SRM

Also see rev. Proc. 2005-25 which defines fair market value of the policy for this purpose. It may be more than the cash surrender value.

Or Rollovers into a plan or all assets after age 59 and 1/2

I believe that you would need to have the same policy types (i.e. same policy series of Life Insurance for HCEs and NHCES) to satify the nondiscriminatory availability of benefits, rights and features (See Rev. Rul 2004-21). In other words, you would have two separate BRFs to test for current and effective availability if you have two different types of life insurance in the plan.

Do you file a 5310-A to report a transfer to a qualified replacement plan?

Please contact your congressman if they are a member of the ways and means committee. While I would hope that this does not go anywhere in congress, I think it is important to note that a member of the presidents cabinet (director of OMB) was one of the driving forces attacking cross testing last time around (see www.cbpp.org/3-2-00tax.htm) so there may be more support in Washington than a small number of House members.

The facts are: Plan has roughly 50 terminated vested participants, 30 retirees, and a handful of active participants. Plan is about 500K short of being funded at 100% of benefit liabilities (i.e. lump sum for term vested and actives and annuity purchase for retirees). Plan Sponsor will fund the shortfall at about the same time as potential annuity purchase so that plan is around 100% funded at time of purchase. Goal is to purchase annuity in late 2007 or early 2008 and then pay lump sums in 2008 to terminated vested participants (plan presently doesn't have lump sums or benefit payments before normal retirement age but will be amended to provide for such). Plan would then continue for a period of time until remaining active participants retire.

When a single premium group annuity is purchased to settle benefit liabilites for a PBGC covered terminating plan, there is a requirement to provide a Notice of Annuity Information and Notice of Annuity Contracts. Does this requirement apply to an ongoing PBGC covered plan that is settling liabilities for a group of retirees through a single premium group annuity but is not terminating?

ak2ary, Could you post the entire memorandum or send via private email? Thanks. SRM

In the 1990 gray book, IRS indicated that there is not a prescribed order for determining amortization bases when there are plan amendments, assumption changes and a funding method change in the same year. Has there been any update to this question since 1990? ----------------------- 1990 - QUESTION 15 General Funding When a valuation includes plan amendments, assumption changes and a funding method change, is there a specific order in which these should be recognized? For example, a plan is valued using the Aggregate funding method as of January 1, 1988 and the Projected Unit Credit method as of January 1, 1989. As of January 1, 1989 the plan is amended to comply with TRA and the mortality assumption is changed. One, two or three bases could be set up, depending on the order in which the changes are recognized and the minimum required contribution for 1989 would vary because the bases have different amortization periods, although the outstanding balances must add up to the same total. RESPONSE 15 At present there is no guidance regarding this question. It should be noted that when guidance is published on this type of matter, IRS generally issues rules on a prospective basis and tends to be lenient if new rules would be in conflict with past practices that were reasonable. ----------------------------------

You can run a Cash Balance valuation entirely in ASC's DB module. You do not need the DC module to handle Cash Balance Plans in ASC, although if you want to test CB plans together with DC plans within ASC then I believe that you would need both modules.

I use both relius and asc. I much prefer asc due to their flexibility and speed of updates for law changes.

Any problem with a plan sponsor deducting two years worth of minimum funding contributions in a single tax year based upon the following? Election to deduct contributions for plan year beginning during tax year Plan adopted 5/15/07 First Plan Year 5/31/06 - 5/30/07 Second Plan Year 5/31/07 - 5/31/08 Tax Year 6/1/06 - 5/31/07 Assume 100K minimum funding requirement for PYE 5/30/07 and 100K minimum funding requirement for PYE 5/30/08 (ignore interest for simplicity). Assume 100K contribution deposit on 6/1/07 for PYE 5/30/07 and 100K contribution deposit on 6/2/07 for PYE 5/30/08. Can the 200K be deducted for the Tax Year Ending 5/31/07 considering the first 100K as includible contributions (not deductible for Tax Year Ending 5/31/06 solely due to timing of contribution)?

It will be nice to have some guidance in this area. It is funny that IRS has indicated that amendment = new plan when most definitions of "amendment" imply a change to something already in existence which is not the case for a new plan.

Thank you for your comments. I appreciate them. Any thoughts on the mechanics of determining the allocated assets to split between the plans? Must this amount be determined by using the pbgc priority class method (it is non pbgc covered plan) or could a simpler method be employed (for example if the plan is 80% funded on a lump sum basis, then split the assets by applying 80% to each participants lump sum pvab). The plan document language refers to each participant being able to receive benefits after the spinoff no less than the available accrued benefits if the original plan would have terminated before spinoff (and it is owner only plan).

Thank you for your comments. I haven't thought about the 415 issue for a while, so I could be wrong. Assuming that minimum participation issue can be addressed by a timely termination of the original plan or providing minimum benefits if needed, any other concerns with the design? The retiring owner is terminal so the goal is to address the situation and pay out sooner rather than freezing and funding over time.