In determining expense under FASB, the expected return and interest expense generally include postulating expected benefit distributions during the year. Suppose the assumption is that the plan always distributes benefits in a lump sum and further, that active participants over the normal retirement age are assumed to retire on the valuation date. In such case, the expected distributions would include expected lump sums. Suppose, there is an active big guy over normal retirement age who if the lump sum were paid would trigger FASB88.

Does it make sense to include this lump sum in the expected distributions? Thus, only enter the expense determination if the big guy retired and received a lump sum distribution. Or, is the treatment no different from any other distribution?

Perhaps, the assumption should be retires one year later?

I have a take over 1 man plan whose sole investment is a piece of property with a mortgage that exceeds the current appraisal of that property. We took over the plan in 2009 and the mortgage was not mentioned. He just let it slip this time around.

I believe that rental income goes to pay down the mortgage. The owner participant is 69, disabled and seems to have trouble understanding what I am saying. I feel sorry for him and would like to help if possible. (How do I get into these situations?). I'm wondering if there is a way I can fix this for him by distributing the investment property to him with the mortgage. The net value is negative so there would not be a taxable event. I don't know what else we can do for him.

Of course I would send him a letter and ask him to sign off on it that we essentially did not create or advise him to create this situation and that we recommend he discuss the situation with an ERISA attorney before he proceeds.

Any thoughts?

Target was acquired in a stock deal. As required by Buyer, Target adopted resolutions terminating its 401(k) profit sharing plan immediately prior to termination. Target's plan permitted Target to make discretionary profit sharing contribution at year-end which Target had done in some prior years. Target has not promised any of the 401(k) Plan participants a profit sharing contribution this year and the final Board Resolutions terminating the 401(k) Plan did not mention making a profit sharing contribution in any way. Target had, however, "accrued" an amount on its books that it was planning on making as year-end profit sharing contribution prior to getting sold.

Does the fact that the 401(k) Plan has been terminated prevent the Target from allocating this accrued amount as a profit sharing contribution on behalf of participants up through the short plan year ending on the date of the plan's termination?. Buyer is fine with the amounts being used for this purpose but does not want to do anything that would jeopardize the status of the plan as having been terminated prior to closing for 401(k) Plan successor employer issues, etc. Thanks for any thoughts.

I am reviewing a pension valuation where the mortality table is described as the "1990 Commissioners Mortality Table" in the assumptions section. Is anbody familiar with this table? I hear commissioners table and think of a table used in the development of reserves in the insurance industry. If this is the case, I have a hard time understanding how a credentialed actuary can justify using it for a pension valuation.

Upon a review of the sample q's in the report, it appears that it may be the "90CM" mortality table. Apparently, this mortality table is "for use in computing (among other things) the charitable deduction arising from a contribution to a charitable remainder trust, charitable lead trust, charitable gift annuity, or pooled-income fund where the term of the agreement is measured by one or more lives." Is anybody familiar with this table and its appropriateness for determining pension annuity liabilities?

Self-employed doctor has a DB plan and DC plan, no employees. He took a loan out of the 401k Plan on 7/1/2011 for $50,000 and just repayed the entire thing. Now he is terminating the 401k Plan but keeping the DB Plan. Does his loan from the 401k Plan limit the amount of loan he can take from the DB plan after the 401k Plan is terminated? Does the $50,000 threshold apply to each plan or the combination of the two?

If an employee separates from service and is subsequently rehired in the same year, can the employee or employer make election changes or is the employee locked into the previous election he/she made earlier in the year? Basically, does a separation from service cancel out an employee's previous elections? Any guidance on this issue is appreciated.

Here's a twist to this common question . . . Can my husband enroll in a HDHP HSA. The employer will contribute $2,000 and he will contribute nothing. Then, can I fund my FSA to cover the remaining deductible and co-insurance? Can I just substantiate my FSA expenses by showing that they were all MY charges and that none of it was used by my husband?

Just back from ASPPA and geared up to get our 8955-SSA's filed for our clients. The question regarding having supplied the required individual statement was mentioned. Does anyone have any particular wording they are using? The instructions generically say to provide a statement setting forth the information contained in the SSA form. Isn't all this on the quarterly plan statement that most 401k participants receive regardless of active or terminated status? Any thoughts on the wording you're using out there would be appreciated, Thanks

If a company begins 10/1/11 and their 401(k) plan also begins on the same date, but has a 12/31 year-end date, is that still considered a Short Plan Year?

Does anyone have a good outline that would address this topic that you'd share with me?

Please send me a private message if you do.

A client would like a year of service graded match formula with 3 tiers, the 3rd tier being after 10 years the match increases to 100% up to 4% of deferrals. However to be eligible for any match during the plan year, the participant has to be deferring on January 1st of each year and then the match is funded each payroll period. If they are not deferring on January 1 but start deferring later in the year, they will not receive the match. Is this formula valid? I could see January 1 being kind of like a reverse last day rule, but in this case they have to be employed and deferring on January 1.

Does anyone see any problems? Is this just a matter of coverage testing under 410(b)?

Thanks!

Participant age 49 has both 403(b) and after-tax (non-Roth) ee money in a 403(b) plan. She has left employment and now wants to roll the money from old employer to new employer. New employer will accept the 403(b) and employer money, but not the after-tax. What can she do with the after-tax money? She doesn't need the money right now and does not really want to take a cash distribution.

A roth IRA might be a good fit. But she would be taxed on her after-tax plan earnings, correct? I'm not sure how much we are talking about, but lets say the earnigns amount to $2,000 and that her overall after-tax account has $10,000. So if she rolls to a Roth IRA, She rolls the entire $10,000, but is taxed on $2,000? In other words, she has to pay tax on money that she really will not get her hands on? That's a little tough. Is the alternative to roll $8,000, take $2,000 in cash and pay tax on the $2,000, but you now have money for the tax (because you are taking $2,000 in cash)?

Finally, due to her age, is there a 10% early distribution tax and if so, how does putting money in the Roth affect that? If she put the entire $10,000 into the Roth, would she avoid the 10% tax? If she took $2,000 in cash, is only that portion subject to 10%? Is nothing subject to the 10% because it is after-tax regardless of what she does with the after-tax monies?

Thanks for any comments.

We are in the process of acquiring the assets of a company which sponsors a health flexible spending account. We plan to transfer the accounts of the participants to our plan. Unfortunately, the selling company's plan is not a calendar-year plan year while ours is... how exactly does that work? The way I read the Ruling, the transferred participants utilize the remaining balance for the remainder of our plan year, so if they come in 1-1, they have until 12-31 (not 4-30 which would be the end of the prior company's calendar year). The sale itself is not a change in status, so unless the participants otherwise have a status change, they will be unable to adjust the amounts in their flexible spending account. The fact that the selling company's plan year is not a calendar year plan is throwing us for a loop on how logistically we get this accomplished. Any insight would be appreciated!

Facts:

Plan has immediate entry for 401k

Plan excludes HCE's

2010 NHCE ADP - 2%

2011 NHCE ADP - ?

EE hired April 2011 and will make $133k in 2011...becoming an HCE in 2012

Issue: When the EE was hired, the company did not give him an election form. They knew upon hire he would be come an HCE overlooking that he is a NHCE in 2011. They were going to give the EE an election form so he can contribute in November/December.

Question: I believe he is owed a QNEC (1/2 the rate of the ___) but what is the QNEC calculated on? Does he get 1/2 of the 2010 NHCE adp or do we wait for 2011 to be finished? My guess is that he still gets a QNEC even if he elects 0% on the election form for Nov and Dec.

Lot's of questions and hopefully someone can help with the answers. Does the irs allow a poa to change beneficiary designations on an ira or is this just up to the bank's own policies? Can a poa choose to elect ownership or choose to decline ownership for the deceased's spouse? Would a spouse have to elect to treat the ira as her own in order to change beneficiary status (this was supposedly done by poa)The ira owner is deceased, can the surviving spouse, or her poa, change only her beneficial interest to a trust in which she has no control, or can a change be made to include the remainder beneficiay of the ira as well? What it boils down to is this - if a trust seems to prevent ownership due to limitations on the ability to access funds and since RMD's have routinely been taken out by the trustee, can owenership occur and if not, can a beneficiay change be made by someone not the owner, but only beneficiary? Trying to figure out what has gone on is very confusing, if anyone can offer some help, please do!

Client has SH 401k Plan. Current eligibility is 1 YOS with semi-annual entry dates. Client wants to change entry date for deferrals only to 90 days effective immediately. Document being used will allow this, but are there any problems with doing this mid stream?

First, I fully admit that I'm a "DC" person. You know - know just enough about DB Plans to be dangerous!

With that in mind, I need to know whether it is within the realm of possibility for a 64-year old self-employed doctor (of course!) with annual earned income of ~$250,000 to adopt a DB Plan? Yes, no, maybe so? Pros and cons?

Thanks for any and all replies!

1.Can I have HRA for shareholders in an S corp. that own greater thatn 2 percent of the stock?

2. Can I Have an HRA for employees that are enrolled in medicare?

I have an administrator who is holding pension payments via direct deposit if the participant does not inform the benefit office of a change of address. Upon providing the office with the new information, the office does proceed with the payment, not including any interest or other monies with the payment.

My problem is I'm not sure an administrator can hold a payment to a vested retiree who is in pay status, but I cannot find anything specific. Any ideas on this with any type of authority? I would appreciate any insight!

Plan owns a building that sustained damages related to snow, and much of the expense was not covered by insurance.

I assume this would not go on the schedule C, becaus they were not providing a service to the plan, but wondered if anyone had some authority they could provide. I can't see how replacing a roof could be a service, but if there was something I could point to...

Also, I don't see a service code for construction, I suppose I could pouint to that!