Blinky the 3-eyed Fish

Since any returned deferrals due to ADP failure are still annual additions, I don't think that helps any should that occur.

Mathematically, I find the whole issue largely moot. I haven't found there to be a significant additional amount available due to the UCL in the first 2 years over the minimum funding. And keep in mind these additional contribution are just effectively reducing future years' contributions, so if the plan has any lifespan, the moot stick gets brought out again.

That is only specific to parent/subsidiary relationships, not brother/sister

401(a)(4) has a broad brush. Can you provide more details? Is there a PS contribution? Is it a non-safe harbor designed allocation formula? It sounds as if the answers to the last 2 questions are yes, but I wanted to confirm before going further.

Yes, I mistakenly used the wrong number. Good catch. (I went back and edited it to avoid confusion.)

Obviously, my brain was still on hold. Please disregard my comments earlier.

(Deleted due to the incorrectness of the reply.)

The various provisions affected by EGTRRA all have either set or variable effective dates. When the EGTRRA amendment was adopted the first time, the various provision effective dates were set at that time. Why aren't you effectively just readopting the EGTRRA amendment already done? I don't see why there is a decision to be made here.

Yes. You just need to have your document worded correctly. Also, if you don't want the 415 limit prorated, be wary your limitation year is not the plan year.

Oops. Counting error incurred. 2007 you are good to go on the change.

So I think the answer to your question LIBOR is why would you? The rule MGB mentions is going to yield a higher UCL.

I would have been thrilled to get 417(e) under control for minimum lump sum values. I can't tell you how many times I am asked by the owner what an ancillary person's value is in a DB plan. My response is filled with caveats because who knows what the 417(e) rate will be at the time of distribution. They could have even had a nice transition rule for 2004 or a wear-away approach based on current rates. Arg!

SoCal, I agree with your assessment in your last paragraph. I think this is one example of taking the Gray Book answers with a grain of salt, as I don't see a justification for the answer given.

Here it is: First, the retirement age doesn't matter, but rather the age at distribution. So, I will prep an age 62 and age 55 example. Also, I am just showing my take on the new law and not factoring the transition rule for 2004. I am also assuming the compensation limit is not a factor, the participant has 10 years of participation and there is no way the old-law benefits under Rev. Rul 98-1 are a factor. Age 62 165,000 (unreduced $ limit) * 9.852332 ( AE UP 7% annual rate) = 1,625,635 Now this would also be compared (and the lesser taken) with the 5.5% rate and 94 GAR mortality, but since AE are so high, it's obvious that the AE amount is less. Age 55 165,000 * 9.852332 / 11.240920 (age 55 AE factor) * 1/(1.07^7) = 90,060.57 This would be compared with 5% interest and 94 GAR, but again it's obvious that the AE reduced dollar limit is less. 90,060.57 * 11.240920 = 1,012,364 (corrected the typo pointed out below) (Repeat) Now this would also be compared (and the lesser taken) with the 5.5% rate and 94 GAR mortality, but since AE are so high, it's obvious that the AE amount is less. Help any?

First, those in the ACP test are those participants that are eligibile for the contribution. Thus, if you have a division that is not eligible for the match, then those in that divsion would not be in the test. But you have an entirely different situation here. It sounds as if you have a complete failure to follow the plan document. Your last sentence says it all.

You are correct that you are stuck with FIL. You can't change it in 2004, 2005, 2006 or 2007. I am not sure what you mean when you are asking if another 4-year clock starts by the change in 2003. What change? If it's the simply the takeover change, well that doesn't affect the right to change funding methods.

No, it's 1099R, not 1009R. Keep the R, add the 9.

Technically neither, although #2 could end up being correct. The only thing that has changed as it relates to calculating maximum lump sums is that the previous use of the 417(e) rate is replaced with 5.5%. Thus, you still are calculating the dollar limit at distribution age comparing the value using the plan's AE and 5%/94 GAR. Then multiplying that figure by the lesser of the plan's mortality factor or the 5.5% 94 GAR factor. In your #2 example, you excluded the plan's AE consideration. Also, remember there is the transition rule for 2004.

You check the "corrected" box on the form and fill in the revised information. BTW, it's 1099.

Discretionary matching contribution language with no reference to the basis of the match has long been standard language in VS documents. I don't agree with the idea that you should be concerned about submitting these documents when they fall within the word-for-word language. To chime in on the original question, I too see nothing wrong with it as long as there is proper communication.

(1) Yes (2) Yes, but I think your question focuses on your concern that by using the low-end rate in 2003, that will somehow affect you negatively in 2004? I don't see that it will since you too will be able to recompute the 2003 CL for DRC purposes in a like manner to 412(m).

There is no getting around the need to follow the document. If the document is more restrictive by spelling out the compensation period to use for testing, then that clone is the sign of a crappy provision.

You better not be making fun of Little Pinky!

Rescind the termination, rerun the valuation and prepare an amended return. It's as easy as 1-2-3!

And from a reality point of view it's that line of thinking that is pure nonsense. Everyone, including Jim Holland, knows that it is the partner making the decision on how much PS contribution is made for his benefit. The fact that a made-up piece of paper exists that says it's coming from the employer has no substantive value in my mind. It's like we are in an establishment that doesn't allow pink elephants to enter, but does allow black poodles. You and I desperately want to bring our pink elephants and the manager of the place really likes us. So we slap a sign on the beast that says "I am a black poodle" and Little Pinky comes in and has the best time. He even dances without ever stepping on a single person's toes. But that being said, I play by the rules begrudgingly.