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Mike Preston

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Mike Preston last won the day on March 29 2022

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    Enrolled actuary. Previously sysop of PIX BBS (now defunct). Pension generalist. A little expert testimony thrown in.

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  1. A swing and a miss....... none of this is relevant to the issue being discussed. That issue is restructuring to satisfy 401(a)(4), while satisfying 410(b) on each restructured component. If you want your HCE2 and NHCE3 to be tested separately then you have to ensure it satisfies 410(b) [coverage]. One HCE out of two and one nhce out of three results in a coverage percentage of 1/3 / 1/2 which is less than 70% so you have to utilize the ABT to allow a perentage lower than 70% to satisfy 410(b). But the a4 regs say you can't use ABT on a restructured group unless that group is a reasonable business classification. There are no explicit rules on what constitutes a reasonable business classification. I think it is fair to say that the IRS will, given the chance, define it more narrowly than I would like. So, caution is advised as per Corey's comment.
  2. Whatever happened to just following the plan document? Issue been around for years. Sometimes the plan wins sometimes the plan loses.
  3. True. I should have mentioned that. With a group that small and two hces it is highly likely in my opinion that one can find a reasonable classification to work with. The devil is in the details of course.
  4. And, of course, WTF is the actuary asking of you? Can't he tell? Easily? Something just doesn't add up.
  5. Taking all of the above into account, of course it doesn't sound right. And, site unseen, I'd wager a fair amount that it is not so. But it *is* possible. Without a whole bunch of information there is no way to tell.
  6. If a regular ps then testing with permitted disparity the nhce should end up with less than 6%.
  7. Do you mean the 2022 "new" tables? Or a table applicable to a year greater than 2022? If the former, yes. If the latter, no. Use at your own risk. 1.401a9 2022 Tables.xls
  8. No, it was C.B. Zeller who did that. My program that is commercially available can do it but you shouldn't have to purchase a program to do this when every administative system will do it for you, too.
  9. The formula appears to be a very simple calculation of the account balance divided by the annuity purchase rate. Two of them, in fact, because the disclosure is required for both single life and 100% joint and survivor (assuming spouse the same age as the participant, I think). You calculate the annuity purchase rate using a published interest rate (I think it was 1.2% last time I looked) and the 417(e) mortality applicable to the date of the calculation. I have a recent post where I displayed how my program can be used to do the calculation. However, it shouldn't be necessary to purchase a separate program to do this as every admininstration system will have a method for doing the calculation. I believe C.B. Zeller has published a free excel worksheet that can do the calculations:
  10. Are you guys sure you're talking about the same test?
  11. Notwithstanding the fact that you can use compensation only earned by those who have adopted the plan, you must use all three for section 415 purposes.
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