Mike Preston

Plans can allow the contributions posited but as QDROPhile accurately points out, very few do. The reason is that taking advantage of the provisions subjects a plan to extra non-discrimination testing (known as the ACP test) and since most people who wish to take advantage of such a provision end up being part of the class of employees subject to limitations due to the non-discrimination testing a plan will frequently find itself needing to un-do the contributions anyway. Hence, unless: 1) the plan is not subject to ACP testing (because 100% of the employees of the plan sponsor are highly compensated; or, 2) a plan finds itself in the position of welcoming non-highly compensated employees to the ranks of those who take advantage of the provision, the plan will fail the ACP test and have to disgorge the contributions made. A waste of effort, essentially.

Should be no problem. But ultimately it is up to the IRS and with government in flux who is to say that past practice is a good indicator of future action? I'd tell the client that I think it will be fine but caveat it just enough so that if the IRS changes its procedures the client doesn't get mad at me.

Millenium

Correct. You can't.

Time the DC contributions so that they end up being deducted every other year, but counted for a4 every year. You then can time the DB contributions so that the 31% applies every other year, not every year. Should be able to keep the plan well funded. Other alternative is to stick with 6% and then top-up as needed with DB benefits.

kcbirm, Just to nit-pick a bit (but not much), as long as he doesn't receive a contribution, he's eligible to be treated as excludable. Take, for example, the case where he is an HCE. In such a case, it is usually advantageous to not treat as excludable. It is an option provided to the Plan Sponsor.

I suppose it is possible that your document provides for the forfeiture to take place on the day that the distribution takes place and that the forfeiture re-allocation doesn't take place until the next year. I thought the IRS did away with that practice, but maybe not.

Be aware that the distribution deadline is not the end of the 60 day review period. But you have a valid question because the circumstance you describe can arise at the distribution deadline even if that deadline is 180 days later than what you are implying. When there are at least 30 days remaining before the actual distribution deadline I would contact the PBGC and ask for an extension.

Two separate questions. 1) You add back the in-service distribution amount ($6,000). 2) You include the $4,000 as an account balance for this individual if not forfeited a/o 12/31/15. Of course, if the $4,000 is forfeited a/o 12/31/2015 it then will be a part of other participant account balances. Hence, you will always add back the full 10k, but it may be a part of one participant's not yet forfeited account or it will be a part of the other participant account balances.

If you exclude him from coverage, then he is excluded from the ABT. If not excluded from coverage (and it is frequently far less expensive to include such an individual), then he is included.

Sorry to see you go, GMK. Enjoy life and come back every once in a while with an update if you feel like it.

Why do you need an on-screen ruler? When you are viewing the pdf can't you just slide the scrollbar? Or use the keyboard keys (PgUp, PgDn, Left-Arrow, Right-Arrow)? Or if the reader has a GOTO page number capability, use that?

In my neck of the woods, actuarial equivalence doesn't use 417(e) rates so I wasn't referring to use of 417(e), which in some economies could potentially be usable.

And I think it is wholly unreasonable.

The determination of present value in anticipation of preparing a fair settlement agreement is very much a matter of state law and rarely, if ever, involves actuarial equivalence factors contained in a plan document. Practitioners should tread with caution in this area unless familiar with the state laws that govern.

Besides the interest rate, be aware that the method you described is not just "not preferred". Off the top of my head I believe the actuarial standards (or the comments regarding the actuarial standards) make it clear that using that method is actuarially unreasonable.

Then why do you say the plan document is silent. Seems quite non-silent.

Confusion reigns..... You require proof of hardship for a ..... loan?

It can't?

So many semantic nuances.... so little time. JPOD wasn't saying that the entire $6,000 is "an MRD piece". He was saying that of the $6,000 (which constitutes a payment of the balance of his benefit) a "piece" of that $6,000 should be considered an MRD and that piece should not be rolled. Your EPCRS argument might win the day, but it hardly seems worthwhile to do anything other than follow JPOD's lead since the MRD "piece" will be but a few hundred dollars. Why risk the plan's qualified status? It certainly doesn't make sense to file under EPCRS, IMNSHO.

Stuck.

You have answered your own question. If the timing of moving the rate downward by 1% creates a debate then moving the rate upward by 2.5% would have an impact that can only be described as HUUUUUUUUUUUUGE, or bigly.

Yes, you can. It is an urban myth that one can't.

Close. What you have wrong is that the DB minimum is limited to the amount deposited so, in the second case, when you deposit $194 (instead of $200) to the DB, you don't accomplish anything because the total deductible drops to $218. In the first case, if you deposit $200 to the DB the total deductible is $224. In either case, you have contributed 6 above the 6% resulting in 6 being non-deductible.

If the doc has fail-safe language you must follow it.