150% of Unf CL

[Penman2006]

For 2006 and 2007, does the 150% of unf CL 404 limit apply to a one person plan?

[Mike Preston]

Yes.

[SoCalActuary]

But watch out for any DC plan contributions. Even if they are below 6%, you might lose the 150% range.

[david rigby]

- "2006" should refer to a fiscal year beginning in 2006, not (necessarily) ending in 2006.

- See Q&A5 of IRS Notice 2007-28 for discussion about plan amendments in the last 2 years.

[Penman2006]

Thanks.

[AndyH]

Notice 2007-29 will say that the subliminal intent of the IRC is that if there has been any consideration of adopting a DC plan in the past 48 months or if any HCE has sneezed within the last 2.99 years then the 150% goes away.

:angry:

[Effen]

???

[AndyH]

Should I delete this rant also? If felt good.

[Mike Preston]

Nah. Warnings on things which are a little like whack-a-mole are a good thing. I don't think I've met anybody who said that they interpreted the Code the way the IRS published in the Notice.

The only issue where there appears to be disagreement amongst practitioners is whether the sneezing applies both to the regular 150% limit (obviously it does) and the 100% limit inherrent in 404a7. I've seen some folks I respect line up on the opposite side of the fence from me. Not that my side is unpopulated. Just that there is a scattered opinion on this one issue. On my side are those folks who believe that the 100% UCL minimum referenced in 404a7 is NOT reduced by any CL attributable to amendments for HCE's within the last x (2?) years.

[Effen]

Just to be clear Andy, I was questioning "07-29". I assumed you were ranting about 07-28, but I wasn't exactly sure.

[SoCalActuary]

AndyH did a nice job of parody on 07-28.

ASPPPPPPA apparently has registered their concerns. Gooooood for the industry because 07-28 is a problem.

[Guest pm01]

In what situation would you lose the 150% deduction if the DC is less than 6% for a one person plan? Would this also apply if the plan covers only owner and spouse?

[AndyH]

1. Today, if the dc employer contribution is $0.01.

Maybe a different answer some day.

2. Yes.

[Guest lerieleech]

I was at a luncheon today at which Brian Graff spoke.

He said there will be some kind of technical correction re Q and A #9 of Notice 2007-28. He elaborated, but I really couldn't determine what he was saying.

[Andy the Actuary]

When do the last two years end? E.g., Plan adopted 1/1/2007. Do two years end December 31, 2008 so that 150% can be reflected 1/1/2009 or do two years end January 1, 2009 so that 150 cannot be reflected until January 1, 2010?

[Guest lerieleech]

When do the last two years end? E.g., Plan adopted 1/1/2007. Do two years end December 31, 2008 so that 150% can be reflected 1/1/2009 or do two years end January 1, 2009 so that 150 cannot be reflected until January 1, 2010?

If there was no other DB plan within the last two years, the two-year moratorium doesn't even apply, and the 150% can be reflected in 2007.

Notice 2007-28, Q&A #5