I was. In answer to the question why spousal consent, it is needed if the payout is not a QJSA. I didn't look into whether a J&S with a COLA increase would be acceptable. I would actually assume that it would be fine, but was just throwing out the thought.

Yep, you are right.

Bird, good point about not being able to defer more than 100% of income. I agree with your total contribution result but it should be $4,275 in PS $15,000 in deferrals and $2,100 in catch-ups.

No offense, but I don't think you are informed enough of the rules to make such a recommendation. A person more familiar with what austin is saying should be involved.

Neither. First, you must reduce the net earned income by one-half of self-employment taxes. 23,000 * .9235 * .0765 = 1,625 23,000 - 1,625 = 21,375 Allowable deduction of ER contribution is 25% of earned income. Earned income is reduced by the ER contribution. Therefore - 21,375 *.2 = 4,275 = allowable employer contribution Check - (21,375 - 4,275) * .25 = 4,275 Catchup contributions don't count against the 415 limit, so total allocation are $15,000 - 401(k) deferrals $5,000 - catchup deferrals $4,275 - employer contribution $24,275 - total

1. Yes 2. The participant needs to complete standard election forms choosing that annuity form of payment. Spousal consent is needed if not the QJSA. The plan needs to allow for that option form of payment. Just curious, but why are you thinking an increasing 100% J&S annuity is a good choice? What is your goal?

Irrespective of the estate issue, she is an HCE for 2006 because of ownership by attribution in 2005.

If your DC contribution doesn't exceed 6% of salary, 404(a)(7) doesn't apply. It doesn't matter if someone is considered a beneficiary or not. Doug, your first example had no contributions to the MP plan. WDIK's response is correct. In your second example, will contributions be over 6% of salary?

I bet Moe2 would have known the answer to the question.

It's not allowable. Someone else is going to have to track down a cite though.

He can deduct it in a future year when there is a difference between the minimum required and maximum deductible contribution. Because of the new PPA max deduction up to 150% of CL, this is most likely to occur in any future year in which he has enough earned income to sustain the deduction. For example, assuming he has plenty of earned income in 2006, let's say his minimum is $100,000 and his maximum deductible is $200,000. Well, he could contribute up to $149,000 but deduct the full $200,000. To answer your second question, yes, it is taxable to him despite the fact it was never deducted. There are prior board discussions on this question.

Carol, to be clear, contributing to a SEP and a qualified plan in the same year is allowable. You are confusing the rules that apply to SIMPLE plans. The issue here is the SEP contribution probably caused the DB opportunity to be lost because of 404(a)(7). Also, non-deductibility is not a mistake of fact that allows legitimate removal of contributions, so while I didn't research the PLR you reference, I doubt it applies.