I have an actuary looking for a book of business to purchase. DB or DC. Message me if you have any questions or follow up.

Thanks.

Clients pay my fees in one of two ways: (a) From the company account and (b) from the pension plan directly upon invoice. I receive no indirect compensation.

My conclusion is that the final fee disclosure rules set forth in 2550-408b-2© do not apply to me and I'm not required to provide any disclosure.

Agree or disagree?

I have a client who has apprached me with the following scenario:

Prior to last year, the client has offered all of its benefits on a December 31st plan year. However, last year, the client changed their benefits plans and moved some coverages from one company to Aflac and changed the plan year. So, now, they have some benefits that are December 31st year and some that are June 30th plan year. I would think that they could maintain separate plans for each set of benefits (so, one document for the 12/31 benefits and one for the 6/30 benefits).

The problem is that they never executed a new plan document for the June 30th benefits and here we are coming up on the end of the year. My gut is to have them execute the plan now with Board resolutions back to the date they initially decided to adopt the new plan. In my experience, this isn't a hot button with the IRS and showing a good-faith attempt at complaince will usually be sufficient to protect the employer...especially when they correct the problem on their own. Does anyone have a better idea?

Also, when the change was made to the new benefits plans, they allowed some employees to stay under the prior company's critical illness plan, due to higher rates in the new plan. In essence, they grandfathered out the old benefits. So, now, they have employees with one company's critical illness plan on the 12/31 plan year and some under the new Aflac plan with a 6/30 plan year. Does this cause any problems? In essence, is there a problem with a company payroll deducting premiums from two similar plans under 2 different cafeteria plans with different plan years? (I know that's a convoluted question...)

Has anyone decided if these are plans for purposes of the regulations? It looks like if they are unfunded excess benefit plans they are not. I know they are unfunded but do not know if they are excess benefit plans. Can someone point me in the right direction.

Controlled group consists of Company A and Company B. Company A sponsors Plan Y, a safe harbor matching 401(k) plan. Company B sponsors Plan Z, a safe harbor nonelective 401(k) plan.

Because Plans Y and Z utilize different safe harbor formulas, they cannot be aggregated for coverage and nondiscrimination testing. However, because the Plans are sponsored by members of a controlled group, the separate coverage and nondiscrimination testing for each Plan is performed by looking at the participants benefitting vs. the employer-wide workforce.

Company A has 12 employees (4 HCEs and 8 NHCEs), all of whom are participants in and benefit under Plan Y.

Company B has 88 employees (4 HCEs and 84 NHCEs), all of whom are participants in and benefit under Plan Z.

The combined workforce is therefore 8 HCEs and 92 NHCEs. The coverage ratio for Plan Y would therefore appear to be (8/92 NHCEs = 8.70%) divided by (4/8 HCEs = 50%) = 17.39%. FAIL.

Looking at the average benefits test, the NHCE concentration percentage is (92/100) = 92%. The safe harbor percentage is 26%, unsafe harbor percentage is 20%, and the midpoint is 23%.

The coverage ratio of 17.39% does not exceed the safe harbor percentage of 26%, and also does not exceed the unsafe harbor percentage of 20%. FAIL.

Since 100% of Company A's employees are participants in Plan Y and benefitting under Plan Y, there are no employees that might be added to Plan Y to help pass coverage. What, then, are the correction options under this scenario?

Mom and Dad own 100% of a corporation and they employ their adult daughter (age 43). The type of business is NOT one of those professional businesses that are automatically exempt from PBGC coverage. No other employees.

A DB plan is set up to cover all three employees.

The plan is subject to PBGC. Agree?

Assuming nothing changes other than the daughter later becomes a 100% owner and Mom and Dad retire from working, 404(a)(7) applies and PBGC coverage ends, right?

Plan A is a traditional, Taft-Hartley DB plan with an elective lump sum payment (LSP) option. In PY 2008, Plan A implemented the new PPA 417(e) rates. The amendment included an odd wear-away rule. Now we're concerned about that rule in light of the general rule that QJSA must be at least as valuable as any other benefit option that is payable at the same time (the most-valuable rule or "MVR").

Under Plan A's wearway rule, minimum LSPs are based either on (i) "frozen" service, i.e., service through a fixed date, using pre-PPA 417(e) factors; or (ii) the e'ee's total service, using post-PPA factors. The "freeze" date is the end of the 2009 PY. So a participant with 10 years of service as of the freeze date, who then retires at the end of the 2010 PY, would get the greater of the LSP calculated using:

Whether it was substantively permissible or not, the amendment was timely adopted during the transition period described in Notice 2008-30, and the dates line up with the period during plans were permitted to pay the greater of the LSP payable using pre- or post-PAA factors, without violating the MVR. The idea was simply to give participants a window to see what the rate would be for the upcoming stability period and then decide whether to retire and take the old LSP.

Note that Plan A adopted an identical wear-away under the relief issued after the transition from the old PBGC factors to the GATT factors in 2000, and the IRS has issued favorable determinations following both amendments.

The critical points of the law are:

QJSA Most-Valuable Rule: A qualified joint and survivor annuity must be at least the actuarial equivalent of the normal form of life annuity or, if greater, of any optional form of life annuity offered under the plan. § 1.401(a)-11(b)(2).

417(e) Exception: A plan does not fail to satisfy the [MVR] merely because the amount payable under an optional form of benefit that subject to the minimum present value requirement of section 417(e)(3) is calculated using the applicable rate (and, for periods when required, the applicable mortality) under section 417(e)(3). § 1.401(a)-20, Q&A 16.

PPA "Greater-of" Transition Relief: Expired at the end of the 2009 plan year. Notice 2008-30, Q&A 16.

No one foresaw what would happen to interest rates, however, and the result is that the frozen LSPs, which are calculated using pre-PPA factors, are still greater than the all-service LSPs calculated using post-PPA factors. It looks to me like there's a problem here, because the frozen LSPs are more valuable than the currently-payable QJSA.

Does anyone see this differently? A different answer is greatly to be desired at this point.

Cheers.

I am doing some research on ethics issues in retirement plans. I would appreciate hearing some examples of client requests or other plan matters that caused you to consider the ethics of how to respond. If possible, please provide a story where real names are not used. Or if you can refer me to a source of this kind of information, that would be helpful too. I would appreciate any help.

I have a new client with the following situation:

401k plan (not a safe harbor), it is top heavy, no match or nonelective contributions.

There is one key employee (and he is also the only hce), he defers $5,000 (he is not catch up eligible), the non highly ADP participantion rate is 0%. The key/hce employee then receives a refund of $5,000 to correct the ADP test.

The key makes $150,000. Is the top heavy mininum 3% or is it nothing since 100% of his deferral was refunded? I can't seem to find an answer anywhere.

Thanks

CPC, ERPA, QPA, QKA

My cousin is diabetic and his wife just mentioned to look into life insurance for ds because it is insanely expensive for my cousin now. And he's only 32! Thought it might be a good idea but I have no idea where to start?

The plan terminated 10/15/2011. The termination was not for hardship or other reason that would preclude ADP/ACP testing. If I understand this correctly, the ER must still make the SH matching contribution. Is that SH match subject to ACP testing?

Plan Sponsor has a 401k PSP and CBP. The vesting service for the CB Plan started at the effective date of the CB Plan (1/1/2010) so as of the determination date for TH testing (12/31/2011) there were no vested benefits in the CBP. When performing the TH test do you look at the present value of the vested accrued benefits (in this case, all $0)? Or the present value of the benefits without regard to vesting?

Also, the CBP uses a BOY valuation date. For determining if the Plan is top heavy in 2012 is it ok to use the 12/31/2011 401k balances and the 1/1/2011 benefits in the CBP? Or do the CBP benefits need to be projected forward to 12/31/2011?

I need some guidance and I’m getting conflicting information from two different benefits companies. Possibly, I’m not explaining myself properly to them or I’m just not understanding properly (or they’re someone is trying to sell me something I don’t need!)

My partner (Joe) is 100% owner of two LLC’s, (call these entities A, B).

Both have less than 20 employees each, both are completely different businesses with no employee overlap.

Joe is also an W2 employee of entity X and fully participates in its 401k.

I (Wes) have a C-Corp with S election, (call this entity S) I’m 100% owner of, with no employees (besides me).

Joe and Wes are getting into a completely new business, an LLC, 50/50 owners, and 20 employees (call this entity N).

The conflicting information we are getting is generally centered around the entities being called controlled groups.

Joe and Wes are not related. None of the entities have customers in common nor derive revenue from each other.

Wes has had both a SIMPLE and a SEP (at different, exclusive times) in entity S.

Joe has a Safe Harbor 401k for the employees of A. Joe offers nothing in B.

1) One planner is telling us that Joe must offer the same plan in A and B since they are a controlled group.

2) Same planner is saying that N is formed, the same plan, any plan, must be offered in ALL the entities

3) What’s the truth, if there is black and white truth? (another planner is saying that the entities can have their own plans)

4) What kind of plans should be set up? Considering:

Joe would like to keep maxing out his 401k in X, because of a great employer match.

We will be scrapping the 401k in A since the employees no longer wish to participate.

We like to set up a plan in N for Joe and Wes (where few, if any employees want to participate – so if some sort of mandatory contribution is required, that’s ok).

Wes would like to keep some type of plan in S.

Thanks very much… I have a conference call next week with both planners so any guidance would be helpful.

Previously posted regarding difficulties I was having regarding the implementation of a QMCSO. Payment checks are still going to the non-custodial parent (which is in non-compliance with the QMCSO); however, the ex has started to send me the health insurance checks endorsed over to me - what should I do with these checks?

Facts:

1. 1985 - Based upon #4 below, former participant terminated with vested balance prior to Sponsor/Plan becoming our client.

2. 1985 - Based upon #4 below, former participant's vested balance was properly reported on Schedule SSA.

3. 1988 - Sponsor/Plan became our client.

4. 2012 - Former participant receives notice from Social Security Administration that they had a balance of $850 in xyz Plan in 1985.

5. 2012 - We research all available records, some of which date back to 1996, and have no record of the former participant or balance. No records have been kept prior to 1996.

6. 2012 - We notify former participant that balance was previously distributed (an assumption on our part), and they no longer have a benefit in the Plan.

7. 2012 - Former participant rejects our claim and insists we provide forms for them to obtain their benefit.

Assumptions:

1. Former participant's balance was properly distributed between 1986 and 1995.

2. The Social Security Administation was never notified the benefit was distributed.

Known Issues and Questions:

1. Who has the burden of proof to show the benefits either remains or was properly distributed?

2. Since records are not required to be kept for 20 years, how do we prove the benefit was properly paid should the burden fall on us?

3. Related to 1&2, was there a mechanism to remove someone reported on Schedule SSA when they subsequently receive their distribution?

4. If the answer to 3 above is yes and it was never done (a reasonable assumption considering they received the notice), does it affect who has the burden of proof?

5. If the ultimate conclusion is that we have to pay, do we have to include gains/losses from 1985?

6. If the answer to 5 is yes, how do we calculate that if the investment records no longer exist?

7. What other issues and questions am I failing to consider?

a 401k plan with only deferrals and a safe harbor match as I understand is exempt from the top heavy allocation requirement.

The company then adds a separate and new profit sharing plan and a new defined benefit plan.

All three plans are part of required aggregation group.

the group is tested to be top heavy.

for employees only in the 401k match plan: do they need to receive a top heavy allocation OR is that 401k plan still exempt from top heavy?

rev rul 2004-13 seems to make clear that if within same 401k plan there are profit sharing allocations, the exemption does not apply.

However, I am not sure w/r/t situation above.

thanks

Question (what else?):

Real estate is in qualified plan for the benefit of 3 brothers who purchased it with plan assets long ago when they were the only participants. Real estate was not in an LLC or any other organization, but was held directly by the Plan. One property is a commercial strip mall with only rents as income, & the other is undeveloped land. Now that the company is winding down, they want to roll %ages of real estate into IRAs, one for each brother--maybe into Roth IRAs, but I don't think that impacts the question.

Assume we want to protect the IRAs and their owners by having each of the IRAs be a member of an LLC, with the real estate held by the LLC. How do we get the properties into the LLCs without a distribution of the property from the qualified plan? We can't distribute the real estate directly to the individuals, have them move the assets into an LLC, and then rollover the LLC membership interests into the IRAs--rollovers must be the exact property received in the distribution, or the proceeds from its sale (IRC Sections 402©(1)© & 402©(6)(A)), but cannot be cash or substitute property of the same value.

Any ideas? Or I missing something pretty basic?

Client has a 401k. The client files 5500s for 2008 and 2009. 2010 5500 is filed on 4/5/12. IRS sends letter stating you owe us money. Can he amend the 2010 5500 and mark the box for DFVC and pay the 750?

A plan uses a volume submitter document and is set up as comparability with two groups, 1) one named individual and 2) everyone else who is eligible. The employer is a partnership and the person in group 1 is one of the partners (HCE & Key). He gets a 0% PS contribution and everyone else gets 11%. Does this scenario need to be tested for gateway and the classification/average benefits tests? It's as if the formula is salary ratio with one HCE not getting a contribution, but since the document is comparability, does it need to be tested anyway?

Would the answer be different if the partner was getting 11% too?

Thanks.

year end valuatio scenario.

based on 12/31/2010 valuation 2011

aftap is certified to be 91% before 10/1/2011. at 4/1/2012

aftap is presumed to be 81%. 12/31/2011 valuation is done after 4/1 and

2011 aftap would be less than 90% if calculated and certified resulting in 2012

presumption less than 80%. Is there anythig wrong with

issuing a 2011 minimum funding report without a final 2011

aftap calculation? final 2011 aftap is done when 2011 sb is done

and contributions for 2011 have been made sufficient to have 2012

aftap above 80% so no 436 restrictions arise.