Company is an LLC - all employees are being laid off prior to the end of the plan year but LLC will remain open with partners until 12.31. This will cause a partial plan termination and all current employees will become 100% vested.

Current plan is a Discretionary New Comp Profit Sharing and Plan is Top Heavy. Allocation requirements for New Comp profit sharing are 1000 hours and last day.

If the plan is not officially being terminated until 12.31 does the top heavy contribution need to be given to the employees since they terminated prior to 12.31?

What if they decide to terminate prior to 12.31 (Let say 9/30) but all employees are already gone - does the plan termination date become the last day of the plan year?

We already know it will cause problems with testing, but what about the NC Contribution? If all the employees are gone prior to the last day of the plan year are they required to get a NC contribution.

Partners are trying to maximize themselves before they close the doors but don't want to provide a contribution to the employees that will be leaving!!!

Help! I can't find an answer to this at all. I have a company that will be terminating its plan and then shuttering its doors. In fact the two remaining employees (one age 56) have already separated from service. So my question is, can the 56 year old separated participant avoid the 10% penalty if he receives his distribution as a plan termination distribution or does he have to receive it as a "separation from service" distribution.

I am trying to minimize the administration expense for the employer (ie one distribution for a participant as opposed to two) but also don't want to limit the opportunity for a participant who is now umemployes at the age of 56.

Any insights will be very helpful.

Thank you,

Jeanne :angry:

Can an owner (max comp) receive a $49,000 profit sharing contribution and then make a $5,500 deferral, classified as catch-up? Or is a deferral not classified as catch-up until you hit the $17,000 limit.

Facts – Sponsor adopted an individually designed plan in 2006. Sponsor’s EIN ends in 7 so the plan is a Cycle B Plan. Sponsor has timely adopted all interim amendments but failed to amend and restate the plan under Cycle B prior to January 31, 2008. We are currently in the second remedial amendment cycle for Cycle B. Based on my interpretation of Rev. Proc. 2008-50 and the instructions to Appendix F – Streamlined VCP Submission, Sponsor would need to restate the plan under the current cycle (2011 Cumulative List) and submit the Appendix F, Schedule 2, and the VCP Fee under 12.02 of Rev. Proc, 2008-50. Sponsor would also need to submit a determination letter application (Form 5300) with the VCP and include the 2006 plan, the interim amendments, and the 2012 plan.

Questions

1. Is the above correct?

2. On Appendix F, Schedule 2 does the sponsor check the box “The changes required by the 2006 Cumulative List” because that was the Cumulative List that was used for the missed Cycle B restatement or does the sponsor check the box “Other” and state that it failed to restate under the first Cycle B restatement period?

3. Will the sponsor receive a current Cycle B determination letter that is good until the next Cycle B restatement period?

4. Will the IRS require sponsor to provide the first Cycle B document?

Thanks

Small company (one man plan) establishes and maintains a defined benefit plan for many years. The plan is fully funded and no more deductible contributions can be made. The plan is terminated and the benefit is rolled over to an IRA. A full tax year goes by and the owner wants to establish a new defined benefit plan. Is there anything that prohibits this or will limit the owner's ability to establish and fund that new plan?

Puerto Rico's Department of Treasury -- the Hacienda -- has issued Circular Letter 11-10, announcing their determination letter procedures following the significant amendments to the Puerto Rican Internal Revenue Code, The only copies of Circular Letter 11-10 I have seen are in Spanish. Does anybody hve an English translation, or has Hacienda put out an Engish version?

Hello,

A small employer will be hiring 8 employees from a company. Currently, the plan has 1 yos age 21 eligibility conditions. Could they amend the plan to allow for service with these new hires predecessor employer so that they can be in the plan or would that be discriminatory?

Life insurance allowed in 403(b) plans? Does it matter whether it is an ERISA or non-ERISA plan? I thought the 2009 403(b) regs prohibited life insurance in these plans.

Thanks

Is it mandatory to report D's, or is still optional? The instructions do not seem to go out of there way to tell you not to report them.

Any help is appreciated...

A company's board was required to adopt an interim amendment by the end of the calendar year. One board member adopted in writing, while the others (who had been sent a copy of the amendment by e-mail) simply replied before the end of the year in an e-mail indicating that they had reviewed and approved the amendment. Does anyone have any experience indicating how the IRS would likely react to this form of adoption? Presumably it would be permissible under E-Sign, but the 2011 ASPPA Q&As indicate that the idea of electronic adoption is "controversial" within the IRS.

Thanks very much.

An HCE has requested a full distribution of his benefit to an IRA. He also deferred wages for 2012. His deferral rate assures he will need a refund of ADP and ACP for 2012. If his entire balance is rolled over now, will the plan sponsor's obligation to refund ADP/ACP failures be satisfied by sending correspondence to the IRA custodian when that time comes in 2013?

Is the plan required to send a suspension of benefits notice to all participants who reach normal retirement age, even those who continue to work past normal retirement age without stopping? CCH Pension Plan Guide states that notice must be given to employees who reach NRA but continue to work, and cites a DOL information letter dated 7-12-82 (which I can't access). Code Sec. 411(a)(3)(B) seems to pertain only to actual retirees who go back to work -- meaning they stopped work, and then resumed covered employment and so pension benefits were suspended. If a suspension of benefits notice was not sent to participants at NRA who continued to work after NRA (without stopping work and without receiving pension benefits), are these participants entitled to an actuarial adjustment for the time they worked after NRA, as well as the accrual of regular benefits while they worked after NRA? What is the sanction for not sending a suspension of benefits notice to participants who continue to work in covered employment after NRA?

Employer wants to offer a self insured medical reimbusement plan only to employees who participate in an employer offered/paid health risk assessment.

Any problems with this?

I always wondered why the correction of 415 excesses start with deferrals. It seems like it's punishing the participant and helping the employer.

1) It is increasing the participant's taxable income for the year.

2) It takes out fully vested money and leaves in partially vested money.

3) It allows the employer to take a larger deduction

Any ideas why they made it that way?

Have a plan with about twenty-five or so partners who file a K1. Most of the partners have ownership but below 5%. A 1% owner (or really between 0-5%) would become a key employee if their "wages" exceeds $150k. For a partner, what "wage" should you use?

For example, a partner with 2.5% ownership has $162k reported on K1. After reducing by his share of the non-key employer contribution, 1/2 SE tax, and their own employer contribution, his "plan compensation (or testing compensation) is $146k.

If I use the 162k, he would be a key. If I use the $146k he is not. The plan is going to be top heavy no matter what but wanted it to be precise since we recently took this plan over.

Hi,

Need some assistance, is there any programs that will help pay for dental surgery? I don’t have any insurance for dental, I need all my teeth pulled due to a gum disease, the pain is bad cant afford to pay for the surgery. Please give valuable suggestions.

Thanks in advance!

Assume following:

1. 100% asset sale

2. seller going out of business

3. buyer will assume CBA for purposes of employing seller's employees

Absent a 4204 agreement, the sale will result in complete withdrawal of seller from m/e plan (seller-side liability). In other words, even though buyer assuming CBA, it is not assuming contribution history of seller, and buyer's withdrawal liability will just be based on its own contribution history. Is this correct?

As of 1/1/2012 company A has 100 eligible employees. On March 31, Company A lays off 21 eligible employees, or 21% of its work-force. Calendar year plan. The newish IRS standards suggest that we might not know if we have a partial termination until the end of the year. The Plan has a liberal eligiblity and if they hire even 2 or 3 people the %age drops below 20%, where there is a rebuttable presumption that there is NO partial termination.

So how do I process distributions between now and the end of the Plan Year? What vesting do I use? I believe no matter which way I turn I have exposure, because I literally do not know what their vesting should be. And people who get laid off have a habit of wanting to take their money out of the Plan...

Has anyone been in this situation before?

Here's an interim amendment correction issue that is perplexing me.

DB plan cycle A. Restated for EGTRRA and filed for and received a favorable letter.

Before end of cycle A for PPA (1/31/12) signed 8905 certifying intent to adopt pre-approved plan. This qualifies plan for 6 year cycle for PPA.

After the 1/31/12 end of PPA cycle A, it was discovered that 415 amendment was adopted late. 415 was not required for Cycle A EGTRRA restatements.

Is it too late to use a streamlined VCP (with Schedule 1 and $375 fee) to correct this interim amendment?

A. Yes - the "applicable" cycle for this interim amendment ended 1/31/12 and the 8905 doesn't change that.

B. No - the 8905 entitles the plan to a 6 year cycle, so the plan has until 4/30/12 (the EGTRRA 6 year) to adopt this amendment.

C. No, and the "applicable cycle" for this plan is the second 6 year cycle - ending about 6 years from now. The VCP would still be streamlined if filed by then and not pickled up on audit first.

Follow up question - if you picked B, is a restatement to an EGTRRA pre-approved required by 4/30/12 even though the plan has an EGTRRA letter?

Thanks for your opinions.

was a form 8905 required to extend deadline when converting from IDP to prototype. the plan had a cycle C (1/31/09) deadline.