Blinky the 3-eyed Fish

I would not choose to ignore RR 81-213. Whether you establish the 412 base of 50,000 seems to be a point of debate.

I should let this die, but I can't. I guess I am going for the "wow". In the situation where the numerator is reduced and the participant is considered benefiting, I personally don't see how it cannot be a factor when you are getting the best of both worlds. The NHCE is considered benefiting, is getting a much reduced accrual that if he/she worked 1,000 hours, and no general testing is required. If true, this is definitely a situation looking for a client.

I am not sure I agree, maybe if based on common sense alone. Also, there is the blurb on page 31 where it specifically states where the service provider is an entity, you report the change in entity, but not a change in individual. While an enrolled actuary is an individual, I would argue he/she is operating under an entity as an employee of that entity.

Mike, you haven't addressed my thoughts on the differing formulas that apply if you do choose to reduce the denominator and consider the person benefiting. Don't you think it's a concern or am I way off here?

I am not sure how the QNEC could be more efficient in a new comparability plan if the (a)(4) testing must pass with and without it. I am confused why a QNEC helps in a new comparability plan.

Yes Mike, but you have a case where different formulas apply to different people. Those with over 1,000 hours get an increase in their numerator, those with less than 1,000 hours get a decrease in their denominator. Don't you think this would require general testing? Consider an egregious situation where everyone begins full-time and are switched to part-time except for an owner. He reaps the huge benefits while his staff gets miniscule accruals. This certainly wouldn't fly, so the same should be said with only one person affected. Andy, congrats on the Red Sox, BTW.

All you need to do is prepare an amendment to the plan which has the new entity replace the old as the plan sponsor. At that time you can change the plan name as well, if needed. On Form 5500, there is a place to mark the change in sponsorship from one entity to another.

This question has been asked many times on these boards. The quote that always comes up is Jim Holland's paraphrased "No comp, not in the test". Makes sense in that there is no mathematical percentage to use in the test. It's not 0% and it's not 100%.

I too think that by the definition of 1.410(b)-3(a)(1) he is benefiting. But wouldn't you then have a situation where different participants receive different accrual rates and the plan must be general tested. What I am not sure of is if you are able to consider the person as not benefiting akin to someone only receiving a TH minimum to keep the formula a safe harbor.

Of course there is the chance that your document already spells out the correction method for 410(b) failure. The toucan is supposed to follow its nose. You must follow your document. If there is no fail-safe language, then 1.401(a)(4)-11(g) is your guide.

I found it difficult to bracket a word problem. I think a comma placed here would yield 15.85, but I isn't no English majur, so me not fer sur. "...baker's dozen, plus two."

I am sure a wife whose husband cheated on her would answer differently.

Tom, I would like to base the HCE determination on a period of months equal to either two half-dozens or the sum of the angles of a triangle divided by a baker's dozen plus two. Is this possible?

It's not too late to provide the contribution, but it is too late to have it serve as the means to avoid ADP testing.

I am just referring to pax's comment regarding the drafting of a plan to prevent minimum distributions for 5 years. To do so, one would have to have a 5-year cliff vesting schedule and exclude years of service for vesting prior to the effective date of the plan. But my question was that if the plan is TH, then you cannot have a 5-year cliff vesting schedule, but must have no more than a 3-year cliff vesting schedule. I don't know of an exception to this rule just because the plan covers only the owner. The original post requests the best plan, but doesn't specify a 401(k) plan. Now, obviously, if there are 401(k) dollars, they are 100% vested. But, I am an actuary, so I say GO DB!

Pax, if a plan is covered by the sole owner and is obviously top heavy, wouldn't that require you to use a 3-year cliff vesting schedule. I don't know of an exception to having a non-TH vesting schedule for key-only plans.

Yes.

Yes, the EA exam always has a question that has you establish a gain/loss base on a plan with a credit balance that comes out of full funding. It's a situation where the base is not equal to the difference between the expected unfunded and the actual unfunded, but rather is a base that forces it to balance. As for my original question, I thought I would get different answers and was just curious. Either way it's done will yield the same contribution result as far as I see. And as for the base, either the plan came out of full funding and the base is created to force it to balance or the plan remains fully funded or that base is wiped away for next year.

An overfunded plan using the unit credit funding method has a credit balance. I am curious how those out there would handle establishing new bases each year. Would you: a) establish a new base each year to force the balance equation to work, knowing that the base will only be wiped out next year because the plan hits the FFL? b) not establish any bases because the UAL is not greater than zero? c) do something different?

No. The gateway requirement first apply to plan years beginning in 2002.

I had to research that once and too came to the conclusion there is no requirement to continue filing just because you did once. However, we always file EZ's for our plans simply to file the Sch P and get the statute (or statue if your Cosmo Kramer) of limitations running.

You can amend from prior to current year testing. The GUST remedial amendment period has nothing to do with it. Though, there are some people that will aruge that it may be a 411(d)(6) cutback to change the testing method at this juncture, their point being an NHCE could have received a QNEC had the plan failed testing. Personally, I don't think many people hold this position, including myself, and I would say you are fine to change the testing method at this time for 2002.

No.

To shift from the ACP test to the ADP test, the matching dollars you are shifting need to satisfy the QMAC criteria. Chances are they don't but see your document. Also, you mention that the doc has the MUT language in there. Haven't you adopted an EGTRRA Good Faith Amendment by now that would have removed the MUT test? That being said you also must consider that your NHCE ACP% is just 1.03%, you aren't going to be able to shift "a percent of two". The most you can shift would be .39%, which would leave the NHCE's ACP% at .64%, which is 1/2 of the HCE's ACP%.

A DB plan is subject to 412 regardless of size, including 412(m). The notice you speak of extends far past just 1 person. I don't recall offhand how big a plan must be in terms of participants or assets for the missed quarterly notice to apply.