Mike Preston

I'm confused. First you say that it is wrong for the court to not allow the annuity rights of the spouse to be invaded. Then you say that recalculation of a benefit is to be avoided. Are those two things contradictory?

Lori, what you need to do is to do the complete allocation yourself, based on how you think it should be done. What you will find, I think, is that the allocation was done properly. Try it. Post what your calculations are, if they end up with a different total.

Check this out: http://benefitslink.com/perl/qa.cgi?db=qa_..._employer&id=31

What I'm trying to say is that you obviously have some questions about this plan. What to _you_ think the purpose of an IRS submission is?

If he has no employees, the PBGC won't be involved. I guess getting an extra $30k or so in deductions might be worth an uptick in adminstrative expenses, maybe even worth having to deal with an actuary. (shudder). But I might be wrong.

Seems right to me.

Yes, I should have said "correct, with respect to the conclusion", rather than merely "correct". 412 and 404 are indeed different animals.

You are both correct. Hope to see you guys at ASPA.

Why in heavens name doesn't it adopt a plan with a 10/1/2002 through 9/30/2003 initial plan year and then change the plan year to 12/31/03? Wouldn't that solve all the problems of not knowing what falls into what year?

Yes, he should have. Write him a letter telling him that $X was not rollable and that if not removed from the IRA before 4/15/04 will be treated by the IRS as an IRA contribution on behalf of 2003. If $X exceeds the allowable personal IRA contribution available to participant, excise taxes will be due. Then call the participant and offer to help them work with their financial institution to have the monies withdrawn from the IRA. Might be a pain. Goal is to have the financial institution treat the withdrawal as a minimum distribution, but may have trouble because no IRA account balance on 12/31/2002.

Correct. If they had made the contribution 5 days later, the IRS would have gone peacefully, on one condition. The sum of the two minimums still can't exceed the FFL in the second year. From what you have described, that would not have been a problem.

Not me.

pax, why "must"? I always have thought that you must change to UC *IF YOU CHANGE*, but if you maintain what has been in use in the past, you may continue. I know the IRS doesn't like it. But I'm not aware of anything that says you must change the funding method unless you end up with unreasonable results. If I recall, the IRS has stated that unreasonable results are established if the normal costs are negative, or the UAL is negative. But other than that I haven't seen anything. The problem with forcing people to UC is that it flies in the face of the old RR (I don't have the cite handy) that requires an actuary to ignore the plan's termination when developing PVFService. That is, some actuaries had tried to argue that once a plan was terminated, future service went to zero and NC = PVFB - ASSETS. IRS *really* didn't like that.

You are doing your first cb plan termination and your client doesn't want to submit? If this were not a cash-balance plan would you use the 417(e) rates from 2003 or 2002 if you were paying out in 2003?

As mbozek said, in not so many words, you can close the barn door now.

Gateway is required even if all companies contribute the exact same percentage of pay. 1.401(a)(4)-8(b)(1)(iv) is pretty clear. "...if the allocation formula for ALL employees....a SINGLE schedule of allocation rates...". Any particular reason they didn't want to have these companies in separate plans?

Best plan is a DB. With prior earnings history may be able to deduct entire 60k (or thereabouts).

Tough call. Depends on whose ox is being gored. In case number 2, shouldn't there be an amended tax return? If not, hardly think you can exclude the assets and pump up subsequent contributions!

Blinky, pattern of -11g amendments are only restricted for b,r&f's, not for amounts testing. Somewhere in the vast archive of BenefitsLink this has been pointed out before.

mbozek is correct. The monies deposited in 2000 are deductible on the 2000 tax return, but there is a catch. The catch is that they are only deductible if they satisfy the definition of deductible under 404. For this purpose, you would do the 2000 year calculation, excluding the $78k. If that pushes the 2000 deductible contribution up by $78k (unlikely, but I guess theoretically possible if the plan was subject to the FFL in 2000 assuming the $78k was in the plan), then the entire amount is deductible. You say that the minimum for 2000 was $27k. You didn't say what the maximum for 2000 was. And you didn't say whether the maximum for 2000 was calculated based on the $78k being included in assets. The "includible" contribution stuff merely allows you to sum two minimum funding amounts. If a contribution isn't "includible", then you still get to deduct it if it falls within the 404 calculation for the year.

Let's think about the consequences of permissive aggregation for TH in this type of situation. Certainly, as you indicate, the addition of the union plan, whether it is DB or MP, to the "mix" doesn't change the 401(k) testing (ADP/ACP). However, the employer contributions, if any, would be aggregated with the other non-union plan and the benefits from the union plan to determine compliance with 410(b) and, therefore, 401(a)(4). Most of the time union benefits are heavily weighted towards NHCE's rather than HCE's. In fact, if the union plan participants are 100% NHCE's, the addition of the union plan can only improve the discrimination testing under a4, right? I suppose there are exceptions to every rule, but that would be my thought process. Does that solve the problem?

I don't think there is one. Well, there is for the "gap" period income between the end of the plan year and the date of distribution, which is 10% of the previous year's earnings times the number of months, but then again, gap period income can be defined in the plan as zero, so that would be an even easier safe harbor for the gap period.

Don't disagree. I think that Plastics Engineering is a citation that bears on the issue.

Sal Tripodi's latest ERISA Outline Book contains language that supports the use of either method and that the IRS is unlikely to challenge either method.

Mike, would you mind giving a small numeric example of a set of design criteria which would satisfy 411 and then how a modification would result in a design which fails 411? If you don't have time, don't bother, but if you have an example handy would you share?