SSRRS

Thank you very much Sellarsian and A Happy and Healthy New Year..Yes, that is what I was asking (as the regs limit the % to be used for the J&S based on the age difference batten the participant and the non spouse survivor and therefore was asking if the COLA was limited as well). If the participant is 70 and the non spouse survivor is 20 and using a 50% J&S WITH 120 month certain can a COLA up to 4.99% be used? What if the participant is 70 and the survivor is 47 and using 67% J&S WITH 120 months-can a COLA UP TO 4.99% be used? -----I know there is a table that limits the J&S % based on the age difference between the participant and the survivor, however, I'm unaware of a table that shows the COLA that can be used (if any) based on the age difference between the participant and the non spouse survivor. THANK you very much.

To clarify my question above: A DB Plan was set up to allow for an option of J&S, and non spouse survivor allowed, combined with a years certain with up to a 4.99% COLA. Question: is this COLA allowed even when the survivor of the J&S is a non spouse? Thank you for any insights.

Hi, A DB plan offers benefit option of Joint and Survivor combined with a years certain annuity. The J&S can use non spouse as the survivor (and of course there is a maximum % allowed based on the age difference between participant and the non spouse survivor). The plan offers cost of living (COLA) increases as well (up to 4.99%)----the benefit at RMD age/ret. is reduced due to the future increases of 4.99% per year. Is this COLA allowed to be used in a case where you are using a non spouse for the J&S? Thank you

Thank.you very much, David and HoJo. Both of your efficient responses will be of help (depending on the case).

Hi, When setting up a new Plan, in addition to the current census information, how many years back of salary history do most firms ask for? Thank you.

Thank you, HoJo.

Hi, A Terminated employee was in the DB Plan with zero benefits. This is because the DC plan balance offset his DB Benefit (offset plan). During the 1/1/2018 -12/31/2018 plan year, this terminated employee received his DC Balance (this offset his DB benefit and therefore he did not receive a benefit from the DB Plan). Therefore, he was not included in the 2018 DB Val Report. The valuation date for the DB Plan is 1/1/2018 (BOY Valuation date) there any way to justify removing this employee from the 2018 DB Valuation (as he received his benefit during 2018, however, it was during the 2018 year, after the 1/1/2018 val date)? Either way the Report numbers are all the same , since he did not accrue benefits under the DB Plan, the only issue is the participant count.----Thank you.

thank you very much

C.B. Zeller, thank you very much for your quick and efficient help and knowledge on the matter.

Thank you in advance for any help in this matter. Client with DB floor offset plan left and went to new firm. The new firm is asking for written explanation of how the offset calculation (ie accrued benefits after offset was determined). Question: How much work and time are we required to spend in explaining how the plan was administered. 2. Can there be a charge for our time etc. in putting together this information? Thank you.

SoCalActuary thank you. I just want to clarify what makes a plan underfunded for the 401(a)(26) exception. It appears from numerous sources that if based on 417(e) the labilities exceed the assets this would qualify the plan to be " an underfunded frozen PBGC Plan" (and certainty if under the PBGC premium rates the liabilities exceed the assets) even if under the HATFA rates the plan is overfunded -ie there is a zero min. required contribution. We are aware of a frozen PBGC plan that has a zero min . required contribution ( 0 TNC plus a funding surplus as well) yet the PBGC FT exceeds the assets and the PVAB (417(e)) exceeds the assets as well. Thank you for any help on this.

In regard to the above (fixing year after year etc) what if a hard frozen (not underfunded pbgc) plan is not covering 40% of current active employees anymore. To correct this two employees were added to the plan and given 1/2 percent for the year of participation. Question: What if the next year the plan again needs to add an employee or two to meet the 40%. 1. Can you now add another 2 employees and give them as well 1/2% for the yr of participation? 2. What about the 2 employees that were brought in the prior yr - do you need to give them an additional 1/2% for the current year of participation as well or you only need to give them 1/2% in the yr. that they are added to the plan and once they are in, they are just carried forward with that benefit (since plan is frozen)? Thank you.

SoCalActuary thank you.

Yes, Derrin Watson's book Who's The Employer, has extensive coverage on options, (including a control group being created through an option), and of course many other topics.

The NRA is 62. For funding assumed the two partners will actually retire at 64. If the plan is underfunded based on 62, however, based on 64 it is not underfunded (plan does not give increases past NRA). Since the partners are legally entitled to their benefits at 62, and the assets are not sufficient to cover this, would this plan qualify for the Underfunded frozen PBGC Plan exception to 401(a)(26)? Thank you.

This is from a while ago, but if possible, I would really appreciate more clarity on this. 1. If we are doing EOY Vals, would the accrual of .5 % for year of participation that would be given to a new participant (to cover 401(a0(26)) be shown in the FT only (as an A/B that was there as of beg of the yr. and no increase) or that there was zero A/B at the BOY and the .5% accrual as an increase (and shown in the TNC -and there would be no FT for this new partc.) 2. If it is shown as a Benefit increase and a TNC --if the plan is hard frozen, how is this done, is it a special corrective method that is allowed even though the plan is frozen? Or is the idea that that the plan formula is being amended to a .lower formula of .5% per yr of participation -with wear away- and therefore the net result is that only the new participant is getting an accrual of .5% for the current year since the benefit that the others have accrued until now is in excess of this new formula of .5% pr year of participation? Thank you very much

If it is possible to help give clarity on the above it would b e greatly appreciated. I went back and edited the above. Thank you very much.

Thank you very much Larry Starr for your insight, advice, and input. It is really appreciated.

Thank you Luke and RatherBeGolfing. The offer will be within the FMV or slightly higher, as is common. However, it will not be grossly in excess of the Current FMV. Your insight is always appreciated.

Thank you Mike.

I recall that quoting on this forum is not allowed. If it is allowed, I will quote. In the meantime, I have seen that thru attribution if you have an option to acquire stock , such stock shall be considered as owned by such person (the person quoted this from the IRC). In addition, he writes, that you can create a controlled group by giving one owner an option to purchase the other.

Thank you very much, Luke.

Thru attribution, if an NHCE is offered a 5.001% (more than 5%) stock option, the employee's status changes to an HCE. Is the company required to draft an official stock option or is it enough if the company simply writes an official letter on their stationary (notarized, witnessed etc) addressed to the employee offering him the option to purchase 5.001% of the company? Thank you.

Thank you again SoCalActuary. Your brilliance has brought much needed clarity and direction.

SoCalActuary, as you mention, prior posts seems to indicate that you would need to bring in this employee and thru amendment give him .005 pr yr of participation to pass 401(a)(26). As the fact that no HCE is benefiting only helps for 410(b) (70% of NHCE) , however, for 401a26 that requires the plan to cover at least of 40% (or min. 2 employees) of all eligible employees. With exception of an underfunded frozen PBGC Plan. Although if someone can say otherwise- that you can keep the plan frozen with the owner only, It would make things a lot smoother.