Now that PPA has new restrictions on payout for underfunded plans what happens to the old restriction rule on (lump sum) payout to any of Top 25 HCEs? Was that rule repealed by PPA? Since there is no such thing as current liability now, one can't compute the Assets/CL ratio anyway!

By the way, which Code section had the Top 25 HCEs rule?

Here is the situation:
A plan's 2008 AFTAP is 96%. but it's 2009 AFTAP will be well below 60% if the stock market stays at the current level - uge loss on assets. An HCE is terminating whose PVAB is $600k and represents 70% of the plan assets.

Under PPA, he can be paid out during 2008 but not under the old top 25 HCEs rule!

Look to the early termination regs in 1.401(a)(5) (or (8)). Don't think you could pay out in your circumstance in '08 under these regs anyway, since the threshold is 110% AFTER payment.

The high-25 rule is in Treas. Reg. Section 1.401(a)(4)-5(b).

NTIYI (not to insult your intelligence) but have you checked that plan contains the restrictions? In the 401(a)(4) regs that Professor Sieve cited, the rules apply unless the Commissioner determines they are not required. For example, it's possible to get his removed in a plan sponsored by a not-for-profit organization. For exaqmple, if it is omitted and a d-letter was obtained.

The FT is a kin to the CL, which fortunately, was never specifically defined. My clients have been operating on good-faith (my good faith) and concluding that 110% of the FT is a reasonable proxy.

1.401(a)(5) has nothing to early termination? It deals with certain provisions that will not be discriminatory - such as plans for salaried or clerical employes.

And I don't see 1.401(a)(8) reg in the RIA's 2007 desk set of law & regs I have.

Treas. Reg. 1.401(a)(4)-5(b)(3).

1.401(a)(4)-5