Mike Preston

So much for universal agreement.

More confusion. Where in the regs does it say that an annuity purchase is a prohibited payment? Notwitstanding the answer, it is a rare plan that has a required annuity purchase/immunization provision.

No doubt. Which is why, if MJAnderson is still reading this thread, he should be aware of the possibility and therefore recognize that he will no doubt need to hire an attorney to fight against that result. Pension practitioners might universally agree that it is unfair for a judge to do that, but the judge will not be aware of the unfairness unless it is properly explained.

Why does the existence of a contractual intra-Plan requirement to purchase annuities bear on this issue? Either the plan does or does not provide for an accelerated payment option.

I guess I'm in an obtuse mood. The regulations you cite are no doubt cited correctly. But I am loathe to cite them without caveat do to the fact that they are not expected to become final with respect to years before 2010.

No, even if it doesn't get it to 80%. But that would presume that there are no options which would trigger the restrictions. I understand that there aren't lump sums, but are there other benefits would trigger them?

My recollection is that approval is granted to any method that is not inconsistent with the new law, not that it is a necessary change.

You mean the regs that aren't really effective for 2008 plan years? And probably won't be effective for 2009 plan years?

Why is the three-tiered rate structure more difficult than a single rate structure? Nobody does actuarial equivalence calculations by hand, so having a computer program develop the factors should be somewhat similar, shouldn't it?

You can change to EOY in 2008 because it fits within the structure of the preapproval. You will, hopefully, be able to switch in 2009 at your option, as well, once the IRS clarifies the effective date of the funding regs being 2010. The requirement to have an EOY funding method for three years in order to use the EOY method of determining the AFTAP for 2008 (based on 12/31/2007 CL numbers) was eliminated, I believe. Or, it will be. I lose track of what has been finalized and what hasn't without looking it up. But it clearly must be before all is said and done. So, you seem to have a choice. Stick with EOY val for 2008 and rerun a 12/31/2007 CL (or, just use the CL from the 2007 Schedule B, adjusted to EOY, if you feel that satisfies the rules), or stick with BOY val for 2008. However, whatever you do, you are merely trying to ensure that the previously published AFTAP is not materially different from what you end up with.

Bully pulpit oral discussion from IRS actuary at industry conference. So, final published guidance may be 180 degrees the other way. We are talking expense here, so inflating it a bit by treating all outflows as having taken place at the beginning of the period, you decrease the effective assets at end of year. This is probably not much different from what you were initially suggesting.

Plan design issue. Can go either way.

Actual. Good news.

I have heard that they will NOT.

Forget the question about DB. The OP already said that there are both pension and 401(k) plans involved. If the contribution is to the "pension" plan (whether DB or MP), then there is an argument I've heard that goes roughly like this: a contribution is required under the terms of the plan and if not made by one member of the controlled/affiliated group, then it is ALLOWABLE (although not required) that same be made by another member. I wouldn't do this without ERISA counsel in pocket as to an opinion on it.

You need to look at the definition of limitation year. Was it shortened? If so, plus .667. If not, then, plus 1.000, per limitation year.

At issue is whether Ima has the authority to sign the form. In the circumstance you describe, the authority has been delegated to her and she can sign. Would "A" be able to claim, if the IRS audited and it turned out that the information provided was wanting, that Ima was not authorized to by the Plan Administrator to sign the form? If so, she can't sign. But I doubt such a claim would be valid.

DB plan?

Call the PBGC. They are pretty responsive on issues like this.

That sounds like there was no increase in lending. You might find that after reading the regs you can offer more to your client than the $2,600 previously mentioned, as long as the repayment schedule is appropriate.

If the gateway is 5%, yes. If you want to leave the gateway at 3%, no. If the gateway is 3%, the maximum allocation for the HCE's would be 9%. Is that enough?

O(riginal) P(oster)

Getting back to the issue, I'm not sure there is a problem. I seem to recall there was a PLR that took the position that a "repayment and a new loan" was NOT a "repayment and a new loan" in certain circumstances. My memory bone tingles when I think that the relevant circumstances revolved around repayment terms. First, it is clear that the intent of this individual was to increase the single allowable loan, not to terminate the existing loan and establish a brand new one. My memory bone is tingling again.... this time the examples in the loan regulations are coming to mind. Assuming you can find the justification for establishing the loan as a replacement loan rather than a new loan, I seem to have yet more tingling that gets stronger when I think about establishing an amortization schedule for the new loan which provides for payoff of the first loan within a five year period measured from the date it was established and payoff of the increased amount within a five year period from the date of the "new loan." So, you might have the power to right this ship merely by having the repayment schedule adhere to the regulations. I think I'm done tingling.

http://www.dol.gov/ebsa/regs/AOs/ao1999-13a.html

The Pension Answer Book is wrong.