Things seem to getting more complex as companies evolve away from DB plans - instead of easier - opinions below?

FACT: Participant A

DB plan - traditional years of service and final average pay. The early retirement benefit actuarially reduced at time of retirement, unless you satisfy Rule of 85. [Age 55 with at least 30 years of service] - if you satisfy rule of 85 you get your full retirement benefit at 55 or thereafter with age 55 and 30 years of service.

Participant A left the company at age 52 with 34 years of credited service.

Participant is now Age 54.

Plan X terminated further accruals Jan. 1, 2010. She did not get notice of the cessation of further accruals. It supposedly will be terminated - though no one has received a notice of termination either. This is a big company - I cannot imagine they messed it up, and my client may of course have a bad address on file - don't have any of those facts yet with copies of the documents from the plan sponsor and administrator. Lets assume that Plan X is fully funded with a standard termination on Feb 1, 2011. My client turns 55 on June 1 2012. Fortune 500 company - regulated utility - internal staff, outside contract administrator,m internal administrative committee for investments and administration/ appeals.

The SPD and plan document do not specifically require that a participant be actively employed on the date they 'retire.' The definition of 'retirement' is satisfying the provisions to receive a retirement benefit. The plan document contains a separate 'vested terminated' benefit section - but thats only there to preserve term vested benefits. Do not have their pattern and practice yet.

Issue #1: Can she age into early retirement benefit? And is it thusly 'accrued' for payment at plan termination [a lump option will be provided supposedly but obviously the difference between $2400 a month starting at age 55 and $860 a month is substantial]

Issue #2: The VP of benefits for the company has decided that a participant needs to be employed at the time of application to receive a subsidized early retirement benefit. The Plan document states that benefits applications must comply with plan rules - but no plan rules are published or available to an employee even if they request them. Can this provision be enforced - the SPD is silent on required employment at the time of benefit application for either the normal, early or disability retirement benefits.

Issue #3: This is an additional fact: Plan X plan sponsor spun off a new company. Participant A had the choice of remaining with Plan X sponsor or going to the new company. She ASKED the HR Generalist for Pensions a specific question "with the plan projected to be terminated in the future, and if I leave at age 52, can I age into the benefit later." She was affirmatively in writing told YES. LAter - when the plan terminated - she was told that VP of HR had decided that in order to qualify for an early retirement benefit she needed to be employed at Plan X sponsor at the time she applied. Furthermore, assume that Plan X employees who could simply age into the ER subsidy ARE being paid as part of the plan termination. Does she have a claim against the employer for negligence - she received a mea culpa email apologizing for being wrong in her advice about her employment decisions - this is where the ERISA sole source of claims rule destroys an employee who makes a career decision based on incorrect advice about a benefit plan

Issue 4: Can she simply go back to work for Plan X sponsor and age into the benefit and then make the claim? How does the plan termination effect that?

Thanks- this is very complex and there are lots of moving parts of the analysis - and I'd appreciate anyone's thoughts on the matter - this client clearly got screwed by her former employer-0 and they are apparently including provisions that are not in the plan or SPD to limit the payment of an aged-in early retirement subsidy - Rev Rulings and other sources are all 25 years and probably a dozen changes in the law later - thus my reach out to current practitioners . . .

Would appreciate direction on where to locate the following:

(a) How many single-employer ERISA DB Plan there are (say as of the end of 2009). Breakdown by company size would be highly desirable.

(b) How many of these are frozen

© During 2009, how many terminated

I've done Google searches, the IRS, DOL, PBGC, and GAO and more likely than not ran right past what I'm looking for.

These questions are related to section 23(d)(3) of the Corbel DB non-standardized adoption agreement and section 5.2(j) of the Corbel basic document of the adoption agreement (EGTRRA updated).

We are adding an employee as a participant pursuant to the above provision of the document. Questions:

(a) Is the accrual calculated using the accrual rules as adopted in the adoption agreement?

(b) Can this be just a one year accrual, i.e., for next year, if the plan passes the test without this particular employee, can we exclude him at that point?

© Do we count him as a participant in the year of failure or in the year we are doing the correction, i.e., do we need to calculate a pension contribution for him in the year of failure or in the year of correction?

Any guidance would be greatly appreciated!

For 2009, an analyst didn't remember that the rules had changed, and filed a 5500 for a one person plan because it was a controlled group. Should have filed an EZ. Now, for 2010, they have other participants, so a 5500 is now the appropriate form.

Just seeing what other folks would vote for. Would you:

A) Leave it alone, and hope the DOL never kicks back the 2009 form

B) File a 5500 EZ with the IRS for 2009, as an amended form, and attach the confirmation from the DOL to prove that the original was timely filed, but inadvertently filed as a 5500 rather than an EZ

C) Other

P.S. - they don't qualify for the SF

Thanks!

I'd learned several years ago (2008?) that John Hancock's mutual funds inside their contract were no longer reported on schedule D filings. Does anyone have any knowledge on this that is definite?

Sungard's synopsis of the changes

"The IRS has just released the 2010 Form 5500-EZ and its corresponding instructions. The new form is essentially identical to the 2009 form, except the 2009 form had only 6 boxes for characteristic codes while the new form has 10 sets. Read our Technical Update."

Why on earth was this thing delayed for months if that was the only change???

Multiple employer plan for 3 employers: Companies X, Y and Z. Participant A works for both Company X and Y. X and Y are not a controlled group. Participant A contributes from pay of both companies. Top heavy test is run for each company. Participant A will need to be included in each TH test. Do you have to do separate accounting for the participant to determine the account balance used in each TH test? How is this handled?

An insurance agent sold a profit sharing plan to a Dr. group. The group has 6 participants (2 doctors, and 4 staff). The insurance agent set up each participant in an individual variable annuity. The annuities have sub accounts that the employees can direct. The plan document says the employees can direct their investments.

The plan's new advisor wants to ultimately get out of these annuities for the employees, but because of surrender fees, he doesn't want to move them right away. For the two doctors, the annuities make sense, and they want to keep them. Since 90% of the money in the plan belongs to the doctors, the advisor is at a loss as to what to do with the employees.

Since the employees don't have enough money to be up on a platform, I suggested that he open individual brokerage accounts for them, and they could invest the funds however they wanted to.

He's concerned about costs. He feels that if he pools the employee money, he can take advantage of cost savings because they will his some sort of breakpoint at the mutual fund company. The pooled account would be directed by the trustee.

If they set up this pooled account and give the employees the option to invest in this or in annuities, does it still count as participant directed? It kind of makes me think of the pooled account as a "fund of funds" type option, but it makes me nervous that the trustee is directing the funds.

Any thoughts?

Having brain freeze this morning.....

Are you allowed to terminate a money purchase plan and then immediately start up a 401k? Or is that one of those situations where you have to wait a year after terminating the money purchase before you can set up the 401k?

Doe anyone know if there is a late filing penalty for form 945 if all deposits were made timely?

Circular E talks mostly about form 941 and indicates there is a late filing penalty equal to 5% of the unpaid tax for each month or part of month the return is filed late.

In this case there was only $5,000 withheld and it was deposited timely with no tax due.

A plan makes its 2009 Profit Sharing contribution in August 0f 2010. For purposes of the 415 test, is the 2009 Contribution counted in the 2010 testing? If so, then the 2010 contribution which will be made in 2011 would it be counted in 2011 415 Testing. The contribution is based on current year compensation, just not paid until the following year.

I'm sure I should know this, but I don't and I am also not sure how to set it up in Relius to test unless I just don't post the contribution Until the year it is actually being made.

The Form 5500 EZ for 2009 and 2010 do not appear to have any way of indicating that the plan is a 412(e)(3). How would they know that the plan is exempt from providing the financial information, etc?

I can see if you filed a form in 2008 or earlier, that would have been indicated on the form. But a new plan as of 2009 and forward has no way to notify them. Just want to avoid a letter from the IRS about it.

Thanks

Client has 403(b) plan. Plan doc says defintion of comp includes deferrals. Payroll company deducted cafeteria plan deductions and then calcuated 401k deferrals on that compensation (comp less cafeteria plan deductions).

To correct, employer needs calculate difference and make up deferrals plus lost earnings. And correct match as well. Right?

Thanks!

Posted on the IRS website as of 6/11.

Hi,

I was solo participant in my corp's Solo 401K Plan. The assets were less than 100k so I never filled in 5500 forms.

In 2009 I dissolved the corporation and in August of 2010 rolled over 401k assets to IRA. Since the form 5500ez was not available at that time, I foolishly forgot to file FINAL 5500EZ FORM

Question:

1. Technically speaking, how will IRS or Labor Department will even know that I had to file 5500 (final) form?

2. Could I just file for 2010 full year (rather than short year), therefore avoiding the penalty? is there any way the IRS would know when my plan was terminated?

Please advise.

Hello,

I was wondering if someone may be able to point me in the right direction. I have a plan that pays their employer matching contribuiton on a per payroll basis. They are now asking if they can amend their plan document during the plan year with regards to their employer match. What they want to do is add a true up provision to the employer matching contributions. Am I correct that if they were SH, then they could not do this as they would lose the SH "protection" for nondiscrim testing. But, since this is not a SH plan and this benefits all EE's, does the plan have this option? Any help would be greatly appreciated. Thanks

A client's welfare benefit plan is being audited by the DOL. The auditor has provided us a list of items she wants to review. In a couple of places it says she wants a list or log of items distributed. For example, she wants a sample Certificate of Creditable Coverage and a copy of the Women's Health Cancer Notice and a list or log of all Certificates and Notices sent out since January 1, 2008. The carrier sent them out but did not keep a list or log. The carrier says there is no statute or regulation that requires them to keep a list or log. All I know is my client is the one being audited and that we will have nothing to show the auditor. Has anyone else run into this and how did it sit with the DOL?

If I am making a corrective amendment for 401(a)(4) within the 9 1/2 month timeframe, must I file with the Service under VCP? It looks like EPCRS is calling this a demographic error, that requires a filing. Or does that only apply if I am past the 9 1/2 month window? Thanks!

Does anyone have the 2010 Form 5500 planbooks published from Sungard yet?

This client is a fiscal year plan that ended 8/31/2010, so this is their 1st EFAST2 filing.

They are my only large plan, so I have not filed any 5500s with an attachment on EFAST2 as of yet. And yes, it is due on Wed 6/15....CPA just sent me the final Sch H and a draft of the financial stmt w/IQPA. They are waiting for the client to sign off on it. Note the draft they sent to me is not signed by the CPA (she usually signs her company name on the Independent Auditor's Report page). When this was sent in paper form, both the auditor's report page and the financial statements were bound up together. The draft copy that was sent over this am was the same - both pieces together is the same PDF file.

Is this ok?

What is the attachment supposed to be called - "FinancialStatements?"

Thanks for your help! I need to publish this on Monday for the 2 trustees to sign so I can transmit it by Wednesday!