Blinky the 3-eyed Fish

Hmm, can I just delete my answer? Yes, upon further reflection, I agree with you Belgarath. I still do think you have some very minimal concern with 2006 in making sure there is the room between the min and max. It's very minimal though because $100k will be a nondeductible carryforward that will reduce 404 assets and because you will have a large credit balance.

You are correct that it's only the maximum deductible contribution that gets interest to the earlier of the end of the fiscal year in which the deduction is taken or the end of the plan year. The minimum is always considered as of the end of the plan year.

Sure it's possible. However, assuming you don't have some "mistake of fact" mechanism to remove the money from the plan, for 2005 you have a non-deductible contribution to the plan and a nice 10% excise tax. You also need to be sure that there will be at least a $100,000 difference between the minimum required contribution and the maximum deductible contribution for 2006, so that you don't have another nondeductible contribution.

I will climb to the top of the mountain this weekend and ask the Buddhist monk in the big chair.

Well technically the 415 limit is based on the limitation year, so you could have a short plan year and a full limitation year and not prorate. The 401(a)(17) limit is based on the compensation period, so again, you could have a short plan year but a full compensation period and not prorate.

A prudent discovery on your part. It appears you have read through the information and discovered this restriction would apply. As you did not discover, there is no waiver to the restriction simply because of taking "varying" amounts. When the rule is applicable (i.e. plan underfunded as described), the HCE is limited to the SLA annuity amount annually, period.

PIP is correct that there may be severe plan ramifications. A loan in excess of the limits is a prohibited transaction that requires excise taxes to be paid and the correction of the transaction. You may also get into some anti-assignment issues if I recall. How about a hardship distribution?

I agree that technically there is a controlled group with under age 21 children. However, I would argue that is an unintended result of the code. After all, is their any logic to one situation being a controlled group versus another just because they have under age 21 children? Of course not. So, while I wouldn't dismiss the controlled group possibility because I don't agree with the law, I would certainly attempt to obtain an IRS ruling if it was important to establish that it wasn't a controlled group.

Thanks Tom! SoCal, I wasn't sure what your acronym meant, but I did look at the SOA table manager without luck. Update (10 minutes later): I found it on the SOA website. Thanks SoCal.

I have a takeover case and need to figure out how to create the RP-2000 Table with blue collar adjustment. The blue collar part is something with which I am not familar. Help! Also, anyone have Table T-8 handy if it's not infringing on any copyright laws?

Well, I think you mean to say that you want to limit KEY deferrals to 0% since you could have NHCE key employees. So you can surely do that and let the keys get their $4k or $5k each year.

Sure those allocations would be okay, but would probably be far more costly than necessary. You instead could give $x to EE1 and $y to EE15, whatever you need to give to one or more NHCE's to pass the test. Grazetti, be wary that the document already has fail-safe language in it that mandates to whom you provide contributions to.

I agree to not count on the proposed 415 regs until they are hatched. I do think though that any distributions, including minimum distributions, should reduce the dollar limit.

To the original question I have a citation for you, read Notices 2004-34 and 2004-78. I can't remember which, but one of them describes the rule. Thus for the UCL calculation you can use a rate as low as 4.59% for a 1/05 valuation.

Me saying that the loan can be secured by the rollover source is akin to saying that the rollover balance counts toward determining the vested benefit. He has $100,000 and therefore can take a $50,000 loan.

And the plan would have to pass coverage even with the waivers, so there is no difference than just amending the plan as PIP describes.

Yes, there is no prohibition about a loan being secured from a rollover source.

Effen, just me, the client and the CPA. Jay, we are thinking the same.

(D) Special Rule In Case Of Certain Plans.-- (i) In General.-- In the case of any defined benefit plan, except as provided in regulations, the maximum amount deductible under the limitations of this paragraph shall not be less than the unfunded current liability determined under section 412(l). (ii) Plans With 100 Or Less Participants.-- For purposes of this subparagraph, in the case of a plan which has 100 or less participants for the plan year, unfunded current liability shall not include the liability attributable to benefit increases for highly compensated employees (as defined in section 414(q)) resulting from a plan amendment which is made or becomes effective, whichever is later, within the last 2 years. (iii) Rule For Determining Number Of Participants.-- For purposes of determining the number of plan participants, all defined benefit plans maintained by the same employer (or any member of such employer's controlled group (within the meaning of section 412(l)(8)©)) shall be treated as one plan, but only employees of such member or employer shall be taken into account. (iv) Special Rule For Terminating Plans.-- In the case of a plan which, subject to section 4041 of the Employee Retirement Income Security Act of 1974, terminates during the plan year, clause (i) shall be applied by substituting for unfunded current liability the amount required to make the plan sufficient for benefit liabilities (within the meaning of section 4041(d) of such Act). I copied the text in question for all to see. I do agree that (iv) is not worded the best so there is a bit of amiguity. However, I suppose without some formal guidance (or at least informal - has this been addressed in a Q&A) I would be hesitant to apply it to a non-PBGC covered plan. As to your last question, I do think the 2-year rule applies for a terminating plan as (iv) madates the change in (i) and does nothing to negate the rule in (ii).

An April year-end plan terminates on 4/1/2005. Come 10/1/2005, the plan sponsor decides to call off the termination and proceed merrily along with the plan. Being this termination recission is past the 412©(8) deadline do I: a) continue to prorate the NC and amortization bases by 11/12 or; b) treat the plan as not terminated and not prorate them? I can't say I have ever had this happen before. However, I am leaning toward the latter option as Rev. Rul. 79-237 describes a plan that is terminating and this one is not, well at least not now.

Interesting you say that penman as I don't agree. This topic has been discussed before at length. Here is one place. Care to elaborate your position? http://benefitslink.com/boards/index.php?s...c=24115&hl=pbgc

Well first, you have until 10/15 to amend the plan under -11(g) (assuming this is a calendar year plan). BIS is also an eligibility issue. Your document spells it out, but if it requires the person to work a year of service after rehire (i.e. 1,000 hours 11/04 - 11/05), well then she is back in the plan retroactively. If she meets the YOS, you are then stuck with the same problem you have now though, so careful. That retroactive entry is trouble. It appears she is working sufficient hours to meet the YOS.

I have often submitted amendments as proposed, i.e. unsigned but will be signed after IRS approval, with no problems. However, I attempted to submit the initial qualification of a plan as proposed, again meaning the plan would be adopted after IRS approval. It was unfortunately rejected by the agent. Anyone ever try this with success or know of a cite that spells out why this is not possible? The whole idea is for the client not to sign (and be locked into) something the IRS will not approve of, which could then cause some nastyness to spew onto me. No Andy, it is not a 412(i) plan.

You have one test since you are aggregating the plans. The Sch T's for both plans will show the same results. Put another way, you show those benefiting under either plan.

Careful with what you agree with; after all I did type "War the stork!".