BG5150 Posted March 9, 2017 Share Posted March 9, 2017 Our plan documents have the last day of the plan year written in. We have a plan that ends Feb 28. What do we do in leap years? The doc says Feb. 28, not "last day of February." Do the regs address this? QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left. Link to comment Share on other sites More sharing options...
My 2 cents Posted March 9, 2017 Share Posted March 9, 2017 What would they say if they did? Try not to have a plan year end of February 28th because every 4th year you won't know what to do? Based on your description, wouldn't the 2016-17 plan year run from 2/29/16 to 2/28/17? If it were a defined benefit plan with a lump sum option with the 417(e) segment rates for the plan year being based on the second month before the start of the plan year, would you use January segment rates for most plan years but December rates for the plan years beginning on February 29th? Always check with your actuary first! Link to comment Share on other sites More sharing options...
Belgarath Posted March 9, 2017 Share Posted March 9, 2017 I've never looked for any regs or guidance on this, but I would treat the plan, for all practical purposes, as having a plan year end as of the last day of February. If leap year, then February 29th. Other years, February 28th. Until someone convinces me otherwise. I have a hard time imagining that an IRS auditor would give you trouble on this. ESOP Guy 1 Link to comment Share on other sites More sharing options...
BG5150 Posted March 9, 2017 Author Share Posted March 9, 2017 ^ that would make sense. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left. Link to comment Share on other sites More sharing options...
ESOP Guy Posted March 9, 2017 Share Posted March 9, 2017 23 minutes ago, Belgarath said: I've never looked for any regs or guidance on this, but I would treat the plan, for all practical purposes, as having a plan year end as of the last day of February. If leap year, then February 29th. Other years, February 28th. Until someone convinces me otherwise. I have a hard time imagining that an IRS auditor would give you trouble on this. I used to work on a profit sharing plan that was a 52/53 week year end for a grocery store chain. The year end was always a Saturday in Sept. They did this because that is how they thought of their business. Their weekly specials started on Sunday and ended the following Sat. This could mean that the actual year end was between something like Sept 25 or 26 to 30 just depending on how things fell. I got census and trust accounting every year for 9/30. All the participant statements were ending 9/30. The only thing that followed the actual year end was the auditor felt like they should audit the actual plan. So there was a reconciling note in the auditor's report reconciling the 5500 assets to the auditor's report. That plan never had any problem that I know of doing what I described. Truth be told I had to check with the actuary who worked on their DB plan make sure I even knew the correct year end just in case it came up every year. Link to comment Share on other sites More sharing options...
BG5150 Posted March 9, 2017 Author Share Posted March 9, 2017 ^ What did the document say the plan year end was? "Last Saturday in Sep"? QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left. Link to comment Share on other sites More sharing options...
ESOP Guy Posted March 9, 2017 Share Posted March 9, 2017 I believe it was last Saturday in Sept. It mentioned this was a 52/53 week year plan year in the definition of a plan year. The problem was their payroll system didn't really cut off well except at month end. Of course their investment statements all cut off as of the last day of the month. Link to comment Share on other sites More sharing options...
RatherBeGolfing Posted March 9, 2017 Share Posted March 9, 2017 23 minutes ago, BG5150 said: ^ What did the document say the plan year end was? "Last Saturday in Sep"? We had a plan that used "the last day of the last week that began during the plan year". It was a pain... Link to comment Share on other sites More sharing options...
My 2 cents Posted March 9, 2017 Share Posted March 9, 2017 1 hour ago, RatherBeGolfing said: We had a plan that used "the last day of the last week that began during the plan year". It was a pain... Am I missing something or is that a circular reference? And do weeks end on Fridays, Saturdays, or Sundays? Always check with your actuary first! Link to comment Share on other sites More sharing options...
John Feldt ERPA CPC QPA Posted March 10, 2017 Share Posted March 10, 2017 Anyone suggesting that the plan year end, in the document, be changed to "the last day in February", thus the first day of the plan year is always March 1? Link to comment Share on other sites More sharing options...
My 2 cents Posted March 10, 2017 Share Posted March 10, 2017 14 hours ago, John Feldt ERPA CPC QPA said: Anyone suggesting that the plan year end, in the document, be changed to "the last day in February", thus the first day of the plan year is always March 1? With the possible exception of those who insist on ending the plan year as of a specific Saturday, or short plan years,the only sensible way to define plan year is by specifying the starting and ending date (i.e., the plan year is the 12-month period beginning on [date] and ending on [date that is the day before the beginning date for the following plan year). This is especially important when the plan year is intended to begin on March 1. Whoever defined the plan year as the period ending on February 28 (as opposed to the last day of February) really dropped the ball. Plan years that may run from either March 1 through the following February 28th or from February 29th through the following February 28th (depending) make no sense. Always check with your actuary first! Link to comment Share on other sites More sharing options...
BG5150 Posted March 10, 2017 Author Share Posted March 10, 2017 11 minutes ago, My 2 cents said: With the possible exception of those who insist on ending the plan year as of a specific Saturday, or short plan years,the only sensible way to define plan year is by specifying the starting and ending date (i.e., the plan year is the 12-month period beginning on [date] and ending on [date that is the day before the beginning date for the following plan year). This si the way it is in our document software. No indication of BOY date. PLAN/LIMITATION YEAR (1.44/1.34).Plan Year and Limitation Year mean the 12 consecutive month period (except for a short Plan/Limitation Year) ending every:Plan Year (Choose one of (a) or (b). Choose (c) if applicable.): a. December 31. b. Fiscal Plan Year: ending: ____________________. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left. Link to comment Share on other sites More sharing options...
NJ Mike Posted March 10, 2017 Share Posted March 10, 2017 How about b. Fiscal Plan Year: ending: Last day of February. or b. Fiscal Plan Year: ending: February 28/29. Mike K2 and John Feldt ERPA CPC QPA 2 Link to comment Share on other sites More sharing options...
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