Blinky the 3-eyed Fish

Jquazza, I read in the question that $15,000 in deferrals were being made NOT including the catch-up.

SoCal, I am not sure if what I was saying registered. Did you get a chance to read Rev. Rul. 98-1? Notice that it is prescribing the reduction from age 62, not the plan's NRA, using actuarial equivalence for early retirement benefits under the plan. We can agree that that figure is 8% here, correct? In other words, you determine what AE or plan factors reduce the benefit for early retirement or for benefits payable before the plan's NRA. Then you apply those factors in reducing the benefit payable before age 62 for purposes of determining the maximum distribution.

1. Yes, you obviously are aware the 402(g) limit is a calendar year limit, so nothing is precluding a deferral in the plan year in excess of the 402(g) limit. 2. You don't give enough information about the document to answer this question fully. I can tell you that in my documents, if someone cannot receive a contribution within an allocation group because they are at a 415 limit, the document provides that the unallocated contributions for that group spill over to the other participants in the group. With the language in my documents, the other partners would be able to get $29,000 in PS allocations, even though the one partner is only getting $26,000 because he's at a 415 limit. The answer to the question in you last paragraph is yes, but as I stated in (2), it may not be necessary.

Effen makes a lot of sense. There is no way for you to distinguish if the new actuary matched your numbers or used your numbers. Even if you "know" he just used your numbers, you will be the only one who will ever "know" this. A related question though. Sometimes I take over plans where the prior actuary's work was less than correct. It of course varies by the situation. Sometimes I have seen small errors, like no 412(m) charges calculated, when they clearly apply. Other times, I have seen fraudulent numbers, like the NC being the same made up figure for multiple years. Has anyone ever contacted anyone to report a crappy actuary? If so, what was the result?

Sorry SoCal for messing up the flow. I had second thoughts on my post and wanted to do a little research. Okay, I am back to try again. My reading of Rev. Rul. 98-1 is that the plan's NRA is not a factor. Nowhere it the promulgation is it referenced (that I can see). What is referenced is that the determination of the equivalent annual benefit below age 62 is based on the lesser 5% and the applicable mortality table OR the plan's AE interest and mortality (or tabular factor) "used for actuarial equivalence for early retirement benefits under the plan", 8% in this case. Of course this promulgation is a bit old in that the reduction from SSRA to 62 is still there, but the pre-62 reduction is still applicable.

I do. The plan's NRA does not factor into the calculation of the 415 limits. If you want the higher lump sum, amend the plan's pre-retirement interest rate lower.

For the record, my what's the difference remark wasn't that literal. Giving them an SPD is no real extra work, so no difference in my mind. You do bring up a good point though if the counts are between 100 - 150. Then you have a real difference in 412(l) or the determination if the plan is subject to audit. Your arrogance is insulting and belittling and I demand justice in the name of my family!!! :angry:

There are actuaries out there that sign Sch B's and PBGC forms, when needed, for $100 or so. All other plan administrative functions are performed by non-actuaries. As you can guess, the $100 doesn't buy a high level of review, so it's these situations where serious problems can arise unless there is competent staff performing the actuarial services. This would classify as the bare minimum of actuary involvement.

Care to share? And SoCal, good addition.

I think freezing participation when freezing benefit accruals was vital before EGTRRA, but now a frozen DB plan is not required to provide a TH minimum, so what's the difference? Ac, you must be a participant in the plan to accrue a benefit.

Dsw, who said this? Do you have this in writing? Can you scan and post it?

Multiple postings of the same question are my new pet peeve.

The auditor is confused. The Schedule T is reporting coverage under 410(b). The rate group testing is under 401(a)(4), which is not relevant to the Sch T.

I disagree that the employee did not become a participant in the plan. A freeze to the benefit formula doesn't freeze eligibility. They are 2 distinct provisions. I do though agree with the conclusion that the employee is entitled to no AB because the plan was frozen prior to his entry. Think of it this way. You have a formula that's X% of salary times YOS. By freezing the plan you are effectively replacing the X% with 0%, thus, no AB.

That's interesting, personally I have not come across dissenting opinions. Of course there were many abusive 412(i) plans that relied on a legal opinion and we know what the IRS thinks of them.

Whew, I thought you were going to recommend cement shoes. BTW, never go against the family.

Merlin is correct, although the issue with the minor children does not certainly create a controlled group; there are differing opinions. I think people are of one mind that a community property state does blow the exception.

Did you subsequently search him for a crack pipe?

I think we all agree that the reporting of the "salary" as W-2 for this LLC is incorrect. It would to me compound the mistake if you treated the W-2 reported payments as true W-2 wages rather than as guaranteed payments. Common sense demands that the mistake of the accountant should not completely alter the calculation of compensation for the pension plan. What PLR is relevant here? I would be curious to review the facts, although I disagree its logic from the summary you presented.

It's not a distribution. It's a transfer.

Changing the plan sponsor, name and EIN does not make it a different plan. Line 4 of the 5500 is where you address any such changes. The EBSA is right.

Pax, I don't understand why you would want to redo the prior year. SoCal, I agree that common sense should apply here, but since that isn't always the criteria, these types of questions arise. Are you saying that even though there is a change in funding method here, don't worry about it?

I am sure you meant the assets exceed the liabilities. That depends on how comfortable you feel with having a negative unfunded liability. There have been some discussions on this board about the merits of that method if you want to utilize the search feature. Personally, I wouldn't continue it. Of course if you don't continue the methodology, then you aren't following the prior actuary's method and would most likely be required to change the funding method outside of the takeover approval of 4.03 of Rev. Proc. 2000-40.

First, I will say I am not looking at an application for a change in funding method as a solution. Next, I have always considered the takeover of a plan from a prior firm as a change in funding method based on the reading of 4.03 of Rev. Proc. 2000-40. The summarization of that section is that the approval is granted if the method used by the new actuary is substantially the same as the method used by the old actuary and if certain computations are within 5% of the prior actuary's amounts. I am not sure how you get around not defining a takeover as a change in funding method. You are still using the same method as the prior actuary. If it is a funding method change, then 6.01(5) restricts that change in the year of termination, thus my dilemma. Now I suppose you could argue that if you matched EXACTLY the prior actuary's numbers, then there is no change in the funding method because you don't have to address 4.03(4). However, you most likely would have to then consider a change in software approval of 4.04.

Do you think you can take over a DB plan from a previous firm and terminate the plan in the same year? Section 6.01(5) of Rev. Proc. 2000-40 seems to not allow it, but that doesn't make a whole lot of sense to me as to why. Thoughts?