Got a client who is considering trying to get the employees out of the union pension plan. He asked for an estimate of withdrawal liaiblity and the response was that "they don;t have a withdrawal policy at this time." So essentially, they left the door open on them.

The Plan also does include a past service credit (they adopted maybe 6 or 7 years ago), which I would think would trigger a withdrawal liability at this stage for sure. Is there any way to compel them to provide a more concrete estimate?

Hello,

Can I use cash from a traditional IRA to exercise vested (but non-qualified) stock options from my nonpublic employer? I do not have sufficient funds outside of the IRA to do this, and I would like to hold onto the stock for a long time.

Any advice would be much appreciated!

A calendar year plan has an upcoming term date of 6/30/2011.

It has used a 12/31 val date for past years.

For 2011, to my knowledge the valuation date would have to be 6/30/2011 until and unless we find out that there is automatic approval for change in val date to say 1/1/11 in this case.

Has anyone heard anything new about auto approval for change in val date for 2011?

thanks.

Employer wants to make matching contributions to a safe harbor 401(k) plan in the form of employer securities. I don't see this as a problem, except that the employer wants to contribute employer securities to only some employee accounts and cash to all others. Assuming this contribution arrangement can be structured to satisfy 401(a)(4), anyone see any problem with the safe harbor 401(k) rules? The regs appear to be silent on this. They only discuss matching contribution amounts, not form of match.

1. Does anyone know if the renewal process for ERPAs with a social ending in 4,5 or 6 is still delayed? Is the 8554-EP form still not available?

2. This may be a stupid question but what is the CPE cycle ---is it from your designation date to your anniversary or is based on calendar year?

For example if you became an ERPA in June of 2010 are you required to get 16 credits from 6/10-6/11 or is the credits based on calendar year 16 credits in 2010, 16 in 2011 etc? I'm guessing the 72 credits must be completed from 6/2010-6/2013?

An attorney has a sole-proprietorship for a portion of 2010. He establishes a SEP for his sole-proprietorship and contributes $49,000 to the SEP in 2010.

He also becomes an equity partner (self-employed individual) in a 50 partner law firm partnership. The law firm sponsors a top-heavy 401(k) profit sharing plan that he is eligible for in 2010, but makes no 401(k) contributions and receives no employer contributions in 2010. As a non-key employee with respect to the law firm qualified plan, he is entitled to a 3% top-heavy minimum contribution.

Do the contributions to the SEP and qualified plan need to be coordinated?

A well-funded frozen DB plan sponsored by a not-for-profit organization has a $4 million pre-paid pension asset (say it's all in "Liability For Pension Benefits"). The sponsor wants to terminate the Plan but does not want to run $4 million through expense in a single year.

Has anyone been involved with similar situations were the auditor has sanctioned (i.e., not written an unfavorable opinion) that the sponsor could expense this pre-paid over a number of years and then terminate the Plan when it has been written off?

If a participant reaches his first required year for RMDs, and passes away that same year (so prior to 04/01 of the following year) without satisfying any portion of his RMD, has he died pre or post RBD? We need to clarify the answer to this question to understand whether or not the beneficiary needs to satisfy the participant's RMD prior to starting their own. We also need to clarify the answer to this question to understand whether or not we should apply pre RBD or post RBD rules to the bene.

Here are 2 scenarios that may help drill down to the information we are looking for. In both scenarios, the plan follows "new rules" for RMDs. Our question is at the end of Scenario #2.

Scenario #1:

A 72 year old participant has a termination date of 5/28/2010. So the first required year is 2010. The RMD for the year is $10,000. The participant decides not to defer his first required year until no later than April 1 of the following year and takes one withdrawal in the amount of $5,000 to count toward the RMD in September 2010. The participant passes away in November 2010. In this scenario, the bene does have to satisfy the remaining RMD for the participant ($5,000).

Scenario #2

A 72 year old participant has a termination date of 5/28/2010. So the first required year is 2010. The RMD for the year is $10,000. The participant does not take any payments that can be applied to the RMD, and he passes away in November of 2010. Technically his required begin date is April 1, 2011. Does the beneficiary have to satisfy the 2010 payment for the participant, or is there no requirement because he did not take any payments and died prior to the April 1, 2011 deadline?

a plan has a positive funding shortfall

eg.

FT = 300,000

Assets = 320,000

PFB = 50,000

FSF = 300,000 - (320,000 - 50,000) = 30,000

So prior base is maintained and not wiped out.

PV of future amort installments of prior year base = 50,000

New base exemption calculation (portion of pfb used for funding)

= (.96 * 300,000) - (320,000 - 50,000) = 18,000

So new base is = 18,000 - 50,000 = -32,000

i.e. a negative base.

If instead the FT were 280,000

the new base exemption would = (.96 * 280,000) - (320,000 - 50,000) = -1,200

thus there would not be a new base established.

In other words if the FT were less (i.e. a better funded plan) they would not have the negative amort base as created above and thus have a higher funding requirement.

The prior bases would not be wiped out and there would not be excess assets to reduce target normal cost as follows:

280,000 - (320,000 - 50,000) = 10,000

So, in conclusion, a poorer funded plan would have a lower min req cont.

I realize they can reduce pfb to increase assets and avoid above situation, but it still seems a bit quirky.

Our client was purchased by a Canadian company ("CC") who re-incorporated the US company ("USC") as a subsidiary and terminated USC's PS plan. Now they are starting a 401(k) plan for USC. Is there an issue with the owners of CC wanting to be Trustees of the plan? Do they not count as falling under US jurisdiction, even if the plan assets are with a platform such as American Funds Recordkeeper Direct?

Plan that permits Roth deferrals, for reasons unknown, didn't withhold the money from the employee's paycheck. Employee then submitted the appropriate amount by personal check, which was deposited to the plan. This happened in 2010. This is also a plan large enough so that it will require an audit.

Anyone ever encountered this? This should qualify for SCP. But what's the fix? Refunding the money to the employee, then having the employer submit the same amount, then having the employer withhold extra from next paycheck to make it back to the same place? This seems ridiculous, as the employee is paying tax one way or the other, and the W-2 will show full taxable income. So although "no harm no foul" - how would you handle such a situation?

Plan document was established in 2005 as a Master Prototype (Fidelity) with an Opinion Letter

On Form 5307

(1) Line 3(f) Has the plan received a "determination letter"?

Question: Is the answer YES since there was an "opinion letter"? Or is it NO because an "opinion letter" is not a "determination letter"?

(2) Line 9(a)- If you answer YES, you are required to attach a statement. In the statement, you are requried to state if the plan is PAIRED. And if PAIRED, you are required to provide "LETTER SERIAL NUMBER of the PAIRED PLAN.

Question 1: What is a PAIRED PLAN?

Question 2: If paired, where do you get the LETTER SERIAL NUMBER of the paired plan?

Thanks for all responses.

HI:

I am looking for benchmarks among manufacturing companies regarding length of time union employees are allowed for continuing their insurance programs (life, disability, medical, etc.) while on a leave of absence, both personal leave and disability leave. Also, layoff provisions for continuation of benefits.

Any guidance would be appreciated.

Thank you.

Donnie Ilich

(312) 234-7856

Each year the number of participants at the beginning of the plan year is automatically carried over from Question 6f of the previous years 5500. For example if the 2009 Form 5500 question 6f was answered 214. Then question 5 for the 2010 5500(number of participants at the end of the plan year) will reflect 214 as well. How can this be if an entry date is typically the first day of the plan year? Both Relius and Ft William carry over previous years numbers.

I have a client that is considering swithing from Safe Harbor 3% non-elective to the Safe Harbor basic match. They are asking if participation will increase with the match. I think it will, but are there any articles or studies out there on how switching to the SH match will effect participant and deferral rates?

Thanks

An employee terminates employment in 2010 and takes a total distribution of her 401(k) account, apparently paid as a direct rollover to an IRA and immediately converted to a Roth. So far so good. The income from the conversion will be recognized 50% in 2011 and 50% in 2012.

Now here’s the twist. After converting to a Roth, she withdrew all the money from the Roth. Does this change the way the Roth conversion is taxed? The Roth withdrawal is not a “qualified” withdrawal because she did not wait 5 years, but this only affects the taxation of any earnings. Principal can always be withdrawn from a Roth without additional tax.

So, did she just figure out a way to take a 100% distribution of her 401(k) in 2010 and pay the taxes over 2011 and 2012?

I would appreciate thoughts on this issue:

A sale of company A's stock to company B is proposed. Company A maintains a 401(k) Plan and an ESOP and company B maintains its own 401(k) plan. Prior to the stock sale, Company A will terminate its 401(k) Plan. After the closing of the deal, we would like to merge the company A ESOP into the terminated 401(k) plan and then distribute the proceeds of the new merged plan. We will comply with the 1.414(l)-1(d) requirements for merger of defined contribution plans. The merger cannot take place prior to closing because of the limited time period between now and closing.

Does anyone see a problem with merging the ESOP into a terminated 401(k) plan in this matter? There is no desire to merge the ESOP into the buyer's plan (company B's 401(k)) plan.

If we were to file a determination letter request for the terminating plan (composed of the terminated 401(k) plan which had the ESOP merged into it) we should only have to file one 5310.

I have a new CB plan as of 1/1/2010. The Profit sharing plan went from 7-1-2009 to 6-30-10, then was amended and now is a calendar year plan with a short plan year.

For testing, do I test the CB plan with the PS benefits that accumulated during 2010 or is it more difficult?

Working on a plan that excludes a classification of employees. Plan has salary deferral, safe harbor nonelective and profit sharing. Profit sharing allocation formula is New Comparability. They want to maximize the partners to the 415 limit and only provide what is necessary to pass the rate-group test to the other employees.

There are 12 HCEs (all benefiting) and 23 NHCEs (8 benefiting). Eligibility provisions for all sources is age 21 and 1 year of service, so otherwise excludable is not an option. The ratio percentage test and the nondiscriminatory classification test both fail (for both the salary deferral and nonelective portions of the plan), so the only way to correct the coverage violation is to do a retroactive amendment to cover more individuals. Since we are correcting the 401(k) coverage test by retroactively making individuals eligible, a missed opportunity QNEC must be calculated.

My question is how to treat the missed opportunity QNEC when I do the average benefit percentage test and the rate-group test. Should it be included or excluded? From one, or both? I'm familiar with the rule that says the rate-group test must pass both with and without QNECs, but my understanding is that is referring to QNECs made to correct ADP or ACP testing.

I am calculating the cost of correcting the coverage failure both using the ratio percentage test and the average benefit percentage test, inconjunction with calculating their profit sharing contribution under the new comparibility formula. Oh, and I should mention they have self-employed invidiauls with net earnings that fall under $245,000 and they needed their profit sharing numbers yesterday (even though that is when they gave us the K-1s)! Yeah, this one is a ton of fun!

Any thoughts?

Thanks!

i am confused as usual.

i know my actual rate of return for a year, say 2009, and so i bring forward my fscb with actual interest...

then i am instructed to subtract out the deemed election(line 12 amount). the instructions are silent regarding how this deemd election

is adjusted for time if at all. assuming i know the value at 1/1/09 of the deemd election does it make sense to just subtract it

from the return adjusted 1/1/09 credit balance at 1/1/10. do i adjust the deemed election also at the actual return rate to 1/1/10

before subtracting it??

on a side note i wonder if google has an actuary on staff.. do you think larry and sergei

built their search engine to account for ppa??