amoy

My client has a PBGC covered 412(e)(3) plan currently. They neither want to make further contribution nor surrender the annuity contracts. Can the 412(e)(3) plan be frozen? If yes, does it mean no contribution liability any more? Is the plan still subject to the 410(b) testing and the 401(a)(26) testing? Thanks!

The client has a defined benefit plan and is a S-Corp. So the calculated maximum deductible contribution is $300,000, the minimum required contribution is $100,000, and the net profit for 2014 is $200,000. So he made $300,000 into the plan and claimed a $100,000 in loss. Is it allowed as a S-Corp to make the contribution more than the net profit?

I understand the assumption for NRA for funding/valuation purpose can be different from the NRA in the plan document. But when I am paying out someone, I should use the formula defined in the plan document and the NRA defined in the plan document. So if the NRA is defined as 62 in the plan document, then the 62 will be the NRA I am using for calculating the payout. The NRA assumption in the valuation report is irrelevant at this point.

If no ER reduction, does it mean his benefit is $1,000 as of age 55?

@ John, I agree with you for the valuation purpose. But how about for the distribution purpose? Suppose Robert's AB before 01/01/2009 was $200, and the AB after 01/01/2009 was $800. So for the distribution purpose, I will have to calculate two portions: the first portion of $200 is treated as of NRA 55 and the second portion of $800 is treated as of NRA 62. Am I correct?

Recently, we took over a plan. In the original plan document, the normal retirement age was age 55 and 10 years of service. Effective as of 01/01/2009, the normal retirement age was amended to be age 62 and 5 years of participation due to IRS final regulation with respect to the normal retirement age back in 2007. But there is an early retirement age definition in the current plan document which is age 55 and 10 years of service, no reduction for the early retirement benefit. I assume it is used to protect the benefit was accrued before the amendment. So there is a participant eligible on 01/01/2009, terminated in 2014 and he is age 38 in 2015. His accrual benefit based on the plan document is $1,000 per month. Below is the normal retirement benefit definition from the plan document. "Normal retirement benefit. The amount of monthly retirement benefit to be provided for each Participant who retires on the Participant's Normal Retirement Date shall be equal to the Participant's Accrued Benefit (herein called the Participant's Normal Retirement Benefit). A Participant's Accrued Benefit is based on a retirement benefit formula equal to 3.25% of such Participant's Average Monthly Compensation multiplied by the Participant's total number of Plan Years of Service (up to a maximum of 11 years), computed to the nearest cent." For my understanding, this participant was eligible on the same date the amendment became effective. So this $1,000 per month should be as of his normal retirement age which is 62. The early retirement age (55+10YOS) is not applicable to him. Am I correct? If yes, how about the participant eligible before 01/01/2009? Suppose Robert was eligible on 01/01/2008, terminated in 2014, and age 38 in 2015. His accrual benefit in 2014 is $1,000 per month. Is this $1,000 as of age 55 or age 62?

Thanks a lot! Got it!

I have an self-employed client for a defined benefit plan. The contributions he made so far satisfies the minimum required contribution for 2013. But he wants to put more contributions after 9/15 but before 10/15. His personal income tax is on extension (10/15). Can he make more contributions after 9/15/14 for the plan year 2013? Are those contributions deductible? In the SB instruction, I can only report any contribution made within 8.5 months after the end of the plan year. If those contributions are deductible, does it mean I don't list them in the SB but I report them in Form 5500EZ? Any ideas? Thanks!