Defined Benefit PPA Restatements

Transcription

1 Defined Benefit PPA Restatements Presented by: Brian Furgala, Director of ERISA Services, ftwilliam.com Holly Roussel Godfrey, Technical Product Owner, ftwilliam.com Charles Brown, Regional Vice President & Consulting Actuary at EGPS

2 Enhancements

3 What s New Ability to use completed calendar months for determining age (Section A.22) 3

4 What s New New other option for eligibility service requirement (Section B.15) 4

5 What s New Expanded other option to describe optional distribution forms (DB Section E.10h or CB Section E.8h) 5

6 What s New Ability to select additional options, years of credited service or anniversaries of participation, for determining early retirement age (DB Section E.19 or CB Section E.17) 6

7 What s New Ability to describe the allocation of assets upon plan termination if insufficient for full benefits (Sections G.11.1 and G.11.2) 7

8 What s New Including ability to make distributions to HCEs not in high 25 (Section 7.08(d)) 8

9 What s New Trad DB Increased maximum to ten for describing unit credit groups (Section C.13b) 9

10 What s New Trad DB Ability to select either consecutive or non-consecutive periods for computing Average Annual Compensation (Section C.16) 10

11 What s New Trad DB Ability to enter any 12 month period for computing high three-year average compensation (Section C.48) 11

12 What s New Cash Balance Ability to create an opening account balance for a new plan (Section C.7) 12

13 What s New Cash Balance Increased maximum to ten for describing principal credit groups (Section C.8b) 13

14 What s New Cash Balance New other option for principal credit period (Section C.9) 14

15 What s New Cash Balance More selections for interest credit rate, including actual rate of return (Section C.13, C.38 and C.39) 15

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18 What s New Cash Balance 18

19 What s New Cash Balance Ability to describe partial interest crediting period (Section C.22) 19

20 What s New Cash Balance Ability to enter any 12 month period for computing high three-year average compensation for 415 limit (Section C.27) 20

21 Drafting Tips

22 Traditional DB Actuarial assumptions other than GATT for calculating lump sums do not need to be included in the PPA restatement (EGTRRA Sections A.49, A.50 and A.51) 22

23 Traditional DB The Unit Credit Group provisions (Section C.13b) has been improved. Under the EGTRRA doc, you entered each group s benefit as a percentage with the ability to switch all groups to a dollar amount. 23

24 Traditional DB Did you previously select the Benefits Pursuant to CBA under the pension formula? If so, under PPA, the IRS requires you to select a pension formula described in the document in addition to the CBA. PPA Section C.13 = EGTRRA Section 25.xv = 24

25 Traditional DB The IRS no longer accepts a normal retirement age below 55 (Section E.1) for a preapproved plan. 25

26 Traditional DB Expanded ability to select Plan Administrator as an option for Investment Fiduciary while continuing to have the option of identifying another individual or entity. PPA Section G.17= EGTRRA Section G.26= 26

27 Cash Balance Actuarial assumptions for calculating lump sums do not need to be included in the PPA restatement (former Sections A.42a and A.43a). 27

28 Cash Balance For coverage failures, do not need to detail eligible participants or target benefit accrual rates. PPA Section C.6 = Former Sections C.12b and C.12c = 28

29 Cash Balance The IRS removed the ability to describe any limitations or conditions on earning principal credit amounts (bottom of former Section C.24ii). 29

30 Cash Balance The IRS removed the ability to select either six-month period or three-month period for the Principal Credit Period. Former Section 25a = 30

31 Cash Balance If these options were previously selected, mapping is to new Other option. PPA Section C.9 = 31

32 Cash Balance Do not need to enter cash balance conversion method for determining accrued benefit after conversion in PPA restatement. Former Section C.26b = 32

33 Cash Balance Do not need to enter cash balance conversion method for determining accrued benefit after conversion in PPA restatement. PPA Section C.12 = 33

34 Cash Balance The IRS removed the ability to select the last 3 options for interest crediting rates through NRA. Former Section C.31 = 34

35 Cash Balance If a benefit is not currently payable, the two available options are using the Applicable Interest Crediting Rate (even if negative) or the greater of the Applicable Interest Crediting Rate or 0%. PPA Section C.21 = 35

36 Cash Balance Cash balance benefits cannot be reduced by benefits payable under another DB plan, so provisions removed from PPA restatement. Former Sections C.34a, C.34b, C.34c = 36

37 Cash Balance Cash balance benefits cannot be reduced by benefits payable under another DB plan, so provisions removed from PPA restatement. PPA Section C.40 = 37

38 Cash Balance The IRS does not accept a normal retirement age below 55 (Section E.1) for a preapproved plan. 38

39 Cash Balance Do not need to select between annual or monthly periodic reductions for early retirement benefits in PPA restatement. Former Section E.12b = 39

40 Cash Balance Do not need to select between annual or monthly periodic reductions for early retirement benefits in PPA restatement. PPA Section E.19 = 40

41 Tips & Tricks Context Sensitive Help Edit Checks Convert Checklist Type Batch Conversion Coming soon DocPrint (Beta) Batch print anything Global Print Settings 41

42 Questions?

43 About EGPS Back-Office TPA Services We can help you in providing Cash Balance Pension services to your clients You control the client relationship Free Initial Plan Design Analysis Illustrations Sales and Administration Support Contact: Charles A. Brown, EA, MSPA, QPA, QKA Phone: (904)