Mike Preston

Remember that to use the abt for coverage purposes your component plans must be reasonable classifications. You can't just cherry pick the 5 who didn't benefit from the 10 total and automatically claim eligibility. However, with that said, I know that some people believe that if classification number 1 is "everybody employed at the end of the year" and classification 2 is "everybody not employed at the end of the year" then you would have reasonable classifications. Anybody want to opine on that piece?

I think, although I'm not entirely sure, that I'm going to disagree. If a participant became a participant on 12/28 and died at 5pm that day, would they have a benefit payable? I think the crediting date is an accounting fiction and doesn't mean that there is no accrued benefit prior to that point in time. If it did, then the 1000 hour rule would be meaningless. With a 12/28 snapshot date, you know you can pro-rate the premium to 1/12th of what it might otherwise be, right? Or have they changed that rule recently?

I know this is going to sound like a cop out, but the way the document is written will control which comes first. However, with that said, I'd be very surprised if the language in your document didn't devolve into a straight across the board contribution of 3% for the terminated, along with an integration piece that is slightly less than 3% and that integration piece ends up going only to the actives. Body counts, compensation total for actives and terms, excess allocation total for actives and terms and contribution amount would be needed to give you an example.

Seems cut and dried to me. Participant had some of their benefit taken away pursuant to a QDRO. They also have some left! Whatever they have left is bereft of a claim from ex-spouse as to entitlement of J&S. Hence, if new wife satisfies definition of spouse for spousal benefit rules, new wife is to be treated as, uh, spouse. The much more interesting question is what benefit is the participant entitled to if the plan charges for the QPSA. Now, *THAT* is an interesting question. *IS* that the question?

Bill, according to what you and I listened to in DC, it may be more than that. There is also a potential document issue.

Must you shout?

It might have something to do with the fact that the catchup limits for IRA's are very well understood.

The copy I have is not cited. Perhaps they will give it a number of some sort when (if?) it is published.

There is, indeed, an private area that one must be a member to enjoy. However, most of the website is available to the public. That includes the area on articles. Unfortunately, the MVAR TAM hasn't made it to the website, yet, but it should shortly. mike

Sounds about right.

You are not wrong.

Which is complete bullox, IMO. The plain language of the regulations makes it clear that there is an expected adjustment for all plans subject to minimum funding. Not just plans that are both subject to minimum funding and have a waived funding deficiency. If that is what they meant, they should have said so. They didn't.

Harsh, indeed. True? Not quite. I believe the threshold required to force a plan into a position of having to follow its own rules with respect to a potential claim for benefits (including issuing explanation letters as to why a claim is denied, for example) is a bit lower than what you imply. Only competent ERISA counsel can help determine the threshold for this particular individual and the plan in question. You might want to search on things like "colorable claim" or "arbitrary and capricious" for discussions on this point. To put it another way, let's presume the worst in that the beneficiary designation form still lists the last ex-wife as the beneficiary. Even in that case, if there are other documents that appear to nullify the beneficiary designation, I would probably want to have a court of competent jurisdiction make the determination, probably through an interpleader action, rather than just assume that the harsh result you imply is inevitable. But this is for competent ERISA counsel to help an individual decide how to pursue.

If 5/1 is the participation date, then comp from participation date through end of year is an option available to you, isn't it?

Since it is yes, it is simpler.

Have you read it, lately? You can reduce benefits to the level that they WERE as of the first day of the year to which the amendment applies IF and ONLY IF "the plan administrator files a notice with the Secrtary of Labor notifying him of such amendment and the Secretary of Labor has approved such amendment, or within 90 days after the date on which such notice was filed, failed to disapprove such amendment. No amendment described in this subsection shall be approved by the Secretary of Labor unless he determines that such amendment is necessary because of a substantial business hardship (as determined undrer subsection (d)(2)) and that a waiver under subsection (d)(1) is unavailable or inadequate." It isn't easy to accomplish, but it CAN be done if the circumstances fit.

Looks right to me.

See IRC Section 412©(8). Yes, it can be done.

You need to arrange for competent ERISA counsel and follow their advice. They will probably argue that your best bet is to have them, as your attorney, write a formal letter to Delta asserting your belief that you are the beneficiary. That letter should be copied to Fidelity (although I don't think it really needs to be). That letter will let Delta know that you are making an actual claim for the death benefits. If they don't believe you are the proper beneficiary they will then need to respond within a certain period, as per the plan's policy (see the Summary Plan Description for what that policy is). If they don't respond, or even if they do, your attorney will need to be prepared to file suit against Delta on your behalf. You really have no choice at this point other than to engage competent ERISA counsel to assert what you believe on your behalf. If Delta wants to disuade you from pursuing this in court it is advisable for them to show you chapter and verse why they believe you are not the beneficiary. Nothing is cut and dried here. Delta may not respond at all. On the other hand, they may send you everything you need to make a good decision as to how to go forward. Or, they may do something in between. What you do will depend on what they do and will depend on what your attorney advises you to do.

You need to check your document. Very few documents define an entry date for 401(k) purposes and a different entry date for PS purposes. Although, generally, the effect is as you describe, the fact is that entry takes place once (obviously as of 1/1/06 in this case) but that eligibility for the PS contribution doesn't mature until a later date. He is a participant from 1/1/06. I would be surprised if anybody argued for the use of partial year compensation for testing purposes here. About the only way that could be done would be to argue that compensation for the last 1/2 of the year is a 414(s) compensation definition. I don't see it. Not as far as I can tell. This is a plan design issue. If somebody enters mid-year and gets a full year top-heavy allocation, one can use mid-year compensation because that IS the compensation earned while a participant. In your case, it sort of (well, a bit more than sort of) works against you because he is a participant for the entire year and the PS contribution is predicated on compensation earned for a period which is less than the entire year. Actually, I'm taking your word for it that the allocation actually works that way. Wouldn't surprise me to find that your document actually has language in it that calls for this person's compensation to be measured from 1/1 through 12/31/06 notwithstanding the fact that you have represented it should only take into account compensation from 7/1 through 12/31. I would be much more inclined to believe that if you were speaking about 2 separate plans. Are you? BTW, one small correction to the entire thread (going back a few years, I know) is that gateway isn't necessary at all for an HCE, so if top-heavy is 3% of full year compensation, it may be irrelevant whether 5% of 1/2 year compensation exceeds that - but only if the individual in question is a non-key HCE.

Remember that any contribution made more than 30 days after the due date of the tax return counts as an annual addition for the subsequent period. If nobody quits this is rarely an issue, because if it falls into the subsequent year as an annual addition, the 100% of pay limitation makes the issue moot. But if somebody has very little compensation in the subsequent period, such a contribution/allocation could violate 415.

That sounds right to me. However, the example being discussed is with respect to a plan initially adopted 1/1/05, isn't it? I didn't see any calculations that drew the distinction you are making and with which I agree.

Frank,whose interpretation are you agreeing with?

I think that this particular issue is pretty clear and has been clarified for a number of years. It is threads like this one, which call into question the issue as if nothing has been discussed before, that lay the groundwork for future confusion. The original post said it all. Sal's description is quite clear. I just don't see where 404a7 has any bearing on the determination of maximum deductible contribution when you have a set of participants in the DB plan and in the 401(k) plan and another set of participants in the DC plan and in the 401(k) plan. There is no overlap between the DB and the DC plan; overlap in the 401(k) plan is irrelevant. If there is any confusion at all it is because the eligibility for the non-401(k) portion of the DC plan doesn't appear to preclude those who are participating in the DB plan from being eligible for employer contributions in the DC plan. I agree that it would be better plan design to have it specified in this manner. But I don't think it is fatal not to have done so because if they don't get an allocation of employer monies (contributions or forfeitures) they most assuredly are not benefitting in the 410(b) sense of the word and, per Sal's writeup, are therefore not "beneficiaries" in the 404a7 sense fo the word, either.

Interesting interpretation. If you are going to go along with the concept that the initial adoption of the plan on 1/1/05 is an amendment for this purpose then most calculations I've seen for 2006 would not be, as you posted, "($130,000-$55,000) X 150% -$85000" but instead, just like you did for 2005, "($130,000-$130,000) X 150% -$85000". Or am I misinterpreting?