SSRRS

I recall a post regarding a DB Plan short plan year, mentioning that if the amendment for the short plan year did not mention anything re prorating or giving an accrual for the short plan year than there are no benefit accruals for the short plan year. 1. Is this correct. Or must the amendment state clearly whether there are or that there are no benfit accruals f93r the short year? 2. If there are no accruals must a 204(h) notice be provided to the participants, as the plan is not frozen? 3. Can one plan amendment include two amendments to For plan or must a separate amendment be drafted for each plan change. Foir example in the amendment that changed the plan year, it will also include a second amendment to the plan that the retirement age will be amended for the following plan year, and that the benfit formula will be changed for the next plan year. Or must these 3 plan changes have a separate amendment drawn up for each change? Seems no problem...but would like to double check. Thank you.

In addition to the question just posed above regarding 1,000 hours...Can the Document have the following 2 exclusions: 1. Any HCE who is not a shareholder or spouse of the shareholder, of the corporation is excluded". 2. Any employee not listed on Exhibit A. Of course, the shareholder and his wife will need to he listed on the Exhibit A... The first exclusion is sort of a security measure to ensure that no matter what HCEs are excluded from this plan (of course no HCEs will be listed on the Exhibit A. Thank you

Thank you very much David. Your analytical mind, as always. Is appreciated. Can it be done towards the end of the plan year, when the employees have already worked at least 1,000 hours, based on the theory above, that until the Exhibit A is done for the given year, no one accrues a benefit, since to accrue a benefit for the year, you must be listed on the Exhibit? Or even so, the Exhibit still needs to be executed prior to anyone working 1,000 hours for the year? Thank you.

Hi, A pleasent summer to all. In this thread from the past...the original post was about a Traditional DB Plan (safe harbor unit accrual formula). The plan includes annually just enough employees to cover 401(a)26 (40% of all eligble) and just enough NHCEs to cover 410(b) (70% of NHCE). The plan in the covered employee section states that the following are not included in the term covered employees: 1. employees under collective bargaining agreement 2. Employees that are not listed on Exhibit A. (Meaning only employees that are listed on the Exhibit A are included in the plan fir the respective year and if not listed on the exhibit A then they are excluded). A. ..There was a question raised whether the Exhibit must be signed each year or it is enough that the sponsor signed the plan document when the plan was adopted...as the plan that was signed upon adoption included this provision that each year the respective Exhibit A would list the employees that are included and are accruing a benefit for the respective year. Does anyone have any thoughts on whether the Exhibit A must be signed each year? B. Any employee that is not listed on Exhibit A is excluded and does not accrue a benefit for the year....(meaning the exclusion is not due to being listed on the respective year's Exhibit...rather not being on the exhibit is the exclusion). Therefore, for the given plan year, as long as the Exhibit was not prepared yet, all would be excluded for that year. Based on this, would the Exhibit have to be prepared and dated prior to employees working 1,000 hours and accruing a benefit for the year...or even if the Exhibit is done after 1000 hours have accrued it is fine. Being that as long as the Exhibit was not yet prepared for the current plan year then technically all are excluded, even though they worked 1000 hours? Thank you in advance for any insights on this.

Thank you very much Lou S. and Effen.

Can the 2022 be given in as filed based on 2% and either say it was self corrected with the 2023 filing or don't say anything and if the IRS questions why 2 % was used for 2022 and not 3%, we can then say that it was self corrected with the 2023, and if the want we can amend the 2022, or not smart to take this approach and amend and given in the amended filing?

Thank you

I do not think it is an issue ...but just want to make sure.. Is it an issue to amend now...as now that plan was selected for audit so we are amending? Thank you

Thank you Effen and Lou S. It is much appreciated.

Effen, I apologize for not being clear. The 2022 year is under exam, but we have not given any information yet to the IRS. The exam began just recently. Thank you

Thank you Effen, and Lou S. Coming from the senior members of this Forum, the information means alot to me. There are employees, and a 5500SF was e filed. I hear your points re 1. let a sleeping dog sleep and move on and 2. especially since the 2023 val sort of self corrected the Acrued Benefits. So do you think it is ok, to not amend and to just give the IRS the 2022 val that is based on 2%, with the plan amendment that says for 2022 the formula was amended to 3% of comp, and give the 2023 val (as they are asking for the val for the year after 2022 as well) that shows the self correction? If yes, possibly will do this and not amend. I guess, as you are saying when we give the copy of the 2023 SB to the IRS we can include an attachment that states that the 2023 self corrected the 2022 and that the 2022 met the MRC even with 3%? Thank you

Effen, thank you so much. Your thorough and brilliant mind is appreciated , as always. No one is complaining that the 2022 val is wrong . However, just want to make sure that give in to them a val that is correct, that they can't question etc. The 2022 MRC is covered either way, both under 2% or 3%. It is just that since the formula for 2022 was amended to 3%of avg. comp, then the year end valuation, which calculates the benefits as of 12/31/22, based on the specs in place as of the val date of 12 31 22, should show the accrued benefits based on 3% of comp. Currently, the 22 val shows the benefits based on 2%. Meaning the 22 val (year end val date) should show the accrued benefit for the owner as $6,500, however, it actually shows the AB as being 4,444. The 23 val shows the AB for him correctly at 6,500. I appreciate you pointing out that in this case, amending is allowed, since it is not a change, rather a correction of error, as you brilliantly explained it. Of course, if any one can point out if there is a way to leave the 22 val is, and not have to amended it, we would gladly do that. Thank you.

Hi Just wanted to see if anyone has any thoughts on the original post above. Thank you.

Thank you David. Yes the amendment was effective March 2022. The owner passed away in mid July 2022.

Hi, Thank you, as always for all the insights. A DB plan (traditional DB) with owner and wife in plan (both owners) and employees. In early 2022, the plan's benefit formula was amended from 2% of average Compensation per year of service to 3% per year of service. The owner had been battling an illness, and passed away towards the end of 2022. When the 2022 valuation was done (year end 12/31/22 val date), inadvertently the original 2% of comp per yr of service, was still used. This was noticed after the fact, after the 2022 5500 had been filed already. The 2023 val was preformed with using the amended formula of 3% of avearge compensation. Being that as of 12/31/ 2022 the acrued benefit for the owner was suposed to have been based on 3% of comp, the AB for the owner in the 2023 valuation was input based on the 3% as of 12/31/2022. The valuation and filing for 2022 was not amended to properly match the 2022 plan amendnent of 3% of average compensation per yr of service. And therefore, the AB for the owner shown in the 2023 val does not match the AB shown for him in the 2022 val, (although of course they should match, since there were no further accruals for the owner after the 2022 plan year) If the 2022 year is under examination, can the 2022 valuation and 5500 be amended now to properly reflect the plans specs of 3%? (as a val should properly match the plan document specs). Yes, there is a general concept that you can't file an amended 5500 that changes the specs (ie originally filed based on 2% of comp and now amending based on 3% of comp). However, in this case, since the 2023 valuation shows the owners AB based on using 3% for 2022, this clearly indicates that the 2022 was supposed to have been originally filed based on the amendment of 3%? Thank you for any insights and input.

C.B. thank you. I'm looking for a segment rate calculator that is based on a excel etc, where you can input the age and benefit and rates etc and get the APR, for times that don't have access to our pension system. Thank you

Thank you very much Lois.

Hi, Thank you for all the insights and input. Is anyone able to post a link etc for a segment rate calculator that is based on on the 24E or 25E Table or is that not allowable on the forum? Thank you either way.

Hi, North Carolina was originally given an extension until 5 /1 /2025. This included the 5500 for 2023. On 4/17/25 this extension was further extended until September 2025. This additional extension from 5/1 /2025 to 9/2025 includes the 5500 and the pbgc filings. Correct? Thank you.

Thank you C.B. Zeller. Just another question , please....Line 15 will be left blank and an attachment will be included that explains that the AFTAP per the val is 105%, however, since the AFTAP was not certified, it is deemed to be 59%. However, since this plan was frozen prior to September 2005, there are no AFTAP restrictions." ...1. Does leaving line 15 blank draw attention...ie the efast might have certain things to look for as flags. As, since this plan was frozen prior to 9 2005 is there a way to file that it should not attract attention? As an AFTAP of 59% for this plan has no bearing in reality on this plan. Thank you for any thoughts.

It appears that 50% or more of XYZ 's income is from ABC. This possibly makes this arrangement a MFG (Management Function group)?

Thank you so much Carike and Paul I.

Hi, As per 1.436-1(d)(4) a plan that was frozen plan prior to 9/1/2005 is not subject to the AFTAP Restrictions including that it can pay lump sums. If the AFTAP calculations are above 100%, however, there were no actual AFTAP certifications done, is there any basis for the SB to show the AFTAP as being above 100% and it will be based on the signing of the SB (since there are no AFTAP restrictions) or must the SB show the AFTAP as 60% ? As why file with 60% and possibly draw attention of the electronic system, if there are really no AFTAP restrictions for this plan anyway? Thank you

Hi, Thank you, as always, for the all your insights and informative responses. Our Pension reporting system (filing 5500 etc) is having technical issues. Until we resolve the issues: 1 . Are there alternate methods that we can use to file a few 5500s. 2. Does I file work similar to as when we file as third party signs and files for the client from our regular reporting program? 3.And is it easy to resgister and get started to use i file? 4. Are there any other alternatives that we can use to get these 3 or 4 5500 filed? Thank you very much.

Hi, Thank you as always for all the insights. If a DB plan has 2 trustees (the two owners of the company and the sponsors) are they allowed to act independently of each other? Thank you.