I am looking for a copy of an ASPPA Q&A

[SteveH]

I know there has been a quite exhaustive discussion on these boards about the 25% of pay limitation when combining a DB and a DC plan together. I have done the 404(a)(7)©(i) research. I realize there has been discussion about people flip flopping between the plans and issues with having an account balance in a profit sharing plan or possibly even just deferring to the 401(k) component of a profit sharing plan also.

I am trying to convince someone that it is acceptable to go over the 25% of pay deduction limit as long as their is no single person participating in both plans. It is my understanding (from a gentleman on this board) that this topic was covered at an ASPPA conference in 2005. Does anyone have a copy of the Q&A that covered this that I can use to add to my case? My goal is to design a proposal that has a class of employees receiving a DB benefit and a different class receiving a DC benefit. Right now I am being told that "they" don't think I can do that.

I don't know if this board will let you send attachments through their email system to other users, but if you shoot me an email I will reply. Thanks everyone.

[Mike Preston]

Q&A's 19, 20 and 21 address 404(a)(7). They are far too long to quote here in their entirety. But the question you posit is not directly addressed in any. Why? Because, in my opinion, the question you raise is already settled. There is no question to ask, because the Code makes the answer clear. If "they" can't read the Code and come to the conclusion that 404(a)(7) doesn't apply in this case, then I don't really know what to say.

Maybe you can argue by innuendo, though. In that case, if you quote Q&A 21, you might win the day. Here it is:

Q. An employer sponsors a defined benefit plan and a 401(k) plan. There is only 1 employee common to both plans, and he is eligible to participate in the 401(k) plan for deferrals only. The other participants in the 41(k) plan are eligible to make deferrals and to receive nonelective employer contributions. In a year in which the employer does make a nonelective contribution on behalf of those eligible, does this trigger the combiend plan deduction limit of IRC 404(a)(7)?

A. No, as long as the one common employee only has elective employee contirubitons, 404(a)(7) won't apply.

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Hard to imagine how it would apply in your case, if it doesn't apply in the above case.

[AndyH]

Mike, for the benefit of those of us who still don't know how this was "settled", and I am one of them, may we ask you to provide your interpretation? Doesn't it still boil down to how "beneficiary under a trust" is interpreted?

Is this settlement in print somewhere?

[Mike Preston]

It isn't my interpretation, it is what I've heard from the IRS representatives. Yes, the key word is beneficiary. I just don't see how someone can be a beneficiary if they aren't even in the plan! That is the case cited by the OP isn't it?

[Guest merlin]

Would the person described in the 2nd paragraph of Q20 be considered a beneficiary as long as his employer-provided account balance remains in the DC plan? What if he hets an allocation of a forfeiture?