Cloudy

Traditional DB formula of [52.5% (AMC) + 12.5% (AMC-CC)] x Part/25, fractional accrual Partic. / Total Partic. Does this formula satisfy the requirements for a designed based safe harbor?

I'm not sure what they were thinking. I will say that I like the company and we have some really good people. I think this may get sorted out, it's being discussed, I'm hopeful anyway.

Thank you. It looks like I mispoke in that the 4 day turnaround is not actually part of the service agreement, that is an internal deadline.

I am an enrolled actuary and I work as a pension actuary for a financial services company that acts as a custodian for plan assets. At this company when a plan spsonor makes a deposit the financial operations department notifies the actuary that a depsoit was received and then the actuary needs to submit instructions to the financial services operations people telling them to invest the funds per the plan spsonors investment directives on file. Our company has 4 days to turn this around per the service agreement. Ignoring the fact that executing financial transactions is a poor use of our time, my concern is that because the actuary has discretion on when to invest the funds that maybe it crosses the line into having "authority or control over plan assets" and the actuary becomes a fiduciary. That may be a stretch but I am a little uncomfortable and I would like to know what others think. Thanks.

Mike's interpretation of the facts are accurate. I am only concerned with the a26 test meeting the .5% standard for the 50 / 40% passing mark. Coverage and nondiscrimination testing are not a problem. I appreciate everyone's help, thanks.

I have a CB plan that failed 401(a)(26) when testing the current year accrual. A couple of years ago the plan reduced the rank and file participants pay credit from 9.5% to 4%. Although I have never needed to use it, I believe that I could do accrued-to date testing for the purpose of passing 401(a)(26). Is that correct?

Traditional private sector DB plan. Currently QJSA is defined as J&100%S. Can the QJSA be amended to J&50%S? Or, is the QJSA an optional form subject to 411(d)(6) protection?

My understand from following the ACOPA listserve is that the .5% requirement after offset applies to the upcoming IRS pre-approved document, but not otherwise. That is an interesting point that you make, but I am wondering if 417e applies regardless.

Do you mean why set up a floor offset arrangement in general, or why use a CB plan rather than a DB plan in a floor offset arrangement?

Can a cash balance plan which is part of a floor offset arrangement get whipsaw relief (statutory hybrid plan)?

Thank you.

I am (considering) using the accrued to date testing method for a medium size DB plan. I typically use the annual method for my smaller plans, which are usually DB/DC. A participant has an AB but because they worked less than 1000 hours did not accrue in the current year. (Worked 800 hours and still active.) Are they "not benefiting", or do I use the AB/Svc/Ave Comp?

Sponsor has terminated DB plan in 2015, participants will be paid out in 2016, and is considering starting a CB plan in 2016. I know that the DB benefits need to be considered for 415, and I am aware of the predecessor plan rules for vesting. The decision to terminate the DB plan was made before any thought was given to adding the CB plan, but it works to side-step doing a CB conversion. Are there any problems with doing this?

Andy, Since the plan is terminating I don't think the IRS will have a problem with offering a LS to retirees. Have you had problems? I realize there are other issues, such as with annuity pricing, but we don't anticipate that with this group.

Thank you. FYI - Installments are definitely subject to 417(e).

Terminating traditional DB plan. Owners spouse age 75 has been receiving installment payments to satisfy RMD requirements but will now elect a lump sum. Election forms with spousal consent were completed at the time. I feel good that this is a new ASD, all optional forms must be provided, a new spousal consent is required, and that using current 417(e) rates is correct. To date she has received 6 annual installments out of an 18 year certain benefit. Is the lump sum value: 1. The 417(e) value of the normal form accrued benefit reduced for payments received. 2. The 417(e) value of the remaining certain payments. Optional forms would be calculated from that value. 3. Something else. We are having a debate in the office. I think it's #1.

That's what I think too, Tom. It was an oversight.

Classic CB/DC for a law firm: DC1 - Partner and Staff DC2 - Associates (no keys) CB - Everyone (but Associates at $0 pay credit) We took over the plan so not involved when the design was implemented. I don't know why the Associates were allowed to participate in the CB plan with a $0 benefit rather than just excluding them as a class. I can't come up with a reason but I have to ask if I am missing something? Coverage related?

Can a majority owner that is in-service and past NRA and elects to receive a monthly annuity, or alternatively elects a LS but only receives the allowable monthly annuity due to the 110% restriction, then after commencement of the monthly payments waive that benefit in order to make the plan sufficient for termination? This is a PBGC covered plan.

DB plan with a 70% AFTAP. Plan document allows lump sum payments to term vesteds, but now restricted to 50% of the otherwise payable LS. The 436 amendment says that there is no new ASD when restrictions no longer apply. Does that mean that you cannot allow someone to elect to receive the 50% LS now and delay receiving the rest of there benefit to a later date...because that would require a new election which would be a new ASD....or is the new election not a new ASD?

Thanks for your help Tom!

Thanks Tom. So the people with 1 YOS but less than 2 YOS will be in the ABT with whatever benefit they got in Plan 1, and they will be in the a4 test with zero (not benefiting for a4) since only those with 2 YOS get any benefit in Plans 2 & 3.

I need some help/confirmation that I will be doing coverage and nondiscrimination testing correctly for the following situation: 3 DC plans - all plans cover all employees. 1. PS/K 21 & 1 2. MP 21 & 2 3. PS 21 & 2 Plan 1 meets coverage on it's own and the PS contribution is that same % for all. Plans 2 & 3 combined and x-tested. For 2 & 3 the combined plans pass the ratio percent test but need the ABT to pass rate group testing. Questions re plans 2 & 3 testing: 1. Can all employees with less than the 2 year eligibility be excluded from both the ABT and the a4 tests? (In other words, someone that has 1 YOS but less than 2 YOS will be "excludable" rather than "not benefiting".) 2. Should the ABT benefit % include the K & PS benefits from Plan 1? Thank you to anyone that replies.

Calendar year CB plan is terminating 8/31/15. The plan has been tested as a CB/DC combination arrangement. The DC plan is not terminating. 2015 pay credits will be based on comp from 1/1 - 8/31. The DC contributions will be based on full calendar year comp. What is my testing comp if I continue to use the annual accrual method? I think I have would have to test the partial year CB pay credit on a full year pay in this case, but I would like to hear what others have to say. Thanks.

Looking at a cash balance plan as a potential takeover. The pay credit formula for the owners is based on 401(a)(17) limited comp then subtract out the bonus (comp - bonus). It seems like that allows the owners to virtually set their pay credit every year based on how much of their pay they label as "bonus". Does anybody think this is a concern?