Blinky the 3-eyed Fish

If you forfeited them now, but kept records so they if the resurfaced their benefit would be restated, from a participant standpoint there is no harm. However, from a PBGC standpoint, there may be harm if you aren't paying a premium for that person. After all if the plan terminates, if seems to me as if that person should be added to the missing participant rolls. So, why not ask the PBGC what they think?

Just to be clear the child had to be kept at under 1,000 hours in the past. It does you no good to keep him under 1,000 hours now if in the past he worked over 1,000 hours and met the eligibility requirements. Since the OP stated the child would be eligible it seems the hours consideration ship has sailed.

I agree it's based on plan participation. How many small plans last 30 years though?

I can't imagine pulling a sham like this would net the owner anything. After all there's a 30-year phase in for substantial owner benefits. I will keep in it mind though for future consulting.

The definition of participant for premium payment purposes and for coverage purposes are two different things. Thus if you have a participant in the plan but with no benefit liabilities, this can trigger the plan being covered by the PBGC even if you aren't paying a premium for that person. Next, I don't agree with Andy's assessment of coverage. The plan becomes covered the moment it no longer meets an exception for coverage. The participant count date is the first day of the plan year for a newly covered plan and is the last day of the prior year normally. However, this is only for the determination of the amount of the premium, not whether or not the plan is covered. In this case, when the plan was frozen, was eligibility frozen as well? If not, assuming you don't meet a standard coverage exemption, you have plan now covered by the PBGC. Blame whomever prepared the amendment for not doing it properly if eligibility was not frozen.

This question has been asked 1,000 times on this board. I recommend a search.

J&50%S10C100%IBND50%IC! IBND = if beneficiary not dead IC = if croaked

I had to review another actuary's work for an interstate transit company. I thought the actuary was making up the late quarterly exception for such companies, but I pressed on searching for the truth and finally found it. I learned this fact the hard way.

You can eliminate the in-service distributions for a penson plan. After all that is the whole reason of Notice 2007-69 and the increased retirement age for pension plans. By the way, what a strange document provision. I have seen the allocation requirements eliminated at NRA if the person actually retires, but not for an active participant.

You should definitely ignore it. I too would give them a call and ask why they believe the compensation increases affect 404(o).

You understood wrong....maybe. This issue have never been really decided. I can tell you that many people do not believe that the plan's entry dates are a factor in determining OE employees. Thus in your plan anyone who hasn't worked 18 months could be treated as OE.

There are a few little things I could nitpick as to what you said, but it's generally semantics. Your last sentence is entirely correct and sums it up though.

Each component must satisfy the ratio percentage test for coverage (410(b)). If not, you can't pass coverage for either component because chances are the selection of the people in each component won't pass the reasonable classification test needed to satisfy the ABPT for coverage.

The NRA is protected for benefits accrued, not future contributions. So if you are testing under the annual method, I can't see why you wouldn't treat the NRA applicable to the contribution for that year. Keep it simple and amend the NRA effective 1/1/xxxx. Now if you were testing using something other than the annual method, perhaps age 65 would be the appropriate testing age, although I would have to think about that a little more. I reserve the right to give that no further thought because I doubt you are not using the annual method.

This is a new-comparibility target benefit or money purchase plan? I doubt it. Reasonableness of NRA only applies to pension plans.

I seem to recall that if you don't true up, the SH match deposits must be made quarterly. I am not sure how this would be addressed in the document should the actual deposits be made too late. Would it revert back to the annual method? My guess is no, as I doubt that would pass muster.

Have them read the notice.

But it's right there in the notice, so who cares what some guy you call up at the IRS says?

The waiver absolute does not apply to DB plans. Just read the first sentences of the Notice: On December 23, 2008, the President signed the Worker, Retiree, and Employer Recovery Act of 2008 (the Act) into law. Section 201 of the Act waives any required minimum distributions (RMDs) for 2009 from retirement plans that hold each participant's benefit in an individual account, such as §401(k) plans and §403(b) plans, and certain §457(b) plans. A DB plan does not hold each participant's benefit in an individual account.

You are not excluding from coverage those only receiving the SH, you would instead be treating them as not benefiting, then see if you pass 410(b). If you do, the design in of itself is a safe harbor design. But like I said, doing this is not anywhere in the regs/code that I know of because that rule for top heavy was written long before safe harbor 401(k) plans existed. If you are uncomfortable with that, then I agree with what you said.

Technically you may be correct that it's not a safe harbor design. The safe harbor has no accrual requirements and the nonelective does. It's possible for someone to just get the 3% safe harbor and nothing else. I liken this to a top heavy plan where someone is employed on the last day and received the top heavy minimum, yet doesn't work the hours to get the nonelective contribution. However, while there is a special provision to not treat the person who received the TH minimum as benefiting and still pass 410(b), there is no such correlating rule for someone who just receives a safe harbor contribution. Logic states that the same concept should apply to both situations and one may want to take that position to preserve the safe harbor design status. But if you don't want to be that aggressive and want to pass 401(a)(4) using the general test, remember too that you can pass on a contributions basis. Chances are very high that if you could pass coverage not treating the safe harbor only people as not benefiting, you can pass the general test on a contributions basis. No gateway is required when testing on a contributions basis.

Why don't you think the actuarial adjustment can be eliminated? I think it can. He's not reached RMD age after all. You can amend any part of the plan document. You probably will lose reliance on the VS determination letter and make it individually designed possibly. But doesn't the language already there still fit your situation? Seems to me there would be an option in Article I to provide the actuarial increase or not. If not, the suspension of benefits notice is required (standard language).

I know the proposed regs state that an election to use a credit balance to satisfy a quarterly contribution must be made by the quarterly due date. Being that election is not in place, what is your argument to not apply the 5% penalty? I find this election timing to be a bit ridiculous though and would consider ignoring it. Although I haven't yet.

I don't understand how use of the FSCB helps add to the PFB. You can only add to the PFB to the degree it exceeds the minimum contribution ignoring any use of the FSCB. Of course this is proposed regs, so are you taking a position against them?

There are no surgeons in the waterways, so no.