Blinky the 3-eyed Fish

But a change in the funding target can impact the AFTAP after 10/1. It just can't lift a restriction until 1/1. Your situation is benefited by the fact the first AFTAP was under 60%. Your solution should the AFTAP be above 60% is simply not to re-certify. Thus there is no material change. However, if your AFTAP was 79% and you changed the funding target so now the AFTAP would be 80+%, well then it seems to me you have a problem. As the rules stand right now, I don't see how you can allow the plan sponsor to elect a change that would cause the material change.

The whole timing of certification has been discussed over and over so I won't touch that. Nobody really knows what you are supposed to do. There was something that came out a few weeks ago (I think from one of the actuarial organizations, but I don't truly remember) that the plan sponsor is responsible for telling the actuary to do the certification. I had doctors flooding me with calls demanding I do them. (No, not really.) I agree you can certify after 9/30. It's just the effect of that certification that's important. I don't think your operated paragraph holds water. As soon as the certification was done 9/30 plan distributions are restricted. It's just that the notice telling people of such restrictions had not gone out. To argue you aren't operating under the restrictions is to argue you could have make an otherwise restricted distribution between 9/30 and 10/2. You couldn't have. One other thing, an AFTAP cert on 10/2 is not good until 1/1, so the plan is restricted any way you shake it until 1/1.

The logic in that response is of course that both are "equivalent" vesting schedules so there should be no inherent discrimination. I have kept them different in plans that I have designed. I haven't had the issue raised from the IRS when the CB plans were submitted, but that doesn't necessarily mean a general thought on the subject. I heard heard different views though, one I see to recall from Holland, but it's a vague memory.

Why do you think the notice affects whether it's a material change or not? I don't recall anything linking the notice to that determination. I don't have a good answer to your last question other than to say that I would be wary about a plan sponsor election that causes a material change no matter when it is. In your example though you have an AFTAP of 55% and if you don't recertify, you still are under 60%, thus no material change. The material change concept is craptastic if you ask me. Save us final regs!

If the owner is the only plan participant, the plan only covers HCEs and the 110% threshold is not an issue. After all the top-25 restrictions are found in (a)(4), so if you have a plan that covers no NHCEs, there is no possibility of discrimination. As always, your plan document must not restrict anything artificially. No problems with an age 62+ in-service distribution.

I am not a lawyer and don't know for sure, but I don't know why it would matter how many participants there are or if it's a sole prop. I prepare it for every plan term.

You absolutely need a resolution and it cannot be retroactive.

The question is not can we automatically switch to 1/1/09 for 2009, it's can we switch to 12/31/09 for 2009. The automatic approval to switch val dates in 2008 carries forward to the next year, so your val date for 2009 is 1/1/2009. The switch for 2008 is not a one-year change. Right now there is no automatic approval to switch val dates in 2009.

I don't understand the question. The discussion related to changing to a BOY val for 2008, which has automatic approval. A 2009 switch does not have automatic approval (yet). So in your question, the plan would have had a 2008 BOY val and now a 2009 BOY val. The AFTAP is determined using the 2009 val numbers, not 12/31/2009.

You are barking. Change is automatically allowable.

Ask the actuary to explain in detail what he is talking about and post his response (not his name). Then we can dissect it. It will be like science class.

All you have to do is adopt the PPA amendment timely in order to not have to grandfather the old 417(e) mortality and rates. You could adopt it now or adopt it by the deadline. Either way doesn't matter. You say a 2008 distribution was paid on the greater of old and new. That was not necessary, athough because it was done that way, you should make sure your PPA amendment accounts for that.

I would definitely not send the 2008 Schedule B under any circumstances, EZ filer or not.

In other words, phrase your amendment properly and don't cut back his pre-amendment benefit.

We haven't taken that interpretation (I doubt many people have), but I wouldn't say someone was wrong necessarily for doing so.

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Mike, I forgot I meant to get back to you on this. I reverse my answer, my reason -- brain cramp. Maybe I was thinking, even though the entire discussion was on segment rates, that in your question the factors were actuarial equivalents and not 417(e) factors. I agree the proposed regs support the $1,299.79 methodology. It too is how I have been running the 2008 valuations. So my apologies for having you "tear apart" the proposed regs.

Quick answer: Terminating: 1) didn't WRERA remove the 105% limitation?; 2) I assume you are highly simplifying the 417(e) segment rates calculation on purpose. Funding: 1) same comment about the 105% for 2009+ valuations

I think the opposite conclusion should be reached because you too know nothing that says that same plan year doesn't mean exactly that. A plan year with a different beginning but the same ending is not the same plan year by definition. I have a feeling though this question has been answered in a Grey Book somewhere. I just am too lazy to look it up.

415 compensation is only mandated for certain purposes. Compensation used for plan purposes does not have to be 415 compensation. There is your distinction. Be careful though; the standard 415 amendment language I have seen will default to linking the same adjustments to the 415 definition of compensation to the plan definition of compensation. So you might have defaulted your way to some plan compensation adjustments. On a different note, if you have a compensation definition as you described, that is not a safe harbor definition and you must run the compensation ratio test or a general test using a 414(s) definition.

Your forfeitures = x, you make a contribution of x. The contributions are reduced by the forfeitures, so no actual deposit of money is made to the plan.

$1,303.45 is my answer.

If assuming a lump sum you should determine the PVAB using the valuation segment rates (5.31%, 5.92% and 6.43%) and the '08 Applicable Mortality Table and also the PVAB using actuarial equivalents. Take the greater of the two. Compare that result versus the 415 lump sum limit (let me know if you want more details on that) and take the lesser of those two. That is your PVAB at retirement age. Discount that PVAB at the appropriate segment rate. If the person is age 45 and retirement is age 65, it would be exactly 20 years, which is the 3rd segment rate of 6.43%, not 5.92%. If the person was age 46 it would be the 2nd segment rate.

Doogie, are you assuming a lump sum will be paid or an annuity?

I assume the document calls for forfeitures to reduce the employer contributions? Solution: deem a contribution equal to the forfeiture amount.