Mike Preston

So, Tom, what do you want them to be? (I've always wanted to say that.)

Blinky, I think that is exactly what Timeout was saying, unless I misunderstood his/her comment.

mwyatt, I'm not sure we are on the same wavelength. First, I was saying that I do not use the limit in place at the BOY, even if I'm doing a BOY val. Except in a very few cases I can remember over the years. Second, my definition of incorporation by reference does not mean that the limit increases automatically with cost of living. Those are two entirely different things. Yes, the Corbel, etc. docs include automatic cost of living increases, but they do not incorporate the rest of 415 by reference. If you interpreted those docs as automatically incorporating the increased limits of EGTRRA, I'm afraid you've got some non-deductible contributions hiding in a closet somewhere. Unless, of course, your VS docs are different from those I've seen elsewhere by the various-sized marine life. On the bright side, you have some really cool credit balances, too. (g, d & r)

Misinterpreting. The match provision of the document is usually overridden by the 415 language which ends up precluding the match in the first place. You don't give back what you didn't contribute. And if you did contribute it, it wasn't what you thought it was. That is, it is NOT a match. It is merely a contribution to the plan in violation of its terms. Whether it's source is that the plan sponsor thought they were making a match or making an employer contribution is irrelevant, IMO. What would you do if the matching formula was 100% up to 3% of pay and an individual was matched at 100% up to 4% of pay? The last 1% wasn't really a match, because it violated the plan's terms. It doesn't count in the ACP test, because it isn't a match to begin with. Same thing with a 415 violation, if the document is like the others I've reviewed this issue in.

Count me as one that universally uses the limit in effect at the end of the valuation period, not the beginning. I may have used the rate in effect on the valuation date for a BOY val in a smattering of cases, but it is by far the exception. None of this is meant to argue with the basic premise that it is a part of the funding method.

Usually, the match is precluded by plan provision.

Ooooh, it matches my recollection. That's a good thing.

There isn't much other than the Code. The only thing that doesn't appear in the code, that I'm remembering from the last time I delved into these (which was before the change in law that made them an annual addition, which was a long time ago), was that the determination of incidental was generally considered to be consistent with the insurance rules regarding anything other than whole life contracts. That is, 25%. Hence if the contribution under the MP plan was $20,000, you could put in $5,000 into the 401(h) portion and not be in violation of the incidental part of the rule. That may have been just what grew up in practice, rather than being based on anythng in particular, however.

I know that the Q&A's since 2000 are available on a web site somewhere (I forget the link). Do you know if the Q&A you are referencing is available somewhere? As I said, I long ago (probably in 1994 ;-)) gave up the concept that this is required. But it remains in the lore and a good cite to shoot it down every time it comes up would be worthwhile.

There are many plans that seem to require the loan be repaid over a period not extending beyond NRA. I've never seen anything that demands such a short period, but there are those who are quite wedded to this idea. Something about it being fiduciarily unsound to provide a loan where the repayment period extends beyond the expected working lifetime. Again, that is not my view of things, just what some people seem to say to me when I question them. If it is in the loan policy, however, I guess it becomes something that has to be followed.

No problems as far as I can see.

1. Yes. Yes. As long as each plan satisfies the rules regarding non-discrimination, you are fine. 2. Yes. Not necessary. See comment to number 1. 3. Yes. Yes. See comment to number 1. 4. See the Guest column by Derrin Watson on this site, or see: http://employerbook.hypermart.net/ Otherwise, Yes, No, No (but yes for 415 purposes - see 415(h))

The plan can not allocate the amounts if the plan is not amended. If the plan is not amended, the suspense account will be because of a plan provision other than 415. Hence, the plan will be disqualified. Amend the plan, or be prepared for a correction later under EPCRS.

Evertything you said is consistent with my understanding of the IRS' positions.

Since this involves corrections that are more than two years stale, how are you avoiding EPCRS? Under EPCRS, I don't think you can correct by merely distributing, can you?

The provision of a match is a "benefit, right or feature" which is tested under 1.401(a)(4)-4. Based on what you have described, you have an easy pass of the tests. The test under -4 is essentially the same as under 410(B). You do not need to test different levels of contribution in any way. I would be a bit concerned about using any sort of ADP/ACP shifting to pass the ADP or ACP tests, but then again, you probably aren't doing that. And even if you are, I'm not saying it can't be done, just that I haven't looked it up.

Current market rates have no bearing on the selection of standrd asumptions. Standard assumptions are also a safe harbor for reasonaable assumptions under the regs. Manipulation in this context doesn't apply.

9.5237 is indeed 7.5% GATT. 9.6156 is indeed 8.5%, 83IAM-F. 9.4903 is indeed 8.5%, 83GAM-F. All of these are not true annual annuities, but 1/12 the monthly annuity due factors. In most cases using the monthly annuity due factors divided by 12 will be the correct factors. It sounds ike the actuary mis-identified, or you misunderstood, the table names. Note that the first one, the GATT rate, is not a "standard" mortality table under the non-discriimination regs. That doesn't necessarily mean that the table can't be used for any purpose because there are certain assumption sets that merely need to be reasonable, as opposed to being forced into the use of "standard."

MGB: So, how many Schedule B's did you have to amend?

David, ignoring the terminology, do you concur that the appropriate rate to use for conversion is the annuity due rather than the immediate (which is really one year deferred) annuity rate? Also, what do you get using the 50/50 table? I think we can safely ignore the 5th digit to the right of the decimal as being due to rounding rules.

My calculation routine doesn't get either of your numbers. Where did you get yours? Note that there are two 83GAM-Unisex tables in common use. Sometimes this causes confusion. One is based on 50/50 mortality and is called, as you mentioned it, 83GAM-Unisex. There is another that is slightly different, used for some IRS and plan purposes, which I generally refer to as GATT, although it is supposed to be based on 83GAM and be a unisex mortality table. The difference between the two, however, isn't as big as the difference between the two rates you show. I get 9.34685 under GATT and 9.34679 under 83GAM-Unisex. There really isn't any way for you to do the calculations unless you have a copy of the underlying mortality factors for each year from age 65 to the end of life-span and a desire to write a calculation routine (such as in excel). The mortality tables are available at the Society of Actuaries' website. At least the 83GAM rates are. You may need to find an IRS Revenue Ruling for the GATT mortality rates.

When do you ever not take them into account? Isn't that what the definition of non-excludable means? The only exception is in a 401(k) plan where you only count, for ADP and ACP purposes, those people in the plans that are being tested together. Maybe if you gave a numeric example it would be easier to visualize for you.

Well, is it US source income or not? I'd be willing to bet a lot of money that it is US source income. It sounds like you should be having a talk with the folks in your company that hired the illegal aliens in the first place. You could just tell that they are making your life difficult!

I had actually left out the full funding limitation issue. But the point I was trying to make is that the section of 404 you mention is specifically the one relating to 412, not 404. If your funding method has a range, the use of includible contributions serves to compact that range, not leave it as it was. And when the compaction is greater than the spread, it eliminates it entirely. That is, the second year's deduction is then the sum of the prior year's includible contributions and the current year's minimum. That becomes the minimum and the maximum for the second year. Make more sense?

Three points, Blinky. One is that this was a discussion on how to deduct for the prior year, not the current year. Two, includible contributions don't escape 404, they escape 412. That is, if you have an includible contribution of $100 from the prior year and this year's minimum funding is $20, and maximum is $110, the inclusion of the prior year's amount counts against the maximum, but not the minimum. Hence, the maximum contribution for this year would be $20, because $100 + $20 exceeds $110. Fourth, it is only includible if two conditions are met. The primary of which is that it was required for 412 in the prior year, not just that it was allowable under 404. The other one is that it wasn't deductible solely because it was contributed after the 404(a)(6) deadline associated with the prior year. You probably meant all that with your statement, but I felt it needed clarification for those who aren't as familiar with the regulation.