Blinky the 3-eyed Fish

You assume it's TH.

Well limiting past service to 5 years eliminates any discrimination issues for using that service for testing. The less past service the staff has, the better the accrued-to-date method will most likely be. You are definitely on a much better plan design path.

Navy, okay that is clearer. You could break out the actuarial textbooks. But really you just need to explain why that methodology is wrong. The annuity is certainly not certain to be payable over his life expectancy. The annuitant could die sooner. Just compare the two methods for the court with an intelligent reasoned discussion of why one is correct and the other isn't. A thorough understanding of the mathematics behind the calculations should make this a snap.

You lost me with that. You say that the accountant is using the right table and I guess the interest rate is okay, but not the use of life expectancy? All mortality tables have life expectancy by defintion. What do you want to use? I must reiterate that I have no clue what your question is.

So then your beef is simply with the use of the 2001 CSO Table? If so, my discussion would be why that table versus AE or 94GAR. I don't have a "strong statement" for you though. As for the survivor beef, there is not a 100% chance that the retiree will die beforehand and the probability of the retiree outliving the beneficiary is there. That probability has a value which should be captured. Is a quarter expected to come up heads twice if the coin is flipped twice - no. Can it easily happen - yes. Play him a little game where you give him $1 for every time it doesn't come up heads twice and he gives you $5 every time it does. Then kick his family out of their house when you own it.

Using life expectancy to determine a present value is not valid because there is no interest rate assumption. Life expectancy by definition is just a mortality table with a 0% interest rate. That point alone should invalidate the use of that methodology unless the judge is an extreme pessimist concerning future returns and has his nestegg in his mattress.

No, still $5K. The latter. Yes.

If you are testing on current year, no matter that the formula accrued a positive benefit at year 0, for testing purposes, you are at 0 at the BOY. If you are using the accrued to date method, in this case your measurement period is the CURRENT year and all prior years. The accrual rate is the increase in the AB during the measurement period divided by testing service. So you see that there is a positive benefit that is used for testing that is not just due to a compensation increase no matter which method you use? As to your second question, I don't know the facts and circumstances, but I feel I can safely answer that it is definitely discriminatory.

No. If your measurement period were the current year, well then your AB at the beginning of the year was $0, since you didn't have the plan. If you are attempting to pass under the accrued to date method, well then your increase is the AB/testing service. Either way you have a positive accrual for the year. But of course this design has other more severe issues.

Simply, for a cross-tested DC plan the gateway is the lesser of 1/3 of the highest HCE accrual rate or 5%. How many rate groups there are has nothing to do with it at all.

And the accrual for testing is not zero. Your measurement period is the current and prior years, emphasis on the fact that the current year is part of it.

I was just pointing out that it's the top 25 paid all-time, not the top 25 paid each year. I may have misunderstood your original post though.

You are right as rain you monkey-faced genius.

To be technical ak2ary, you would need to provide more than $0. To bump up to the gateway, one of the requirements is to benefit, so I suppose 1 cent will do, but not $0. Of course, then you need to hope the gateway minimum is sufficient to pass the testing.

I thought you were going to be a forensic scientist, not a TPA.

Who is talking about prevailing? I am talking about asking them first. They may give you the answer you want. Let's say you want to know if you can have a cookie. You could hire a team of consultants to draft a very expensive persuasive argument in an attempt to get the cookie or you could just ask the person who has the cookies. Let's not put the cart before the horse now. That cart costs way too much.

Janet, common practice and correctness are not necessarily the same thing. Unless you are within the 90 days of the distribution election forms being signed, you cannot simply "do the same" with the subsequent distribution. The $200 rule aggregates calendar year distributions, so TAG is correct that you can just pay out without withholding. If it was still in the same calendar year, then new election forms would have to be issued.

First, the definition of restricted employee in 1.401(a)(4)-5(b)(3)(ii) refers to the "25 nonexcludable employees and former employees with the largest amount of compensation in the current or any prior year". It does not reference compensation within the context of determining who is a highly compensated employee, so the use of the lookback year is irrelevant. That being said, $110,000 was his highest salary and should be used to determine if he is one of the highest 25 paid. I am not sure why you are ranking it year by year though since it is an all-time determination.

Asking counsel as a first step is a waste of money unless they are prepared to guarantee no extra costs will arise should the IRS challenge their opinion.

It would be exceedly cheaper and more practical to not consult with counsel and consult directly with the IRS via the submission process.

Of course if the doctors aren't paid out until after the plan terminates, they are definitely 100% vested. If they are paid out before the plan termination and at less than 100%, it would be very prudent to seek an IRS review.

Rev. Rul. 2004-13 is the cite you want. I will specify that the plan is not subject to TH because only the SH match (and no forfeitures) are being allocated.

I don't think Quint the Shark Hunter should be nominated. He is a putz and is now half the man he once was.

The determination of ownership for 401(a)(9) is under IRC 318. These rules attribute ownership from children and of course the spouse. He is > 5% owner and must get his RMD.

You aren't using a future interest rate retroactively. You are using the current rate. Consider if the AE had been amended. You would be forced to grandfather the accrual because of 411(d)(6) but otherwise would use the current rate. I see that as the only difference I have too seen documents with a stability period of one month on plans we've taken over. Never on AE though, just 417(e). We amend them but suffer through the transitional period.