Blinky the 3-eyed Fish

I think it depends on how your document is defined. While CSV is generally the normal method of defined the increase in benefit, the plan's definition of the AB which was used to generate the premium and the CSV can work too. I specifically asked this question of Jim Holland during his and Bruce Ashton's 412(i) webcast in early 2004.

It is possible to combine the two. You avoid potential issues if the participants are the same in both plans. 404(a)(7) still applies if you have common participants in both plans, so that does mean in your question that the DC contribution would not be deductible. Sales guys and 412(i) equals big trouble. Ask yourself why a 412(i) would be necessary, especially if you are already at a 404(a)(7) limit. Chances are that it is not.

Defining compensation to be while a participant would defined the intial computation period as no longer than 4/1 - 12/31. This would require prorating the 401(a)(17) limit. Instead also defined the compensation period as the calendar year to avoid the requirement to prorate it.

Your approach isn't wrong, but you are severly undercutting his maximum distribution amount by a) calculating it to be $776,000 and b) not getting the distribution done by 12/31/2004. You still have the transition rule to keep you from having to use 5.5%, but only if you get the distribution done by 12/31/2004. I am still curious how you got $776,000 also.

I have taken that position as well and vaguely recall Jim Holland at the 2004 LA Benefits Conference stating the same. That was almost a year ago though, so take it with a grain of salt.

I will caveat this by saying I haven't read the article, but even if I did, I have found that articles in general, especially critical articles, regarding pension plans written by major publications are often WAY off base in facts and logic. IMHO of course. I like your title though. BTW, the sky is falling.

It sounds like the client is the owner or principal of a small plan, so that any election changes or amendment will be made to accomodate his specific needs. It also doesn't appear they are MRD's, although they do satisfy those requirements. That being said... Agree. Of course like Effen mentioned, his election forms and the plan provisions need to accomodate this. I am not sure how you got this figure. Using a simplistic LS calculation using 5.5% and 94 GAR I get: $135,000/12 * 73.5464 (APR at 82) = 827,397. Of course you could get trickier using an annual APR that would yield an even higher amount. Agree. The $135,000 would be part of the LS payout total if taken in the same year.

You are correct. Although, if there was an amendment in the last 2 years that increased benefits for HCE's, then your RPA numbers would be overstated for the UCL deduction.

Now because the first post says the plan has been audited, past tense, then of course providing the notice as a solution will have to be approved by the auditor as a means of correction. Arch and Tom provide good ammo to go to the auditor with.

Oh yeah, I forgot where you are. I won't reveal your secret though unless forced to by a hefty cash payment by those that want to know.

I didn't reread my posts, but I am curious where I went John Kerry? Ouch, your from Massachusetts, forget I said that. Anyway 404(a)(7) applies when there is an employer contribution to the DC plan, not otherwise. This is correct. Although if you don't contribute other than deferrals then you can contribute to the maximum DB deductible amount. I assume the $100 is an employer contribution? If so then his deductible limit is $100,000. The $100 would be nondeductible, although no excise tax is imposed due to the 4975 changes by EGTRRA. Sorry, I can't get to your last scenario right now.

It sounds like the 3% was given as a safe harbor contribution, just the notice wasn't provided. Thus, that money would have the same vesting and distribution restrictions as a QNEC. Alf, where's the match? Anyway, Hilarion, I think you have possibilities to make this work. First, check your document. There may be some obscure language in their that defines the SH contribution when a notice is not provided. After all, what's the purpose of the SH contribution without the notice. It's a long shot, but the doc may take that into account. Second, like Alf said, propose the idea to the the IRS anyway. They may go for it.

Bird, B still was a company in 2004, so if an employee made over $90,000, then the are (or potentially are) HCE's in 2005. The question is what compensation to consider if any of the B employees also worked for A in 2004. I could think of arguments both ways 1) to include A's compensation too or 2) to just consider B's compensation. What I don't know is what the IRS thinks.

To clarify on 1. - you can retroactively increase benefits, but when you are past the 412©(8) period, you cannot consider those increases in the valuation for that year. 4. I haven't read Rev. Rul. 94-75 lately, nor do I have time to, so I will have to leave it to your interpretation on the procedures.

The way you are wording what you want to do cannot be done. You cannot stipulate that DB assets are indeed PS earnings. Now because you have only 3 family members who are the participants, through waivers or allocation of excess assets, you may be able to get an end result that is the same. How the language is worded will be SPECIFIC to your situation. Where is the actuary here, as he/she should be the one to help.

That is fine. There should be 2 Sch C's and 2 401(a)(17) limits. The controlled group status or not doesn't matter if this is all that is of concern. GBurns, why is it an issue here?

Well Roman, you can't say they are unrelated since it's a husband and wife, but maybe you meant they aren't involved in each others' business. Some would say they may be a controlled group if in a community property state. But you haven't expressed what the intention is here anyway, so it may not matter what they are.

Chris4013 was caught off the shores of the Bahamas by Quint the Shark Hunter. He is dead! WDIK, nice additional use of fruit. Not quite the same as with the deferrals. You physically have to have a plan set up to be able to deposit money into the trust, no ifs ands or buts. I equate a plan effective date before the employer to the retroactive effective date of plan documents, i.e. the plan was in effect before the document was in existence. To further the use of analogies, maybe the document is the egg and the effective date is the chicken. Which came first?

I will make an attempt at practical. 1. 8 months after the plan year is outside of the 412©(8) range. It certainly cannot affect your valuation figures, so I am not sure what the question is. 2. Don't do it! Effectively, you are tranferring the DB benefits to a DC plan. It is arguable that because no distributions are offerred that the DB present values have to be preserved. What if the assets decrease in value? Then you have a nonsensical result. 3. I wouldn't do it. I think I asked this question awhile back to solicit opinions if you want to search for it. 4. You can do that if you dare to risk 412(i) and the increase scrutiny it brings. Read Rev. Rul. 94-75 for the details.

As Austin said, the point and the context of this notice relates to safe harbor plans and the need for people to be able to defer. You need to have a plan in order to be able to defer. However, this cite is unrelated to the ability to have plan year effective before the employer's existence.

That cite is fine and dandy, but you still have to go back to Bird's comment. They had to wait more than the 18 months to get into the plan. For that sacrifice of not getting a 2003 allocation, they must be 100% vested on all contributions no matter what vesting schedule or eligibility is changed to be.

One. Possibly. Possibly. Whether or not you need two plans entirely depends on this situation. What are you trying to accomplish with two plans that can't be done with one? They are married after all. Easy rule to remember: # of plan documents = # of plans

No, there is ONE plan that is sponsored by two employers.

I assume this employee works on commissions, because otherwise, with $0 compensation I wouldn't consider him an employee for the year.

If you are considering they are adopting the plan, why aren't you considering they are also adopting the trust? I see no reason for another TIN. That would be very confusing.