As a Corporate Trustee is there any need to request an EIN for a Retirement Plan?

In looking at a prior EGTRRA amendment a plan sponsor filled out a section stating that they will not increase 415b limits and will retain pre-EGTRRA 415b limits.

Well what exactly does this mean?

Does it mean that accruals through the 2001 plan year cannot be adjusted by new limits and post 2001 accruals are based on the new EGTRRA limits?

Or is the entire accd benefit subject to pre EGTRRA limits? If that is the case then what is the DB limit for someone with a 12/31/2010 retirement at age 62 with 10 yeares participation? That is, not 195,000, but instead the 140k limit in 2001 increased by COLAs?

thanks

Who is responsible for figuring the amount of someone's eligible catch-ups in a 403b? The participant or the employer? The IRS publication 571 appears to be worded such that it is the participants responsiblity. So need the employer simply get representation from the employee?

We received correspondence from the IRS where they are asking for our DFVC Number that was given when the DFVC was applied for and approved.

Anyone know where/when you get this number?

When does a tax-exempt 457(b) plan need to adopt legislative amendments (e.g., WRERA, HEART)?

We have a non-amender Cycle E plan. We plan to file VCP and 5300 simultaneously. We plan to send original VCP application to the D.C. address with a copy of the 5300 application, and send the original 5300 application with a copy of the VCP to Covington, KY.

Where do we send the $1,000 check for the 5300? The VCP D.C. address or the Covington, KY address?

Anyone know how to do this?

Never mind everyone. I figured it out. The answer is in the Rev. Proc.

Can a plan allow terminated participants to take hardship distributions i.e. for unforeseeable emergencies, from a top hat plan?

I am preparing a final Form 5500SF for a client. There were distributions during the plan year and annuities were purchased by an insurance company for the retirees. Where does the value of the annuities purchased go on the Form 5500SF? Can I include it on line 8d? I will not be preparing a Form 1099R for these annuities since it was transferred to the insurance co. I thought about #8j but the assets didn't go to another plan. Same thing with #13c(1), the assets didn't go to another plan. Any thoughts?

Just took on a new client for 2010 filing year and, as always, reviewing prior 3 years returns. Big problem in 2007, s-corp with 2 owners each contributed $45,000 ($90,000 total) to SEP on $50,000 each of W-2. They claim fidelity, the broker who established SEP plan, told them they could include income reported on K-1 from s-corp in determination of compensation for contributing maximum amount. I disagree. I think each has $28,500 excess amount in SEP ($45K less SEP of $50K*.25 plus $4,000 IRA) .

I've already advised them of the issue and necessity to correct ASAP. If we follow SCP procedures, I know contribution is not deductible by corporation...but which year.? Do we amend 2007 1120S or recognize income in 2011 when we remove excess contribution from plan?

What about VCP, if we use this procedure and leave money in plan paying the 10% penalty, does corporation lose deduction. If so, which year? Or does corporation keep deduction under VCP? If so, 10% penalty might be cheapest way to clear this up. Another question comes to mind on this (sorry, I ramble) regarding interim years. If owners were taking salary in 08, 09 & 10 but made no SEP contributions, could these reduce the excess amount as of today and hence the balance on which the 10% penalty is paid for the VCP agreement. Am I thinking of this correctly? I know there is an excise tax of 10% cumulative each year the excess is left in. Isn't the purpose of the VCP suppose to be in lieu of that excise tax...akin to getting a slap on the wrist for bringing the problem to their attention vs. waiting for an audit. I haven't run the numbers but they may have even used up all excess in these three years, in which case maybe excess amount is extinquished and the only cost of VCP is the $250 flat fee. But then, deduction then becomes an issue if they lose that.

Also, I'm looking into adopting solo 401(K) for 2011 whereby returned excess amount from 2007 can be recontributed into a solo 401(k), thereby creating a net-zero impact if SEP income and deduction for 401(k) contribution both hit in this year. This, of course, will only work if SEP excess comes into current year, not into prior year (2007) requiring amended returns & penalties and so forth. Seems I read somewhere that correction procedures did not require amending prior years returns in order to correct an excess amount in a retirement plant, that everything was accounted for in current year.

Client asked me this question, and of course my answer was that they need to correct the issue and pay any taxes or penalties, but they were wondering what the chances of getting audited or reviewed were at this point (2007 return 1120s was filed under extension on 9/15/08). I agree that there is no statue running as has been discussed on this board ad nauseum. However, given the amount of time so far, how likely is this to get inquiries or audits from the IRS. Wouldn't something have happened by now if it were going to?

Looking for the formula for a joint & survivor factor where the benefit reverts to the single life annuity value if the contingent annuitant dies before the participant.

Thanks!

I understand that for payroll purposes HEART now requires treatment of differential wage payments as 3401 wages subjecting them to certain payroll taxes. I also understand that for Code purposes (415, etc.) differential wage payments are treated as compensation. However, where it gets a bit sticky for me is when HEART states that employers don't need to count DWPs as compensation for benefit accrual purposes under a defined benefit plan.

If USERRA requires that, upon proper reemployment, an employer must credit the service member for benefit accrual purposes based on the compensation he/she "would have earned" but for the period of military service - what good does it do an employer to exclude these DWPs from it's Plan definition of compensation for benefit accrual purposes? It seems to me that if a person is out and is paid DWPs, then upon reemployment, those amounts would count toward (or offset) the USERRA-required compensation that needs to be counted in accruing the person's benefit over the military service period.

If the employer includes the DWPs in its Plan definition of Compensation and uses a W-2 (3401) definition of Compensation for "Code purposes" (415, etc.), what is the impact? Am I missing something? Will there ever be a situation where a person's DWPs are counted for benefit accrual purposes, but they are not properly reemployed under USERRA (thus invoking those rules)?

Any guidance, thoughts, etc. would be appreciated... thanks!

Accordign to 4972©(7), single employer DB plan is exempt from 10% excise tax on contribution in excess of the maximium?

Is this correct?

Thanks for all respones.

Can anyone please help me with any case law showing an Annuity plan paying out early for child support arrears? We filed FL-460 QDRO with Court, judge signed, served plan, but they are stating that the QDRO for support is a lien in that they will only pay when the participant applies for annuity. Looking at the plans rules and regulations for Carpenters Annuity Trust Fund for Northern California, they have written that benefits can only be paid at retirement and or if one of the ten categories is met. Looking under item H, it is written that a Qualified Domestic Relations Order is one of the categories.

Item 8. When may I or my Beneficiaries receive the money from my Individual

Account?

Because Defined Contribution Pension benefits can only be paid at retirement

or death, the money in your Individual Account may only be paid if one of the

following ten categories is met:

H. If You Have a Qualified Domestic Relations Order

If you are an Alternate Payee and have been awarded benefits under a

Qualified Domestic Relations Order, you may apply for your benefits as directed in that Qualified Domestic Relations Order.

Also the plans definition of a QDRO is as follows: Item 27. In rules and regulations.

27. What is a “Qualified Domestic Relations Order?”

A QDRO is a judgment, decree or order pursuant to state law relating to child

support, alimony, or marital property rights directing that all or part of a

Participant’s benefit be paid to an Alternate Payee. A QDRO must meet the

requirements of the Retirement Equity Act as set forth in 26 USC §414(p) and

29 USC §1056(d).

Why would the plan try to hold on to the money if a court order/ QDRO is in place, their own rules and guidelines show that a QDRO is 1 of 10 categories which allow the plan to pay out the monies early and their own definition of a QDRO includes child support?

I really need any case law showing that the plan should follow the QDRO and pay the child support arrears from the annuity fund- even before the participant applies for it.

The administrator of a DB plan recently learned that an individual it was making survivor payments to died more than 15 years ago. The plan had been making survivor annuity payments by direct deposit into a bank account belonging to the now-deceased survivor and her son. The son is believed to be the subject of a pending Social Security fraud investigation. Obviously, the plan will be pursuing recovery against the son of amounts distributed since the individual's death; however, does the plan have any recourse against the IRS to recover the amounts withheld from the distributions and sent to the IRS? Assume for purposes of this question that neither the son nor anyone else filed any (fraudulent) returns on behalf of the deceased individual - in other words, the IRS never paid that money back as a tax refund. We do not believe filing corrected 1099s is appropriate, since distributions were actually made.

Hey, Dave - it looks like the link for today's retirement newsletter should be http://benefitslink.com/2011/2011_01_03_retirement.html instead of http://benefitslink.com/2010/2011_01_03_retirement.html.

Often when I talk to attorneys about QDROs and present value calculations they talk about someplace that they can get the value of an annuity calculated for around $100. After I explain that they generally get what they pay for, they opt for the cheap calc.

So now I am wondering, is there realy a company who specilizes in present value calculations for defined benefit QDRO situations and will do them for around $100? If so, what is their name?

For plan years that begin on or after November 1, 2011, the administrator and other fiduciaries of an individual-account retirement plan that provides participant-directed investment must see to it that participants (and those beneficiaries and alternate payees who are directing persons) are furnished sufficient information for them to make informed decisions.

This disclosure is required (under an interpretation of fiduciary duties under ERISA 404(a)) even if none of the fiduciaries wants the protection of ERISA 404©.

What are the essential differences (if any) in the disclosures required under these two rules?

Is there ary disclosure required for protection under the 404© rule that is not required under the 404(a) rule?

Mom and Pop organization has no common law employees. They sponsor DB Plan and DC plan where they defer under 401(k) and receive 6% PS contribution. In 2010, Mom retires under the DB Plan and receives in-service lump sum of her entire benefit. Mom continues in the employ of Mom and Pop full-time and continues to have compensation. My understanding is that although Mom will earn no additional benefits, Mom must continue her participation under the DB plan or we have a 401(a)(26) problem. Because of this, we cannot set up a SEP for Mom for 2011 and contribute more than 6% because she would be considered a beneficiary under both the DB and the SEP even though she's not benefiting from the DB plan in the literal sense.

Any disagreement?

A DB plan distributes (a) non-consensual lump sums if the lump sum is less than $1,000 and (b) consensual lump sums if the lump sum >$1,000 and <=$5,000. Otherwise, the Plan does not offer lump sum payment. The 2011 AFTAP is certified as <60%. My understanding is that the Plan must distribute the lump sum in (a) but cannot distribute the benefit in a lump sum in (b).

Any disagreement?

I understand that the IRS provided a Q&A regarding AFTAPs for EOY valuations (specifically permitting the inclusion of the target normal cost and all current year contributions - which is what everybody has been doing I think). Does anyone have a copy of the Q&A that they can post?? Thanks in advance for any help!!