Mike Preston

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.

Yes.

"Alternatively, it is my understanding that an owner can irrevocably waive benefits in order to reduce funding requirement." Based on what?

That is the way I understand it.

I'm confused. If this is a standardized prototype, then all you have to do is follow the terms of the plan to pass both 410(b) and 401(a)(4). The plan should tell you what to do to ensure that you pass. Are you sure that your plan allows the allocation to be made solely to those who are employed on the last day of the year? See Tom's message (#2). I would be surprised. The rest of this thread doesn't mean much if your plan already has provisions in it that you must adhere to.

For 2008 it is optional and therefore needs an amendment to the plan to be taken into account for funding.

If it is a vanilla ps plan, where such an amendment would be allowed, then North Shore Auto Body v ???? says that the person does not become a participant.

Maybe I'm not understanding. What makes you think it is merely an average benefits test that is being discussed? The average benefits test is usually discussed in the context of a 410(b) test, not a 401(a)(4) test. Maybe we need clarification as to just what test is being run here and what, exactly, ABR means. What I had surmised is that the plans passed 410(b) and the test that is being run is merely the 401(a)(4) rate group analysis. In that context you run each plan separately and ignore the benefits in the other plan entirely when testing a given plan. But you still can't impute permitted disparity twice!

You can take what Sal says to the bank. [Or, as may be the case this year, to the government which has taken over said bank.]

You can certainly test them separately but there is a "gotcha" waiting for you if you do: if you impute permitted disparity you must limit the imputation in the plans so that it is not double counted. Obviously, it is far easier to do this if you just run one test, since most software is programmed correctly with respect to imputation on a combined plan basis.

Excellent timing. The DOL issued them today: http://www.dol.gov/ebsa/regs/fab2009-1.html

Maybe not. If the design is consistent with 401a4 assumptions, and there is nobody who is beyond retirement age, the plan will, by definition, pass the test. So there is no need to run it. However, if you aren't sure that you don't need to run it, by definition you will not know that the assumptions are necessarily consistent with 401a4 assumptions and, therefore, it is probably better for everybody if you do run the test. Of course, this assumes that coverage satisfies 410(b), too.

Calendar year plan with BOY val can use January YY (0 month lookback), December YY-1 (1 month look back), November YY-1 (2 month look back), October YY-1 (3 month lookback) or September YY-1 (4 month look back). Calendar year plan with EOY val can use December YY (0 month lookback), November YY (1 month lookback).... August YY (4 month look back). I do not agree that you can look forward in any manner (i.e., to the "next month".)

Nope, just the regs themselves, as a whole. I'm sure you can find one if you look at all of the examples.

Takeover where somebody had done it that way in determining the contribution for the year in question. It was easier to just do it that same way than it was to re-do it, as they had actually already done an -11g amendment to make the whole thing work. Changed it for the next year.

As I recall, for those born before a specific date, if they had already commenced RMD's, you had to give them a choice. Otherwise, we amened the plans to remove the requirement for an RMD for non-5% owners. Ever.

Practically speaking, yes, but technically speaking one may not impute more than 100% between the two plans. I've only ever had the need to split the disparity once in over 15 years of doing this stuff. The latter.

Oooh, good point. I agree that the plan can't have language to turn a 2008 deferral into a catchup for somebody who turns 50 in 2009. But it still might not have to return the excess, or recharacterize it.

The broker is mishuga, nu?

The catch-up issue is a red herring. Take the situation where somebody participates in two plans and, between the two, defers in excess of the 401(a)(30) limitation. The participant MAY ask either plan for a refund, but the plans NEED NOT have a provision that allows for a refund. Hence, this is a document issue. The document can provide that a refund will be made. The document can provide that a catch-up will ensue (remember, plans don't need to provide for catch-ups, but as a rule, they do). Do you get the impression this is a RTFD issue? (Read the Fantastic Document).

It depends on plan provisions, I think. If a DB plan, I think you are stuck. If a DC plan, then the question is whether the participant is otherwise entitled to a distribution from the plan. If so, then this question is silimar to the one that asks whether a participant can take $1,000 more than their RMD. Some plans, yes. Some plans, no.

Yes, but.... there is an IRS announcement on this issue and they recognize that anything tied to 417(e) is not provided with 411d6 protection. I'm pretty confident of this, even though I don't have time to search for the cite at the moment.

I've only seen a comment to DOL made once in my life and they asked for a copy of the NTIP from the commenter to determine whether the comment was timely. You are ok.