If say as of 1/1/2009 the AFTAP is < 60% and benefits are frozen as of 1/1/2009.

Say the plan is calendar year and for the 1/1/10 valuation my understanding is that the funding target is based on the frozen benefit as of 1/1/2009, but that there is a target normal cost for an accrual during 2010.

Is this correct?

I'll go through the regs more, but just wanted a preliminary opinion.

Personally it seems that if there is a 436 freeze than there would be no accrual for a target normal cost.

thanks

An employer was participating in a PEO plan and decided to de-participate in the plan and create a new plan. Assets in the PEO plan attributable to that employer were spun off into the new plan. Plan has effective date of 1/1/2009 as a new plan, as administrator prefers this method, and it is cleaner from a 5500 perspective as prior year 5500's will not be available for this new sponsor. So we have a successor plan and is also a new plan. However, an issue comes up as to running the ADP test, because as a successor plan you cannot use the deemed 3% rule. Plan document for 2009 had prior year testing elected. Client does not have data from 2008, most likely because the plan was safe harbor in 2008 so the test was not run. So how do you perform ADP test for 2009 plan year if prior year was elected and this is not a new plan because it is a successor plan? It is too late to change the testing method for 2009.

Do 2 tests need to be performed by the new administrator - 2008 in order to run 2009?

Any thoughts would be great!!

I’d like to learn more about what TPAs and recordkeepers do in processing distributions under a retirement plan that includes Roth and non-Roth amounts.

Do you permit a participant (or a beneficiary) to specify his or her preference on which portion of a distribution is taken from Roth amounts?

Do you require a claimant to direct an allocation between Roth and non-Roth amounts?

For example, I have a client that’s considering whether its plan documents should specify that a claim will be denied unless the claim specifies the claimant’s allocation between Roth and non-Roth amounts.

If a participant isn’t permitted or fails to specify a preference, what ordering rule do you use to allocate a distribution between Roth and non-Roth amounts? What were your reasons for choosing that ordering rule? How much of the ordering rules is in the plan document, and how much is the plan administrator’s interpretation?

Is there any particular kind of distribution for which you don’t permit a claimant to request his or her preferred allocation between Roth and non-Roth amounts? If so, why do you preclude the choice?

If a qualified domestic relations order doesn’t state details on which portion of the alternate payee’s portion is to be credited as Roth amounts, what ordering rule do you use? Is that rule stated in the plan document? Stated in the QDRO procedure? A rule you interpret for practical administration?

Can you apply facts and circumstances for hardship purposes to deferral contributions, without meeting a safe harbor need/event and without requiring suspension for 6 months? So all accounts - employer contributions and 401k deferrals - can be distributed based on facts and circumstance approval to buy a car, if this was determined to be an immediate and heavy need. Also, since plan has not elected to apply safe harbor standard, deferrals do not have to be suspended? Assume this is a volume submitter document. Is this permitted?

Thanks!

I have the newest update on Relius (aug 10,2010)

Now 5500 SB won't print

Anyone know what is wrong?

Thanks in advance to all respondents. (Let me know if additional information is required)

Corp A, 100% owned by Dr. A setup two plans - DB & 401(k) effective 01/01/2002. Plan covers Dr, his spouse and 5EEs.

Dr. A establishes Corp B (100% owned by himself) beginning 2005. He and 5 EEs are paid from Corp B and his wife is paid from Corp A.

I guess this is a controlled group situation and the plans must cover all EEs of both A & B. However, the Corp B did not adopt the plans sponsored by Corp. A and all reporting went on until 2008 assuming all employees were employed by Corp A. The recent DC restatement was adopted by both employers A & B. Also, earlier paln documents had provisions considering employment from related employers. In addition, deduction for employer contributions was taken on the tax returns of Corp. A.

I have a few questions:

1. Is the plan a nonamender and VCP is the only correction method?

2. What is the required correction in re: on erroneous deductions?

Please excuse the cryptic topic title!

Assume:

Cash Balance Plan Year 1/1/2009-12/31/2009

Valuation Date 12/31/2009

Valuation Assets $300,000

Funding Target $300,000

Target Normal Cost $80,000

Minimum Required Quarterly Installments $10,000 4/15/2009, 7/15/2009, 10/15/2009, 1/15/2010

Actual Contribution 3/15/2010 $100,000

Effective Rate 6%

2009 Schedule SB lines 19a and 19b are $0

What should be the entry on the 2009 Schedule SB line 19c?

How about 100,000 / {(1.11 ^ (2 /12)) * (1.06 ^ (.5 / 12))} = $98,037?

That seems to follow the Schedule SB instructions, but totally ignores the late MRQs from 2009!

May this type of transfer be made on a trustee-to-trustee basis and continue the tax deferral (rather than individually elected rollovers to IRAs)?

If so, would that effectively be a 401(a) plan termination if all the assets were so transferred?

If not allowed now, has there ever been a time when this type of transfer be made on a trustee-to-trustee basis and continue the tax deferral?

Say a pension plan purchases a Denny's restaurant and that the plan owns the property and charges the tenant rent to use the property, but the plan does not receive income from the restuarant itself.

Based on a UBIT IRS publication my impression is that this would generate UBIT because even though the plan is just renting the property the tenant is using the property for a commercial business unrelated to the purpose of the tax exempt plan.

Does that seem correct?

Now let's say instead that the plan is experiencing the profits/losses from the restaurant as a commercial business. Does this create UBIT? My understanding is that it does as well.

And finally, as a generalization say a pension plan owns a portion of a limited liability partnership.

If the partnership only generates income from dividends and interest than it would not generate UBIT, but if it also experienced profits/losses from the business of the partnership it would generate UBIT. Does t his seem correct?

Thanks.

FYI the pension plan only has two participants

Say a pension plan purchases a Denny's restaurant and that he owns the property and charges the tenant rent to use the property, but the plan does not receive income from the restuarant itself.

Based on a UBIT IRS publication my impression is that this would generate UBIT because even though the plan is just renting the property the tenant is using the property for a commercial business unrelated to the purpose of the tax exempt plan.

Does that seem correct?

Now let's say instead that the plan is experiencing the profits/losses from the restaurant as a commercial business. Does this create UBIT? My understanding is that it does as well.

And finally, as a generalization say a pension plan owns a portion of a limited liability partnership.

If the partnership only generates income from dividends and interest than it would not generate UBIT, but if it also experienced profits/losses from the business of the partnership it would generate UBIT. Does t his seem correct?

Thanks.

FYI the pension plan only has two participants

Prototype plan has not been updated for years (presume GUST and EGTRRA have been missed). Very few participants. Sponsor wants to fix.

Couple of questions:

1. Is sponsor going to be required to adopt a GUST restatement and then an EGTRRA restatement, or is it enough to do an EGTRRA restatement as part of VCP?

2. Is there some particular guidance for this situation? (multiple missed amendments) I don't recall seeing it, but may have missed it.

If there are other threads dealing with this, I'd appreciate direction to them.

Thanks

For a non-spouse beneficiary to be able to roll over a distribution to an inherited IRA, must such a non-spouse beneficiary be a "designated" beneficiary - i.e., had been specifically designated as a beneficiary by the participant?

I have a situation where a deceased participant did not have a beneficiary designation. Benefits are to be paid equally to her parents and a sibling per plan provisions and state probate statute. Since these beneficiaries were not, per se, "designated" as such by the deceased participant, are the distributions eligible for non-spousal rollover?

Thanks for any and all replies and/or comments.

Plan sponsor failed to implement the automatic deferral provision in 2009. Just noticed the error today. Does this affect answers to the compliance questions to the Sch. H? I don't see that it is a failure to transmit participant contributions (4a); it is a failure to withhold altogether. The other possible question I see is 4l, but it is my incllination that a failure to pay a benefit when due refers to a failure pay a disitribution and doesn't relate to this issue.

Thanks in advance for any guidance.

What is the next step if a group health plan has not provided SPD after 2 requests or the SPD is missing components (simple things like phone numbers or addresses)?

Your thoughts are greatly appreciated!

An employee resides in state X and his marriage is dissolved by a state x court which enters a judgment of divorce and the decree provides for spousal continuation. At the time of the divorce, employee works for Company A. It is unknown whether employee elected insured or self-funded medical coverage at the time the divorce decree was entered. Employee moves to state y and works in state x for Company B. Employee eleects coverage under an HMO issued in state x. Assume both state x and state y have spousal continuation statutes for insured medical coverage. Generally, I would be fine if employee were employed by Company B at the time the divorce was entered. However, there seems to be an implied provision in the spousal continuation statute that the employee be a member of the plan at the time the divorce was entered and that s/he continue to be a member. Does this mean that if employee terminates his/her job and is hired by another employer, the spousal continuation statute would not apply to the new employer?

We recently took over as the TPA for a plan whose service provider processed a loan request twice within two days back in 2008. The participant’s account balance was $16,000 and each loan withdrawal was for $5,000. The participant evidently received both ACH transfers but did not say anything at the time. The first $5,000 withdrawal meets all of the requirements for an acceptable loan. The loan was documented and it did not exceed the maximum amount available for a loan. He has been making payments on one $5,000 loan. My concern is with the second $5,000 that was sent to the participant. I do not believe that the participant was eligible for any in-service withdrawals at the time. How do we correct this?

If a business consists of a younger owner, say age 45, and several older employees, say ages 55-60, can they have a Cash Balance plan with a uniform contribution credit of, say 25% of pay, in addition to a profit sharing plan?

Does this pass discrimination testing?

A traditional DB plan, with similar funding requirements, would almost certainly be discriminatory.

The PPA provides different effective dates for providing pension benefit statements to nonunion pension plans (due for 2009 plan year) and pension plans maintained pursuant to a CBA (for this plan, the 2011 plan year).

If a plan has both nonunion and union employees, can all benefit statements be provided for the 2011 plan year, or must the nonunion employees receive their benefit statements for the 2009 plan year?

It seems to me somewhat unclear whether the exception to lump sum distributions as set forth in Code Section 432(f)(2)(B) included a lump sum death benefit that is less than $5,000?

Company sells all of its assets including employees effective 9/30/2010. Owner continues to maintain the business entity, and would like to set up a defined benefit plan to help offset some of the income derived from the assets sale.

My thought was that we set up the new plan effective 10/1/2010 with a short plan year running 10/1/2010 to 12/31/2010. The idea being that the employees termination date was 9/30/2010 (the date of the asset sale), and they would not be covered under the new DB plan.

I now find out that they have an existing 401(k) Profit Sharing Plan. Since the 401(k) plan runs on the calendar year, does that mean I have to consider both plans for Non-discrim, coverage, top heavy, etc? They technically don't have the same plan year, since the DB will have a short plan year. But will I have to employees for the whole year in my DB plan because they were covered under the 401(k) PSP?

I'm not sure what's happening to the 401k as a result of the sale.

Any thoughts to point me in the right direction are greatly appreciated!

Thanks!