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MBCBP IRS Resource
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I know that our union has provided us with ample smoke to help break down how our MBCBP would work. I have been reading about these plans in an effort to keep an open mind and educate myself. The IRS document below provides a GREAT explanation starting on page 9 of how a real life example would work for a 35 year old participant. They do a better job here than any ALPA email I’ve read yet on the topic! https://www.irs.gov/pub/irs-tege/epchd1104.pdf |
Originally Posted by Richard Head
(Post 2965911)
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I know that our union has provided us with ample smoke to help break down how our MBCBP would work. I have been reading about these plans in an effort to keep an open mind and educate myself. The IRS document below provides a GREAT explanation starting on page 9 of how a real life example would work for a 35 year old participant. They do a better job here than any ALPA email I’ve read yet on the topic! https://www.irs.gov/pub/irs-tege/epchd1104.pdf The example used end of year contributions vs per pay period contributions. Under that example, we are losing an average of 6 months earnings on every annual contribution. I don't know if the DALPA plan used EOY or pay period credits to each Hypothetical Account. There was some language in the section on uniformity requirements that would seem to eliminate any Plus Up or Min Balance provision, as it would not be a consistent allocation for all participants. The Cooper V IBM example seems to make a further case against a Plus Up or Min Balance. Thanks for taking time to look this up and post a link. |
Originally Posted by Gunfighter
(Post 2965999)
Thanks for posting. I lost interest on p.4 with "hypothetical accounts" and PBGC, but kept reading.
The example used end of year contributions vs per pay period contributions. Under that example, we are losing an average of 6 months earnings on every annual contribution. I don't know if the DALPA plan used EOY or pay period credits to each Hypothetical Account. There was some language in the section on uniformity requirements that would seem to eliminate any Plus Up or Min Balance provision, as it would not be a consistent allocation for all participants. The Cooper V IBM example seems to make a further case against a Plus Up or Min Balance. Thanks for taking time to look this up and post a link. |
Interest credits given under a cash balance plan are not related to the actual investment yield of the plan’s assets. The employer assumes the risk of any trust fund earnings shortfall or losses that are in excess of the actuarially determined amount required to fund the plan. Also some other tidbits from the safe harbor requirements: All employees for the plan year must receive the same percentage of plan year compensation or the same dollar amount. Use a set dollar contribution for each uniform unit of service performed by the employee. No employee contributions are allowed in the Cash Balance Plan. |
Originally Posted by Big E 757
(Post 2966037)
The money that will fund the MCB plan will be the DC contributions once we hit the 415(c) limit. Right now, those that do hit the limit, don’t until September to November. With a 25% DC contribution, it would happen earlier for the top guys, but most won’t be hitting the limit until the fall anyway. I only see a couple of months of lost earnings on the first few contributions for most of us.
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Originally Posted by Rich Head
(Post 2966059)
Did you read the document?
I had to create another account because my last one was banned. Anyways, the document from the IRS basically dictates that we can’t just choose if and when we contribute. That was the point. Based off of the examples in said document I don’t see how one group of us would warrant a change in the federal tax code. |
Originally Posted by Rich Head
(Post 2966059)
Did you read the document?
I had to create another account because my last one was banned. Anyways, the document from the IRS basically dictates that we can’t just choose if and when we contribute. That was the point. Based off of the examples in said document I don’t see how one group of us would warrant a change in the federal tax code. |
Originally Posted by Rich Head
(Post 2966059)
Did you read the document?
I had to create another account because my last one was banned. Anyways, the document from the IRS basically dictates that we can’t just choose if and when we contribute. That was the point. Based off of the examples in said document I don’t see how one group of us would warrant a change in the federal tax code. I see what you’re saying. I did breeze through it. I was under the assumption that the MCB plans purpose was to capture DC overages and protect them from taxes, but the document seems to say different, right? That the contributions have to be the same size all year. My eyes or brain fogged up. Why are you getting yourself banned? Or how, is a better question |
Originally Posted by Big E 757
(Post 2966066)
I see what you’re saying. I did breeze through it. I was under the assumption that the MCB plans purpose was to capture DC overages and protect them from taxes, but the document seems to say different, right? That the contributions have to be the same size all year. My eyes or brain fogged up. Why are you getting yourself banned? Or how, is a better question
ALPA’s intent has been to capture DC overages and protect them from taxes. Many of us don’t want that due to the mega back door Roth, or other reasons why we don’t want more income sheltered from taxes. Especially when it’s placed in an expensive and inefficient vehicle. The document has a few different funding mechanisms but they are all uniform and mandatory which is not what ALPA has proposed. |
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