Timing of 436 participant notice

[dmb]

7/1/10 AFTAP is 85%, no 2011 certification so at 10/1/11 the 2011 presumed AFTAP is 75%, 50% restrictions apply. Prior to October 30, 2011 AFTAP is certified to at least 80%. Must the 436 participant notice still be provided?? Thanks.

[Andy the Actuary]

You indicated that restrictions did not apply as of the date the 436 notice was do. In such case, client's attorney and I took the position "no" provided no 10/1/2011 annuity start dates.

[dmb]

You indicated that restrictions did not apply as of the date the 436 notice was do. In such case, client's attorney and I took the position "no" provided no 10/1/2011 annuity start dates.

So if by chance there is/are 10/1/11 ASDs can notice be provided to only those participants??

[Andy the Actuary]

Is this moot as wouldn't you be providing affected participants a new election without restrictions?

[dmb]

Is this moot as wouldn't you be providing affected participants a new election without restrictions?

Not exactly sure, but generally if lump sum is 50% restricted, participant has option to defer election or bifurcate, but once bifurcated, there's no second bite at the apple. the annuity portion is locked in.

[Andy the Actuary]

Is this moot as wouldn't you be providing affected participants a new election without restrictions?

Not exactly sure, but generally if lump sum is 50% restricted, participant has option to defer election or bifurcate, but once bifurcated, there's no second bite at the apple. the annuity portion is locked in.

What am I missing? Because of the >80% certification, it shouldn't have been bifurcated? Isn't your certification as of 7/1/2011 -- the first day of the Plan Year?

[dmb]

Is this moot as wouldn't you be providing affected participants a new election without restrictions?

Not exactly sure, but generally if lump sum is 50% restricted, participant has option to defer election or bifurcate, but once bifurcated, there's no second bite at the apple. the annuity portion is locked in.

What am I missing? Because of the >80% certification, it shouldn't have been bifurcated? Isn't your certification as of 7/1/2011 -- the first day of the Plan Year?

Yes, the cert is as of 7/1/11, but its not certified until, lets say 10/20/11.

[Andy the Actuary]

Is this moot as wouldn't you be providing affected participants a new election without restrictions?

Not exactly sure, but generally if lump sum is 50% restricted, participant has option to defer election or bifurcate, but once bifurcated, there's no second bite at the apple. the annuity portion is locked in.

What am I missing? Because of the >80% certification, it shouldn't have been bifurcated? Isn't your certification as of 7/1/2011 -- the first day of the Plan Year?

Yes, the cert is as of 7/1/11, but its not certified until, lets say 10/20/11.

Is that material?

[dmb]

Is this moot as wouldn't you be providing affected participants a new election without restrictions?

Not exactly sure, but generally if lump sum is 50% restricted, participant has option to defer election or bifurcate, but once bifurcated, there's no second bite at the apple. the annuity portion is locked in.

What am I missing? Because of the >80% certification, it shouldn't have been bifurcated? Isn't your certification as of 7/1/2011 -- the first day of the Plan Year?

Yes, the cert is as of 7/1/11, but its not certified until, lets say 10/20/11.

Is that material?

Ok, maybe now i'm missing something. At 10/1/11 since there is no certification yet, benefits are restricted, so if there is a 10/1/11 ASD, the benefits will be restricted. then on 10/20/11, the 7/1/2011 AFTAP is certified to at least 80% after employer makes contribution or takes whatever action is necessary to get to 80%. What am i missing??

[Andy the Actuary]

My apologies for not probing further and making a false assumption. The Plan with which I was involved allowed for the second bite. I fell prey to a mental set. You said, "generally," and I interpreted this that you meant a universal. Upon rereading I now understand that the Plan in question does not provide for an additional a.s.d. I retract my comments and apologize for wasting your time.

Your example is interesting in that though likely resulting from external forces that prevented you from making a more timely certification, it has the same effect as a Plan sponsor not requesting a certification. It should at least be considered to amend the Plan to allow for a new a.s.d. if the Plan's legal counsel believes that this would be permissible after the fact. Had the AFTAP been certified by 9/30/2011, no restrictions would have applied to those with a 10/1/2011 a.s.d.

While it makes little sense, you should probably give the notice to those with 10/1/2011 a.s.d. as a matter of conservatism. This, of course, is analogous on the practical side to lecturing on abstinence after the girl is pregnant.

[dmb]

My apologies for not probing further and making a false assumption. The Plan with which I was involved allowed for the second bite. I fell prey to a mental set. You said, "generally," and I interpreted this that you meant a universal. Upon rereading I now understand that the Plan in question does not provide for an additional a.s.d. I retract my comments and apologize for wasting your time.

Your example is interesting in that though likely resulting from external forces that prevented you from making a more timely certification, it has the same effect as a Plan sponsor not requesting a certification. It should at least be considered to amend the Plan to allow for a new a.s.d. if the Plan's legal counsel believes that this would be permissible after the fact. Had the AFTAP been certified by 9/30/2011, no restrictions would have applied to those with a 10/1/2011 a.s.d.

While it makes little sense, you should probably give the notice to those with 10/1/2011 a.s.d. as a matter of conservatism. This, of course, is analogous on the practical side to lecturing on abstinence after the girl is pregnant.

Apology accepted. I could have been a little more specific also.

Amending the plan to have additional ASDs is not an option. And if we certify by 9/30/11 there would be restrictions as employer has not made decision on getting to 80%. So the question is if the employer makes that decsion after 9/30/11 and before the participant notice must be provided. I appreciate you sticking with this post. Thanks.

[Effen]

My understanding is that technically the notice of benefit restrictions still must be provided, even though the restrictions may be lifted before the required due date of the notice.

If you are going to do the notice, it seems to me there wouldn't be anything wrong with adding a statement to the notice that the employer made a contribution to increase the plan's funded status and the restrictions have been lifted.

[FAPInJax]

The issue also is what happens with the participant who submits paperwork or requests some during the window when the plan was subject to the restriction.

[dmb]

Thanks for the responses. We had decided to go with Effen's approach and provide notice with addtional info that plan is no longer restricted as of 11/1.