On Form 5500-SF, Line 8, how do you report assets that have been reverted to the employer as part of a defined benefit plan termination? URGENT: 5500-SF due 1/18/2011

I understand that Line 13a will need to be answered "Yes" and the full amount of the reverted assets will need to be reported. Form 5330 has already been filed and the excise tax paid.

What I don't understand is how to report the reversion in Line 8 to wind up with zero ($0) assets at the end of the year and no error message. The instructions don't seem to address this issue, and 8j doesn't seem right since only 25% of the reverted assets were then contributed to a qualified replacement plan.

Say a small plan (two or three particiapnts) is terminating 12/31/2010.

The reality is that all active participants are going to receive an immediate lump sum equal to PVAB.

It seems the valuation should have an imediate decrement and turnover is 100% for that year and the assumed ret age (line 22 of SB) is essentially Not applicable due to plan termination.

How are others viewing this? Still using ARA of 62 (NRA in plan) for the SB? Other?

thanks

The majority of the 401(k) plans we administer have all of their assets invested with one of the major platform providers. They will be able to provide the investment disclosure information.

What about small 401(k) plans that allow each participant a brokerage account? Identifying the investment alternatives and the investment performance of each investment alternative would be impossible as there may be thousands and thousands of investment alternatives. Does anyone know if this has been addressed in the new disclosure requirements?

We have a plan that allows immediate entry into the plan for making deferrals. However, there is a one year wait to receive the match. They have two participants who entered the plan and begin making deferrals on 6/1/2010. The employer also made matching contributions to the individuals immediately rather than waiting until they were eligible.

How should this be corrected? The employer wants to stop making matching contributions for the two individuals until such time as they are eligible, leave the money in the participant's match account using it to offset the future match.

My feeling is that the match should be forfeited? What is the correct way to handle this?

General question - In what year are the late required minimum distributions reported as income ? current taxable year or does a participant have to go back and file amended returns for the years it should have been distributed? Instructions on the 5329 are not helpful at all. Have you run into this and for what years do you issue the 1099R forms?

Does anyone see a problem with this idea?

If Nov. 2008 an older employee is hired, he will come into the plan on 1-1-10. Now new comp plan doesn't work so well and we cannot amend for 2010 to add permitted disparity. If every one is in their "own group", can I give an allocation approximating permitted disparity. Then do my testing on an allocation basis and imputing permitted disparity?

An actuary informed a client that the non-Union VEBA investment income is taxable, whereas the Union VEBA investment income is not. For purposes of Financial Statement preparation, the expected long term rate of return of the VEBAs will be reported separately if the VEBAs are taxed differently.

I can make no sense of this actuary's statement. Would anyone please shed some light on this issue?

Many thanks!

Are most plans updating their privacy policies to reflect the proposed rules, or waiting until they are finalized?

Before 2009, were they required? There was obviously NO information on them. Talking about an ERISA Plan of course.

I have spent maybe too much time lately in the regulations related to Code Section 414® and have convinced myself that a controlled group with only two QSLOBs will not generally fail the separate management or separate workforce requirement. I am thinking this because the formula in 1.414®-3 (and definition in 1.414®-11) excludes substantial service employees of the other QSLOB from the denominator. Is it really this simple, or am I missing something? Thanks

I have spent maybe too much time lately in the regulations related to Code Section 414® and have convinced myself that a controlled group with only two QSLOBs will not generally fail the separate management or separate workforce requirement. I am thinking this because the formula in 1.414®-3 (and definition in 1.414®-11) excludes substantial service employees of the other QSLOB from the denominator. Is it really this simple, or am I missing something? Thanks

New plan effective 1/1/2009

Contributions paid on 3/1/2010 = $300,000

2009 Maximum Contribution = $400,000

Amount deducted in 2009 tax return = $300,000

Question: Is it possible to allocate $250,000 of the contribution to 2009 plan year (as receivable) and the remaining $50,000 to the 2010 plan year? (Even though $300,000 was deducted in 2009)? (This mean the asset at 12/31/2009 is $250,000)

Question: If yes, what do you show as contribution in the 2009 SB ($250,000 or $300,000)?

Thanks for all responses.

Say a calendar year plan sets the termination date as 6/30/2010 and distributes assets 12/15/2010 to the three participants.

For minimum funding for 2010:

The plan was frozen in 2005 so there is only an amortization base and installment.

Would this be considered a short plan year (i.e. 1/1/10 to 6/30/10) thus resulting in a pro rated amortization payment or is it still a full plan year from 1/1 to 12/31?

The only bit of information seems to indicate per rev rul 79-237 that the plan year goes until the end of the year of plan termination. I suppose a case could be made that the plan year could end at the time assets are distributed (not much of a difference in this case). It seems a short plan year generally just occurs when there is a change in plan year.

It would seem reasonable to reduce the accd benefits of the two onwers to avoid shortfall and funding if desired by employer, but tpa firm administering plan does not use this approach for min funding (but does so for the distribution). Any views?

Thanks.

Client has inquired about this plan that is being offered by an insurance agency.

Has anyone heard of this and can help explain how it works?

A participant has several pre-tax IRA's outside of the plan that he wants to roll over into the company's 401k plan. The 401k plan allows for Roth contributions. Assuming we amend it to allow for Roth conversions, can he do what he wants to do? That is, rollover over the IRA into the plan, converting them to Roth dollars at the same time?

Thanks for any advice.

I'm not sure this is the right forum. I'm curious how you are handling this. Since 5500s are exempt from PTIN requirements, but 945 is not, who in your office did you require to get the PTIN? Who is the actual "preparer"? Is it the administrator who got all the information then passed it along to the clerk who prepared the return or is it the clerk who simply typed on a form what she was told?

Thanks

Plan does not limit the number of outstanding loans, but recordkeeper limits them to 3. Vested balance exceeds $100,000 so the $50,000 limit is the maximum loan amount. Highest outstanding principal balance in the last 12 months was $43,000, thus $7,000 is available to the participant.

One of the loans must be "refinanced" to accommodate the limitations of the recordkeeper's system. The last loan that was taken out was in September 2010, for $4,000 with a maturity date of September, 2015 (maximum 5 year term).

Question: If the original term of the replaced loan is maintained with the replacement loan, can $7,000 be added to the existing loan without violating the loan refinancing rules?

I say yes; colleague says no. We're both reading Page 7.305 (option #2) of Sal's Book (2010 version) and arriving at two very different conclusions!

I submitted a signed QDRO to the plan administrator who came back with a notice stating that the percentage was not specified (although a dollar amount is) so they cannot accept it.

How do I get this amended on the QDRO already signed by the judge? Does it need to be signed by me ex-husband again as well? He is refusing to sign anything & I live out of state from the court and plan administrator. How best to proceed?

We have fully insured plans that are meant to meet the requirements of Reg. 1.412(e)(3) Accrued benefits under such plans (other than top heavy benefits) are determined under Corbel Base Docment 5.2 (a)(4). Policy premiums are typically due on the last day of the year and a 31 day grace period is provided, along with an automatic policy loan to pay past due premiums.

1. If plan benefits are declared frozen in the middle of a plan year, must premiums be paid for that year or can the policies just be converted to a paid up status?

2. When a participant meets plan eligibility requirements but terminates before the end of the year so that a policy has not been purchased, is he entitled to anything other than top heavy benefits?

3. If a participant becomes eligible in 2009 and has a policy purchased @12/31/09 and terminates employment in April 2010, is the premium due 12/31/10 payable? If he has an increase in projected benefits as of 1/1/10, must a new policy be purchased @ 12/31/10?

4. For a standardized prototype plan with 500 hour accrual rules, do I treat the answer differently for participants who have less than 500 hours before the plan termination?

as we wait and wait for the forms, here are the most recent topic discussions from the IRS website.

having had to file a few 1099Rs using the FIRE system (the software we use for other purpose was too pricey for the very few that we have to do, though we have since switched what we use for govt forms) I find the topic somewhat interesting (or at least I have an idea of what they are talking about). I figure most govt forms software will handle these anyway, but this is a note to say it appears you will be able to file on your own as well.

Topic 805 - Electronic Filing of Information Returns

The Filing Information Returns Electronically (FIRE) System is designed exclusively for the electronic filing of the following information returns: Forms 1042-S, 1097-BTC, 1098, 1099, 3921, 3922, 5498, 8027, 8955-SSA and W-2G. FIRE is accessible at https://fire.irs.gov/. Benefits of electronically filing information returns include: cost-effectiveness, secure (supports AES 256-bit, AES 128-bit and TDES 168-bit encryption); and a later due date for filing most information returns. The electronic filing of information returns is not associated with the Form 1040 electronic filing program.

If you are sending files larger than 10,000 records electronically, data compression is encouraged. WinZip or PKZIP are the only acceptable compression packages. The FIRE System is operational 24 hours a day, 7 days a week. Please note that the FIRE System will be down from 2 p.m. EST December 21, 2010, through January 3, 2010, to allow Internal Revenue Service/Information Returns Branch (IRS/IRB) to update its system to reflect current year changes. In addition, the FIRE system may be down every Wednesday from 3:00 a.m. to 5:00 a.m. Eastern Time, for maintenance.

After you file your returns via the FIRE System, the result of the electronic transmission will be e-mailed to you if you provide an accurate e-mail address on the "Verify Your Filing Information" screen. The file status e-mail will include the IRS assigned filename, date received, count of payees, and file status for Forms 1042-S, 1097-BTC, 1098, 1099, 3921, 3922, 5498, 8027, 8935, and W-2G. If the e-mail indicates that your file is bad, you must log into the FIRE System and go to the "Check File Status" option to review the results of your file and timely resubmit the file as a replacement file. If the file is good, it is automatically released for mainline processing 10 calendar days from receipt

Topic 802 - Applications, Forms, and Information

All filers must obtain approval from the Internal Revenue Service , Information Returns Branch (IRS/IRB), and be assigned a Transmitter Control Code (TCC) prior to electronically filing Forms 1042-S, 1097-BTC, 1098, 1099, 3921, 3922, 5498, 8027, 8955-SSA, and W-2G. Once you have received approval to file electronically, you need not reapply each year. There are two exceptions where you would need to apply for a new TCC: (1) you have not used your TCC for two consecutive years; or (2) your files were previously transmitted by a service bureau using the service bureau's TCC and you now have the computer equipment that is compatible with ECC-MTB and wish to prepare your own files.

Form 4419 (PDF), Application for Filing Information Returns Electronically, must be mailed to the Internal Revenue Service , Information Reporting Program, 230 Murall Drive, Kearneysville, West Virginia 25430, or faxed to 877-477-0572, at least 30 days before the due date of the returns; do not do both (mail and fax).

Upon approval of your Form 4419, you will be sent an approval letter and assigned a 5-character TCC used to identify payers/transmitters and to track their files electronically. If you file Forms 1097-BTC, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G for multiple payers, only one TCC is required for each transmitter. However, if you file Forms 1042-S, 8027, or 8955-SSA you will need a separate TCC for each return. You may not electronically file information returns until your application has been approved and you have been assigned a TCC. If any information on the Form 4419 changes, please notify the IRS/IRB in writing so the database can be updated. Be sure to include your TCC in all correspondence.