mattmc82 Posted February 14, 2012 Posted February 14, 2012 Hello there. Long time lurker, these boards are a wonderful resource for seeing varying opinions. Scenario EOY VAL cash balance plan Plan terminated in 2012 AFTAP is 95% No Credit Balance A contribution of the accruals funds the plan 100% on a termination basis However, with the SF + TNC, the MRC is 30k more than the accruals. I've scouted several resources looking for an alternative to forcing the client to overfund. I know occasionally some of our rules have unintended consequences, but was hoping maybe someone has come across the same issue. Thank you!
frizzyguy Posted February 14, 2012 Posted February 14, 2012 What are the effects of overfunding the plan in this scenario? How many people are in the plan? What percent of the PVAB belong to owners? Are the owners at 415? IMHO
mattmc82 Posted February 14, 2012 Author Posted February 14, 2012 sole propietor, 1 nhce and 1 nhce inactive owner makes up 98% of pvab overfunding would result in having to distribute the excess on a tested basis, and in this case the one NHCE is already getting a fairly large amount. not the biggest problem in the world, just thought there should be someway to avoid having to overfund. if it was possible to switch to BOY val, ftap >100 and the bases are wiped out and all is good. as of right now, I don't think we have automatic approval for that.
mattmc82 Posted February 14, 2012 Author Posted February 14, 2012 415 isn't an issue either. any acopa folks have an idea if we can expect any funding relief soon? thanks.
frizzyguy Posted February 14, 2012 Posted February 14, 2012 I think it depends on the employer. Most of the DB plans I see with that demographic would gladly give that out on a tested basis. The owners are usually older and make significantly more. That's not the only case though. Is this a 2011 end of year val? Would funding relief help in this case? Check out notice 2011-3. What part of the shortfall amortization is attributable to the currect year? http://www.irs.gov/pub/irs-drop/n-11-03.pdf IMHO
Effen Posted February 14, 2012 Posted February 14, 2012 any acopa folks have an idea if we can expect any funding relief soon? You funny man! Actually, the last I heard is that there may be a flicker of hope because funding relief can be pitched as a revenue enhancer, but I wouldn't expect much any time soon. The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.
david rigby Posted February 15, 2012 Posted February 15, 2012 415 isn't an issue either. Does this mean the benefit could be increased to use up the surplus? I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
SoCalActuary Posted February 15, 2012 Posted February 15, 2012 415 isn't an issue either.any acopa folks have an idea if we can expect any funding relief soon? thanks. Well, revalue the benefits at the new (nearly zero) interest rates, and see if the plan really is overfunded with that contribution.
mattmc82 Posted February 15, 2012 Author Posted February 15, 2012 415 isn't an issue either. Does this mean the benefit could be increased to use up the surplus? any increase is going to have to have an additional increase for staff. testing is tight so increased benefit or distributing excess on a tested basis does the same thing oh well, thought I'd give it a shot, thanks for the comments
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