Hi,

I am assuming that a (3 year cliff vesting schedule), (a 20% after 2 years and 100% after 3 years vesting schedule), a (2% after 1 year, 40% after 2 years, and 100% after 3 years vesting schedule), and a (25% after 1 year, 50% after 2 years, and 100% after 3 years vesting schedule) would be considered equivilant such that Benefits Rights and Features testing would not be required.

Any thoughts?

Seems like an absurd question, but I ask because I have now seen this done on more than one plan. When completing the ADP test, can the first $5,500 of deferrals for a participant over 50 be considered catch-up, or must the participant first reach the “deferral limit” or “employer provided limit” before any additional deferral is considered catch-up?

If a corporation has a "stock split" that results in a greater number of outstanding shares, does the aggregate number of shares available for issue under the ISO need to amended to reflect the split if they want to have the option of issuing more shares based on that split? Can they simply award from ISOs based on the split?

Assume 100,000 shares were approved for issuance under the ISO. Two years later there is a stock split and there are now 2 shares to every 1 share there was at the time the ISO was approved. Do we need to amend the plan if we want to be able to issue 200,000 shares under the ISO plan?

What if over 100,000 shares were awarded under the ISO but the plan was never amended to reflect the greater number of shares available due to the split?

Small Cash Balance Plan is considering terminating. One of the owners retired in 2011 and has not been able to take her lump sum because the plan is restricted by the 110% test. If the Plan were to terminate and the assets are not sufficient to cover the payouts, the 2 remaining owners are willing to forgo benefits. However, the question is, does the one retired prior owner, who is no longer an owner, fall into the rank and file employee group in terms of who gets paid out how much? Typically how we handle underfunded terminations is the rank and file are paid out their benefits in full, and then the owners are paid out with the remaining assets (pro-rata if there is more than one).

I am interested in knowing what a male who has a high income (400K for many sequential years) would have for a value (today) if he had supposedly previously "maxed out" his own single employee corporate DBP and now is 65, assuming todays maximum benefit (195K).

i ask because I am only 50 but my DB plan administrator has told me that I can't make any more DBP contributions because my value is 1.4M. I don't see my current value paying out 195K/year when I am 65 but maybe I am wrong and in 15 years this actually would cover my retirement assuming a 6% return...

Secondly, if I may inquire, I was corporated several years ago with a corporate Defined benefit plan that because it was supposedly maxed out, I closed and rolled into an IRA. That company was later closed. Now I am starting a sole proprietorship business and wanted to open a sole DBP. Is it true that if I maxed out the first DBP, I can't use a new one, with a different company, or now as a sole proprietor, as a retirement vehicle with this new venture? Didn't the last DBP "belong" to the last company?

I apologize upfront if this are naive questions, but I am a busy physician and my "people" never seem to be able to give me layman's answers...

My client is requesting information about terminated participants under the age of 59.5 who want to take installment payments and believe that this can be done without a 10% penalty if taken as substantially equal payments.

Plan document allows installment payments.

Please advise what Regulations or Code addresses this information?

A deceased participant's minor child (10) is entitled to an annuity death benefit until age 21. The child lives in Texas. The amount of the benefit is significant, and, in order to commence payout of the benefit, the plan requested documentation of a court-appointed guardian for the property of the child.

The deceased participant was the child's mother, and the child's father does not appear to be in the picture. Instead, an ex-husband of the child's mother (not the father) appears to have been named as executor under her will, which also specifies that the ex-husband/executor is appointed as guardian of the person and estate of the child. However, the death benefit is not being paid/distributed via probate under her will -- it is being paid under the terms of the pension plan (i.e., the will should be irrelevant for these purposes).

The ex-husband/executor does not want to go through the process of setting up guardianship, apparently due to the expense and "best interests of the minor." He wants the benefit to be paid to himself, as trustee of the trust under her will f/b/o the minor child. Alternatively, he proposes the benefit be paid to a custodial account.

Requiring the establishment of a guardianship would appear to be in the best interest of the minor (particularly given that the guardian is not a parent or other relative of the child). Other posts in this forum suggest that requiring payment to a UTMA custodian is an acceptable route, but UTMA accounts do not seem to offer all of the safeguards of guardianship (e.g., no monitoring of how funds are spent -- child or someone else would have to sue the custodian in the event that the funds in the UTMA were spent improperly).

Plan itself is relatively permissive and states as follows: "If the Administrator determines that any person entitled to payments under the Plan is an infant or incompetent by reason of physical or mental disability, it amy cause all payments thereafter becoming due to such person to be made to any other person for his benefit, without responsibility to follow the application of amounts so paid. Payments so made shall completely discharge the Administrator, the Trustee and the Company."

Any thoughts on whether payment of the benefit to the ex-husband/executor (f/b/o the minor child) or to a custodial account would be problematic under the circumstances?

An unscientific sampling of the interest rate used for pension accounting as of 12/31/11 shows this for various companies:

AT+T 5.30%

Wells Fargo 5.25%

J&J 5.22%

3M 4.15%

GE 4.09%

Chevron 3.80%

Are these companies living in parallel but different worlds on opposite sides of the sun? Or what?

The original Titanic -- the largest ship of its type at the time -- sank 100 years ago when it struck an iceberg on the night of April 15, 1912, on its maiden voyage from Southampton to New York. More than 1,500 people perished in the disaster, which captured the popular imagination. The ship had been vaunted as "unsinkable."

Most people don't know that back in 1912, Hellmann's mayonnaise was manufactured in England. In fact, the Titanic was carrying 12,000 jars of the condiment scheduled for delivery in Vera Cruz, Mexico. This was to be the next port of call for the great ship after its stop in New York. This would have been the largest single shipment of mayonnaise ever delivered to Mexico. But as we know, the great ship did not make it to New York. The ship hit an iceberg and sank, and the cargo was forever lost. The people of Mexico, who were crazy about mayonnaise, and were eagerly awaiting its delivery, were disconsolate at the loss. Their anguish was so great, that they declared a National Day of Mourning, which they still observe to this day. The National Day of Mourning occurs each year on May 5th, the day the shipment was to arrive in Vera Cruz, and is known, of course, as Sinko de Mayo.

An ISO plan is required to designate the number of shares available for grant under the plan. If the corporation has a stock split, does the plan have to be amended to reflect a change in the number of shares available? For example, assume a plan is written so that 500,000 shares can be issued under the ISO plan. After adoption and approval, there's a stock split which doubles the shares that can be issued by the corporation. Does the plan have to be amended and do the shareholders need to approve the availability of 1,000,000 shares under the plan? Seems like the answer to that would be yes, but looking for thoughts on that. Thanks.

Can anyone confirm my understanding that a mass withdrawal is the only way a previously withdrawn employer can be held responsible for increased withdrawal liability? Assume no calculation errors were made and that there was no obligation to contribute following the complete withdrawal.

Let's say you have a participant whose benefit is limited by 415. The client wants to reduce future contributions but you want the participant to continue to accrue benefits so that the YOP's count towards 415. So you create a frozen accrued benefit plus future accruals at .5% of compensation. To put some numbers with it lets assume the following:

-at 12/31/2012 the participant has 6 YOP

-the participant has made $300,000 plus in compensation for all years and already has 10+ YOS

-the participants accrued benefit under the plan's formula is $145,000 at 12/31/2012

-plan AE is 5%/94 GAR (no pre-retirement mortality)

So an amendment is done which establishes a frozen AB at 12/31/12 plus a .5% of compensation accrual for 2013 and beyond.

Let's say there is no COLA in the limits for 2013. How would you calculate the PVAB at 12/31/2013? Could you argue that it is:

$120,000 * 5.5%/417(e)(3) mortality table

plus $1,250 * 5%/94 GAR

The arguement for this approach would be that you put in fresh-start / frozen AB language, which states the frozen AB is calculated as if the participant terminated employment. If this participant terminated employment on 12/31/2012 their benefit would have ultimately been limited by 415, thus that portion of their benefit is calculated under the $120,000 * 5.5%/417(e)(3) mortality table.

Was given a last minute document to do and racing a little. I haven't had to prepare the docs before and have a question about the NRA. Their current doc had a retirement age of 58 and 10 on part but no later than 65 and 5 on part. Question is, how do I accomodate that first piece. I don't believe that is allowable any longer is it?

Participant has been told that there will be no actuarial increase if he delays taking his defined benefit pension after NRA (age 65). Participant was fully vested (5 years of service) when he terminated employment at age 57. Early retirement under Plan is age 55 and 5 years of service; participant is age 62 and has not yet taken his pension. Participant was told that there is no actuarial adjustment if he commences pension later than NRA age 65 -- e.g. if he decides to defer until age 66 or later (but not after 70 1/2). Is it permissible for Plan to avoid giving actuarial increase if he delays taking pension -- if so, is it because the Plan "forces" payment at NRA age 65 and doesn't allow deferral beyond age 65 to 70 1/12?

So I passed my tests and received my ERPA designation certificate and card etc... the only problem is that my name is misspelled on everything. Instead of Sheila I am Shelia! Everything else I have including my application have the correct spelling. I've already sent a request (2 weeks ago) to have it fixed but have heard nothing. My question is.... can I use the designation or need I wait until they can spell my name correctly?

If a plan in critical status with an accumulated funding deficiency goes into reorganization, does the temporary relief from the excise tax continue to apply? Or are critical and reorganization statuses exclusive?

Question: A doctor who is a partner in an anesthesiology practice has supposedly terminated and is now an independent contractor. We are being told he is paid on a 1099 and is no longer a W-2 employee. But he is still an owner of the practice. He wants to take a distribution from the plan. I'm not sure where to go with this. This doctor is also a trustee. As a TPA firm, how much should we really question this?

Is there a window of opportunity for an IRA owner to return a distribution to his IRA without incurring any tax?

The plan sponsor of a plan with a safe harbor match has gone out of business suddenly, and only after the fact called to tell me that he needs to terminate his plan. He understands that he has to fund the safe harbor match through the final payroll, but will fail ADP if he has to test.

"Going out of business" isn't technically one of the reasons to have a short plan year for a safe harbor match so far as I can see... but it has to sort of fall under there, doesn't it?

I have a 10 years old corp just one employee ( me ), .

First two years the corp contributed to Money Purchase Keough ( required ).

I stopped contribs due to reduced income and just left the funds in place. I just wrote a letter stating

corp will no longer make contribs ( to freeze plan ).

Am closing company, have to complete Form 5500 which asks how many participants

and minimum required contribs made in this year. I never filed 5500 before because

account is under 250K. it is defined benefit plan,

do I enter 0 participants / 0 minimum required contrib on the 5500-EZ ???

Thanks, Mark