Blinky the 3-eyed Fish

You don't think actuaries should write plan documents? Freudian slip?

An actuary wanted tables from a non-actuary? Doesn't that seem a bit backwards? Of course if he wanted 94 GAM to run RPA, well then this actuary needs to retire or quit, because he/she doesn't know what they are doing. I sense something missing from this whole scenario.

Logically, that would not be permissible since the value of the plan would be depleted by the lump sum amount needed to purchase the annuity. That would defeat the whole point of keeping plan assets around in case the plan terminates with not enough assets. I am sure if you read the applicable cites like 1.401(a)(4)-5(b) and Rev. Rul. 92-76 that will confirm what I am saying.

To illustrate Tom's point how a 3% cash balance contribution is most likely NOT 3% for gateway purposes consider this example of a 35 year-old retiring at 65: $20,000 * .03 = $600 CB Convert $600 to an annuity using AE (say 5% & 94 GAR) $600 * (1.05)^(65-35) / 11.794088 = 219.87 Now convert the annuity to an equivalent allocation rate using the testing assumptions (say 8.5% and 83 IAF) 219.87 * 9.615584 / (1.085)^(65-35) = 182.92 $182.92 / $20,000 = 0.9% - that is the value of your 3% contribution for gateway purposes As to your other questions, you can have allocation groups within a cash balance plan much like a cross-tested designed DC plan. You could also utilize a -11(g) amendment to increase somebody as needed to pass testing. There isn't an issue with giving one NHCE more than others other than if his/her co-workers find out and wonder what the deal is. If none of this has been implemented yet, you just need a 3 month year for the SH 401(k) piece. The DB can be adopted 12/31.

Why do you think so? There is not enough information for anyone else to make a determination. Read 4975(e) and determine if this person is a disqualified person if you want others to chime in. Actually, I should amend my comment to ask what you mean when you say this person is an HCE. Under what definition?

I have a list too: 1. Since when did Tom go DB? 2. I am wearing a shirt. 3. You could just remove the last day requirement for a DC TH contribution, but I prefer to use the offset method in the DB. So when someone terminates with over 1,000 hours, their TH is handled in the DB. DB TH is offset by DC equivalent balance from prior years. Most people who quit are young and get a big fat $0 more due to the offset because a youngins 5% in a DC is worth more than 2% in a DB. Even for the older folks, my DB/DC arrangements are nearly always general tested, so everyone got 7.5% anyway in past years and you have to be pretty old to have that be worth less than the 2% DB.

Recognizing a 412©(8) amendment does not require applying to the DOL. Where did you get that? Anyway, 412©(8) also doesn't apply because the amendment is not after the end of the year. As for recognizing the amendment, check Rev. Rul. 77-2 for help.

Can you think of a reason why he wouldn't?

One of the limits for a DC plan is 100% of pay. With pay of $0, she obviously cannot get any more contributions after the year in which she stops working.

It would be deducted in 2005. It would have to be in the 2005 415 if the contribution is made 30 days after the due date of the tax return. Assuming it was filed 4/15 and since it is past 5/15, it is a 2005 annual addition. No. Because the deduction will affect the 2005 tax return, it should factor in to that NEI calculation.

They are saying two different things. The first one's premise is that your index fund will be at X value at retirement no matter what happens now. The second one's premise is something different. Obviously if the shares are low throughout and then the value springs up right before retirement to X you would own more shares than if the value was high and decreased to X before retirement. What the first guy is missing is that if the value is low, it may stay low.

There are a couple of quarters sitting on top of it, so broke? I think not.

Touche, Mr. Peanut.

How about neither of you are right or you both are right. While you can make the amendment retroactive for some purposes, what you can't do is make it retroactive if you are talking about allowing 401(k) deferrals. In other words, if Billy was due to enter the plan on 4/1 based on 3 month eligibility and he started deferring on that date, but you didn't have the amendment in place yet, well that's a problem. Of course 2003-44 offers some discussion on the subject and depending on who was allowed to defer, the acceptance of the retroactive amendment may be appropriate. I assume you were talking about 401(k) since this is the board you posted it on, but if not, then provide more details. Ah, Butler beat me. We are saying the same thing except the need to consider what HCE's & NHCE's are being let in.

Broadly available is a term related to satisfying the gateway requirements. That is not an issue here. When determining the rate groups, of course no MP contributions are considered and those nonexcludables with no DB will have a 0% accrual rate. But for computing the avg benefit ratio, you are going to include the MP contributions.

Here is the applicable cite from 89-52. I highlighted the relevant part. Q-12: May an employer treat all or a portion of a credit balance in a plan's FSA as a payment of a quarterly installment? A-12: An employer may treat all or a portion of a credit balance in a plan's FSA as a payment of a quarterly installment. Example 5 -- Assume the same facts as Example 3, except that an amount in excess of the 1988 minimum funding requirement was contributed during 1988 and that such contribution resulted in a credit balance of $10,000 on December 31, 1988. It was determined in Example 3 that the amount of the first quarterly installment due on Apri1 15, 1989 is $6,250. At that time, the credit balance, with three and a half months' interest, equals $10,227. Even if no contribution is made by April 15, 1989, the first installment requirement is satisfied because the credit balance with interest exceeds the amount of the quarterly installment due. The amount of excess, $3,977, with three months' interest to the due date of the second installment, is $4,054 and may be used to reduce the amount required to be contributed for the second installment. Therefore, as long as $2,196 [$6,250- $4,054] is contributed by July 15, 1989, the second installment requirement will be satisfied. The full $6,250 must be contributed for the third and fourth installments unless additional contributions are made for the 1988 plan year on or before September 15, 1989. Contributions for the prior plan year will not be reflected in the determination of any credit balance until they are actually contributed to the plan. The intent to contribute the required amount within 8 1/2 months after the end of the prior plan year is not sufficient. For example, in the previous example, if no contribution for the 1988 plan year had been made by April 15, 1989, no credit balance could have been taken into account in determining the amount needed to satisfy the first installment requirement, unless the amount of credit balance as of December 31, 1987 was greater than the 1988 minimum required contribution. So Harold, in your first example, your CB was generated by the deposit on 8/27. A literal reading of the Notice though says you can never use that CB to satisfy the quarterlies whose due dates have past. Although some will argue you use the 8/27 date. In your second post, I agree with your calculations.

Whether you want to call it a 415 violation or no income, so ineligible to defer, does it really matter? So long as we can read his handwriting and it's not ilegible (sic). That's the main concern.

What took you so long? Next time I want agreement within 2 days. :angry:

I don't disagree with that. I suppose my point was not clear, but it's not important.

That is not correct. The 50% replacing 80% is for parent-subsidiary relationships, not brother-sister.

There have been discussions on this in the past. My thought is that even though it's a sole prop, there is a distinction between the entity and the owner. The non-deductible is an entity concern and does not affect the owner and therefore there is no basis in the distribution.

Yes, yes and yes.

If the staff has limited past service, then their accrued benefit will be less. If their accrued benefit is less, then the current year testing is worse because the owner will have 5 years. Hence, my line, "The less past service the staff has, the better the accrued-to-date method will most likely be." (in comparison with the current year method). See, the heat hasn't got to me yet. (BTW, I realize that statement didn't make a lot of sense without explanation, but I really didn't feel like editing it.)

He's not ineligible, he's ilegible (sic). He's one of the best poker players around because you can't read him.

I think you are misinterpreting the statute. The fact that there is no aggregation means you aren't adding up the ownership amongst the related entities. For example, if someone owned 4% in A and 4% in B, he is considered owning 4%, not 8% and is not a key employee. In your case, they are all keys and HCE's for that matter based on ownership. Whether the employers maintain the plan or not has nothing to do with it.