415(e) Repeal When Plan Frozen Prior to Repeal Effective Date?

[Christine Roberts]

Can an employer repeal 415(e) for a MPP plan frozen in 1995 (employer has DB plan in its past).

Repeal would be for purposes of GUST amendment for terminating MPP plan.

[mwyatt]

What do you mean by "frozen"? If you mean that the contribution percentage was reduced by amendment of the document to 0% of pay in 1995 (which is what I think you meant), then the repeal of 415(e) contained in your GUST restatement won't "spring up" any contribution requirement.

If however you mean that you haven't been making any MP contributions since 95 with a non 0% formula solely due to the fact that you had a 415(e) dominant DB plan in place, then you might have some issues. I'm assuming that this is a one-person plan (remember under 415(e) a rank and file employee was effectively under the 1.4 rule so a MP contribution was available even with a 100% DB formula). If this was the case, then really in the 2000 year 415(e) went away and the MP contribution was possible.

Further help based on your situation: if MP formula was amended in past to 0%, then putting the 415(e) repeal in place in your GUST restatement won't spring any problems up with how you ran the MP plan. Could be problems though if you just let DB plan forbid contributions to the MP under 415e as post 1999 this no longer would apply.

[Appleby]

415(e) was repealed for plan years beginning 1999. Wouldn’t this mean that it would be a non-issue for the plan?

[Christine Roberts]

Thanks for the thorough reply.

This is an owner only MPP plan and the contribution was reduced to 0% of compensation in 1995

Prior DB plan was a multiemployer plan and I believe employer withdrew - not even sure if owners ever participated.

[mwyatt]

Go ahead and add in 415(e) repeal as has no impact on your client's funding requirement. Will also smooth your determination letter process as this is one point any agent will be looking for in review of your GUST restatement.

Happy holidays...