Has anyone experience with use of the "certain violations disregarded (aka "safety valve") " provisions as per the referenced citation in the Treasury Regulations? The testing population in our situation is in excess of 8,000 and 11 hce's are causing the test to fail. We realize that the appropriate use of this provision is pursuant to a facts and circumstances determination by the Commissioner. The situation would seem to support use of this provision based on the relevant factors found in §1.401(a)(4)-3©(3)(i-v). We've never used this provision before. We are in Cycle E (determination letter filing) of the 5-Year Remedial Amendment Cycle for Individually Designed Plans...thus if this provision is used, it will appear in the filing. Thus, we are seemingly left with 1) use this provision or 2) do a remediation impacting (increasing the benefits of) a small group of nhce's in order to pass.

Thanks for any general thoughts...relevant experience using this provision.

Can someone please confirm my understanding of applying balances.

Case 1. As of 1/1/2009

Assets $750,000

COB $ 0

PFB $80,000

FT $850,000

TNC $340,000

MRC $365,000

1/1/2009 FTAP 78.8%

To avoid lumpsum restrictions, there is a deemed waiver to apply a portion of the PFB to get FTAP to 80%. Say about $ 15,000 of the PFB is waived then the 1/1/2009 MRC reduces to about $ 360,000.. The 2009 FTAP is thus certified at 80% with a lower MRC.

Case 2. A plan having quarterly contributions requirement for the 2009 calendar year does not make them in time. At 9/15/2010 they realise they do not have enough money to put in and end up with a funding deficieny due to the penalty charges. They decide to voluntarily waive $ 10,000 of their COB to fully fund the 1/1/2009 MRC.

In this case will the 1/1/2009 valuation have to be rerun and recertified with the reduced balance? This will reduce the 1/1/2009 MRC(due to reduced shortfall) but I think that since this waiver came much later into the next plan year and since this is a voluntary reduction, the effect can be seen through the reduced balance itself and there is no need to rerun the prior valuation.

To conclude does this mean that a deemed waiver requires the valuation to be re-run, but voluntary application of balances does not.

Sorry if I sound confusing since I really am.

Thanks for all help!!

Vesting question; you have to comply with PPA strictures on vesting even though the PPA restatement/amendment has not come due? So, one would have to vest on a six year schedule or faster, right? You have to comply with the PPA laws as of the effective date right. So, you would have to vest faster than a seven year schedule as early 2007.

Hi

Have an owner who owns several entities that are part of a controlled group, which are all participating employers. He receives compensation from these entites in various forms, such as Schedule C income, K-1( Partnership), W-2 (S-Corp). He contributes 401(k) deferrals to the plan from his W-2 compensation. For the 2009 plan year the compensation calculated from his k-1, and Schedule C resulted in a loss that was more than his W-2 Compensation. Am I correct that since all compensation combined was a loss, that he is not allowed to have 401(k) deferrals, even though he contributed based upon his W-2 compensation?

Also, 1 entity is no longer controlled this year, so we would be required to test this entity separately - since not part of the controlled group. Eventhough not part of the controlled group, I would still be required to use all compensation earned in testing - correct?

Thanks

Am attempting to create from DB Plan 5500-SF ifile xml via Relius (SP5). SF and Schedule SB pass edit.

Get error when creating IFILE xml of 2146232000, line 18, position 26 as invalid character. Error Source: System.xml

(1) Has anyone encountered seen this error? If so, what is the fix?

(2) Has anyone successfully created through Relius an IFILE xml for a DB Plan submitting a 5500-SF?

I have a client who is electing to offset their required minimum contribution in end of year 2009 valuation by their carryover and prefunding balances.

Can anyone point me to guidance on how to reflect this on the 2010 AFTAP?

I am questionning whether or not a 401l plan still needs an audit.

I have a plan who had an audit in 2008 and previous years, for the 2009 plan year they have only 93 participants at the beginning of the year. The plan merged with another plan in 2009 so all that assets were transferred out by 12/31/09. So 2009 would be their Final 5500. Should this plan still have an audit for 09?

Is anyone aware of any chart or other materials published that shows the tax treatment under state law?

I found a q&a on this topic but is dated July 2005. Can someone confirm that this is still how one would do the 5500's for Welfare Plans that are going to be "warpped" into one document and therefore one Form 5500 for the next plan year.

Mark the returns for the un-wrapped welfare benefit plans as the Final filing and indicate that the plan has 0 particpants ar the end of the plan year. Then the next year mark the 5500 as a "first return" for the wrapped plan using a new plan number.

Please share your expierence or any suggestions for reference material to confirm this.

Thanks!

Prospect wants to update their plan for missing 20+ years of documents and amendments. They want to submit under VCP as a nonamender, get approval, then terminate the plan. The do not want to request a Determination Letter.

If a plan submits as a non-amender to go back as far as 1986, even if the 3 newly adopted documents are prototypes for TRA'86, GUST, and EGTRRA, doesn't Rev Proc 2008-50 require the plan to also submit for a determination letter?

During the recent IRS phone forum that dealt with EPCRS the presenter stated that forfeitures could not be used to make QNEC’s for correcting a failed ADP test. This was because Reg 1.401(k)-6 requires that the QNEC come from nonelective contributions that satisfy vesting (100%) and distribution requirements under 401(k) when contributed to the plan. Forfeitures are derived from contributions that were not fully vested when made so they cannot be used.

Does anybody think this interpretation could also be applied to employer 401(k) safe harbor contributions? Would employers not be allowed to use forfeitures to fund the SHNEC or SHMAC?

A trustee said at a union meeting that the management and union trustees altered the trust document so that selection and removal of the trustees would no longer be done by management and the union. Instead the power would now be only that of the trustees. The reason they did this was to prevent the International union from making any changes in the event the local union was trusteed. Would this not be a breach of their fiduciary responsibility?

An employer has two calendar year 401(k) plans, one for the union employees (UEEs), one for everyone else. The union was going to break up. Before they did, the union plan (UEE plan) was amended with an effective date that begins August 1, 2010 - the same date that the union no longer exists. That amendment allowed the same employees, now non-union, to continue to participate in the plan.

The other 401(k) plan is a safe harbor 401(k) plan.

1. Can the plans be aggregated for coverage (for periods after 7/31/2010)?

2. Can they be aggregated for non-discrmination?

3. Would the 410(b)(6)C) exception apply? (I don't think so)

I've been looking off and on for 4 years for info or where to go next. My dad had a pension plan with Atlantic Richfield. I have written to every place and person that I can find. Mostly I get returned to sender. Anybody know what I can do next.

I see one brief blurb in the preamble, and in the final funding regs themselves, in section 1.430(g)-1 of the funding regs issued 10/15/2009, that "seems" to say to use the prior Rev Procs issued regarding insurance valuations for FUNDING purposes and the preamble part specifically cites Rev Proc 2005-25 and 2006-13. However, I believe those Rev Procs verbiage only deal with valuation of insurance policies for distributions.

Any thoughts out there as to whether it is clear that we should be using these 2 Rev Procs guidance for valuing insurance policies for FUNDING purposes too ? Thanks for any opinions.

Plan is using prior year testing and the client does not like the limit on the HCEs. Unfortunately the current year results are worse. So, they have decided to do a QNEC so they HCEs can defer more.

The client understands the QNEC must be deposited before 12/31/2010. So far so good. It appears the QNEC must be based on the compensations for the NCEs for last year (2009). The document allows me to limit the QNEC to those employed at end of year 2009. THis means that we can compute the QNEC based on the anticipated deferrals for THIS year for the HCEs such that the test will be passed.

Did I miss anything?

I need to amend a 2008 Form 5500 to change it from a "single employer plan" to a "multiemployer plan" per the request from an IRS auditor.

This return was a limited information filing for a 403(b) plan. I understand from reading the FAQ's on EFAST2 that I can file via paper until October 15.

Can someone tell me if I have to use the 2008 Form or the current year form to file the amended return.

Thanks

hope this has not been asked exactly before. my question is

two fold:

1). for purposes of applying limits under 404 is earned income always inclusive of

the 401k salary deferral(i.e., we do not reduce for the deferral for

25% limit, 6% overlook, 31% combined etc.).

2.)is the treatment identical for 415. in other words for compensation

purposes, is the 100% of three year average also applied to earned income

ignoring salary deferrals but with regard to other qualified plan contributions?

this client was way above the 401(a)(17) limit in 2007 and 2008 the first two years of

the plan, but that is not the case for 2009. it is a one person k/db combo.

The owner of a company would liek to set up a one-man DB plan for the plan year ended 9/30/2010. The company had other employees up until 4/30/2010, but now he is the only employee. If he implements a one person DB plan, would the initial plan year need to be a short one from 5/1/2010? And would he only be able to use his compensation from 5/1/2010-9/30/2010, or would he be able to use his full year compensation?

If a 9/30 PYE switches to a 12/31 PYE, does the $5,000 threshold for Sched C reporting get adjusted down to $1250 for this short one-quarter period?