Can anyone confirm if a publicly traded REIT or limited partnership or REIT mutual fund is subject to UBTI if purchased as an investment in a retirement plan?

Since 2004 the ADP Test has been run using Current Testing. However, the doucment stated Prior Year testing would be used.

Looking for some suggestions on how to correct. Do we use VCP and have an amendment to the plan stating current yaer was the testing method for all plan years after 12/31/2004? The plan is definately outside the SCP time period. We are trying to make the correction as painless as possible for the Plan Sponsor.

I am trying to figure out what happens when a Plan is late in signing its amendment to convert a plan to a nonelective “safe harbor.” In this example, assume that Plan A intended to adopt the safe harbor nonelective amendment prior to the beginning of the year, but for some reason failed to do so and the amendment was not signed until November of that first year. Would this mean that they must pass discrimination testing for that year or can they do a VCP to get IRS approval for the adoption of the amendment retroactively to the beginning of the plan year. I have reviewed the regulations and realize that there is not an exception to the 12-month rule (nor anything specific in EPCRS), but I am wondering if anyone has any experience under VCP with this issue.

I have a participant that is requesting distribution on an invoice from "National Personal Training Institute". Is this institute considered post-secondary education. Their website only issues a Certificate of Completion after a 500 hour course.

An individual implements a DB plan in end of 2011.

The individual also is told by a financial advisor to set up a SEP and contribute 25%.

The individual comes to us the tpa and asks how much they can cotribute to db plan.

it seems the deductible limit for 2011 would be only 6% of comp and then excess contribution not deducted until later year.

Can the employer return contribution made to SEP (or all of it except 6% of comp amount) as a "mistake of fact" prior to 4/15 in accordance with 4972© and proceed to make the desired contribution to DB plan?

Does the return of SEP contribution satisfy 4972©(3)?

thanks

gary

1 Life PS Plan with only the owner in the plan.

He has $300,000 invested in mutual funds plus an insurance policy that has $100,000 in cash surrender value; everything is pre-tax.

He wants to terminate the plan and roll over all assets into an IRA.

I believe that the insurance cannot be rolled into and IRA. Therefore, the only options are to:

(1) either cash in the policy (while still in the plan) and roll the cash value of the policy into the IRA along with the other non-insurance assets, or

(2) take personal ownership of the policy outside of the plan.

Questions I have in regard to Option #2:

** We are told that in order to avoid any tax consequence on the insurance, that the individual must contribute $100,000 in after tax-money into the plan. By doing so, this "balances" the idea that the cash value in the insurance policy, now held outside the plan, is not taxed now (at the time of distribution) nor at a later date when/if the participant wishes to terminate the policy and receive the cash value. In addition, the plan now has $400,000 in non-insurance assets in the plan and can roll the entire amount over into the IRA.

Is this the correct way that these are handled?

** If the participant does not want to pay the $100,000 into the plan but still take personal ownership of the policy, he can do that, but the cash surrender value becomes fully taxable when the policy is transferred out of the plan.

Does that sound right?

Thanks for any replies.

Only assets in a new plan right now are unrelated rollover funds. Owner/Employee A takes a loan from the plan.

Now my top heavy test is indicating that the plan is top heavy because of the existence of the loan. Top Heavy test is excluding the remaining unrelated rollover assets, but not the loan. Is this right?

Can someone please just give me a hand on what annual testing is currently needed for a POP Plan? Has anything changed recently?

Thanks in advance for everyone's help!

Hi. I had a qdro approved by my company and then went to have the judge sign it (after divorce decree was finalized in Georgia), the staff attorney then called me to say that they couldn't sign it because the language of the decree didn't mention anything about it.

Specifically my divorce decree had stated that respondent and petitioner shall receive all personal property in his/her possession. My question is is it still possible to get a qdro issued? Divorce was totally uncontested and I am voluntarily trying to get a qdro issued for her for a fixed amount of my retirement plan. Basically we agreed to an amount but didn't specify any details in the settlement.

Anyways thank u for any advice u could offer.

We are getting a lot of feedback from clients on what we require for participants to rollover money into our qualified plan.

When a participant rolls money into our plan, we require the partcipant to provide a copy the letter of determination from the plan the money is coming from or a statement from the former plan administrator that the funds are coming from a qualified plan.

People are telling us that the Schwabs and Fidelities of the world are not requiring this. Are we out of date with our requirements? What protection do we need to make sure that money being rolled over to our plan is coming from another qualified plan?

Form 8955 SSA was released this morning on the IRS website.

No instructions are available as yet.

I was hoping someone could provide their thoughts on an issue that has been controversial in our office.

Scenario involves 401(k) Plan that has eligibility of 1 month of service (83 hours worked in such month), and entry on first day of month following satisfaction of eligibility requirements. Participant was hired October 20, 2005, satisfied the eligibility requirements in November, and became a participant December 1, 2005. Participant subsequently terminated service on February 5, 2006. Participant worked 300 hours in 2006 and 220 hours in 2007 (total of 520 hours in anniversary period). Participant never deferred and never received any other employer contributions. Participant was rehired March 2, 2011. Therefore, participant did not incur five 1-year breaks in service and the Plan does not apply the one year holdout rule. Plan was subsequently amended in 2008 to require 3 months of service (83 hours worked each month).

Question is when does the employee become a participant. I think IRC 401(a)(5) provides that you must take into account all prior years of service in computing period of service under 401(a)(1). It does not say to take into account all prior service. Nor can I find anywhere that requires the Plan to take prior service into account, except for prior years of service. Further, the language in the Plan does not cover this particular scenario. Therefore, I think because the participant never earned a year of service, his prior service is disregarded and he must start new.

Others in the office state that once he became a participant, he is always treated as a participant so he should get into the Plan on his rehire date. But they can't provide anything in the Code or Regs that require it.

So, is there some guidance that provides a clear answer? Is there something special about becoming a participant that it is protected once it is a attained, even after a separation from service of more than 1 year (but less than 5 years)?

Facts:

Hi-3 Year Average Comp - $60,000

Date of Termination 3/15/2012

Benefit Commencement Date – 4/1/2012

Age at commencement - 80

NRA – 62

There is no suspension of benefits

Annual Benefit at age 80 as an actuarial equivalent of Normal Retirement Benefits – $72,000 ($6,000 per month) – over 415 salary limit.

Is it appropriate to start paying $6,000 per month effective 4/1, since total 2012 payment will be $54,000 < 415 annual salary limit, and reduce monthly payment to $5,000 per month effective 1/1/2013?

If not, are there any other options besides paying $5,000 per month effective 4/1/2012?

Client sponsors 401k Plan, and has since 1999. Has never had another plan. Client received IRS letter in January stating that Form 5500 had not been received for Plan Number 002 for plan year 2009. I responded that there had never been PN 002, and sent copy of filing for PN 001. Client just received second letter stating that since PN 001 was terminated in 2002, PN 001 cannot be reused.

I called the toll free number listed on the letter and was told:

1. These letters do not come from this area and they cannot resolve this issue by phone (Why is this toll free number listed if that is the case?)

2. The DOL sometimes changes the plan numbers. (WHAT THE HECK?)

3. I should respond in writing and request a written response. Otherwise, there would be no response.

I hope someone from the IRS knows that letters are going out with a number that is not helpful.

I hope someone from DOL finds out the problem in their system that changes plan numbers at random.

Does anyone from either agency read any of these messages?

Thanks for letting me rant.

I see that the DOL issued proposed rules in November, 2010 for changes to the Annual Funding Notice. Does anyone know if the sample funding notice issued in the proposed rules should be used for a 2011 calendar year plan? I went ahead and compared the two samples, and there are some additions to the new AFN. Would it be prudent to use the proposed sample AFN, or can we stick with the initial sample AFN?

Thanks for your help with this

We have a service provider who does first-level appeals. This service provider asserts that they are not a fiduciary because the plan also has a second-level appeal. The service provider says there is caselaw out there supporting this position, but I have not found it.

Is anyone familiar with such caselaw?

Does anyone know whether a second-level appeal would relieve this provider of fiduciary status?

Since claims are required to be reviewed by the appropriate fiduciary, is it even possible to allow a service provider to review claims if the service provider refuses to be a fiduciary?

Given traditional DB plan with formula 5% of Average Comp x years of service.

Question1: Can averaging period = 1? (that is, no averaging)

Given fraction accrual rule. where accrued benefit = 5% x Average Comp (3 years) x min(25, total service) x (years of service / total service)

Question: in applying the formula, CAN you use "projected" average comp rather "current" average comp?

For example, given following comp: $100,000 $120,000 and $130,000.

Is "average comp" = $120,000 (average of current 3) or is it $130,000 (projected average 3)?

Thanks.

I have a 401(k) distribution request from a nephew of a deceased participant. He has provided the death certificate of his uncle, a State Letter of Administration of a Small Estate showing that he has authority to search for assets, a State Letter of Administration of a Small Estate showing that he is the personal representative of his uncle's estate, and "Affidavit of Estate" on plain paper stating that he is authorized to receive any monies owed to the deceased by the company the deceased worked for. The Affidavit is notarized but is on plain paper and does not really show an legality to it other than his signature is notarized. Can I distribute his uncle's funds to him based on this documentation? Or, do I need to get something more official showing that he has legal rights to the money. He says his going to deposit the funds into an estate account. I received a Plan form "Non-Spouse Beneficiary Distribution Election" form requesting a "lump-sum payment to be issued to him. Any thoughts from anyone out there???

I have an employee who elected $4200 effective 1/1/2012

Theer was a system error snd $175 has not been taken semi-monthly for 5 pay periods. Employee just noticed. How would we fix this? Can we double up next 5 pays to catch up for the $875 not deducted to date?

I have a new client that has taken the 401k assets that were part of a KSOP and established a new 401k plan with these assets. THe only money left in the KSOP are employer securities/cash that are Profit Sharing. Match or old Money Purchase Money.

They established a new 401k plan with a new plan number 002, but listed the effective date of the plan the orignal effective date of the KSOP? Does this seem correct? Is that how a spin-off is handled?

The new 401k plan will also accept any profit sharing/match/money purchase funds that an employee chooses to diversify (when eligible to do so). Are these rollovers to the 401k plan considered 'related rollovers'? Do they carry J&S if the funds are from the Money Purchase piece of the ESOP?

Thanks for any guidance you can provide.