We have a small plan with 2 participants (dr and wife). Part of the assets are held in LLCs. These LLCs have not been recently appraised because doc didn't want to pay for appraisal. The Dr. has closed his practice and wants to terminate his plan. However, he can't find anyone to buy the LLC interests or any custodian who is willing to hold the property if he tries to transfer it to an IRA. Any suggestions on how to close out this plan? We have called the local IRS retirement plans specialist and even she didn't have any suggestions.

At the end of 2005, we didn't notice that a client's plan assets crept over $100k. They hit $100,620 in the last week of December. We noticed it while filing the 2006 Form 5500-EZ, when it was obvious that filing was required. We prepared a 2005 Form 5500-EZ and the taxpayer filed both in July 2007. The IRS has hit the taxpayer with a $5,000 penalty!! How can we get out of this? Is there any way?

Thanks!

Participant was working here with green card, then left the US and gave up green card back in 2004, so no longer living here. He received a distribution in 2009, the 1099 was issued with his ssn.

However, the investment company withheld the 20% but left in his account for some reason. Since he was not a US citizen I guess they weren't sure if they should pay the tax or what. I think they should have just paid the tax. Is there some special form that needs to be completed since he was a not a US citizen that I don't know about?

Thanks!

We use the 1-866-go-efast # to check the filing status of a potential client.

This number was always updated within a few weeeks of the filing. It seems that the old EFAST is not going to merged into the EFAST2 filings.

e.g. I have a few potential clients that have a plan year end 7/31/2009 and I am trying to check the 5500 status.

Also when I check some of my plans that I know were filed and have confirmations and are already on FREEERISA, the status check line states it has not been received in the EFAST2 system. But I am checking the EFAST1 system.

Any advice out there for an immediate status check that it was received? or where the old one resides?

Some people argue that dollars used to make 401(k) loan payments are taxed twice; once when the loan is repaid with after tax dollars and a second time when the account balance is distributed. But isn't there an argument on the other side, as well? A participant does not pay tax on the initial deferral, nor do they pay tax on the loan proceeds, so the deferral is maintained. If loan payments were tax deferred a person would in essence get a double deferral on the same money. Does anyone have something already prepared that argues that loan repayments are NOT taxed twic?

Thank you.

LL&P

As we all know, effective January 1, 2011 (for calendar year plans), plans that cover dependent children will be required to coverage adult children to age 26, regardless of dependency status.

Hypo:

Employer has a number of tiers of coverage, including Employee-only, Employee + Children. Both the employer and employee contribute to the coverage. Employee is estranged from his 25 year old son. The son comes to plan and says "I am entitled to coverage. Put me on the plan." Employee says "I don't want to pay more for his coverage."

Three questions:

1-Does the plan have to cover the child?

2-If the plan does have to cover the child, can the plan require the employee pay for the employee share (presumably pre-tax through a cafeteria plan) or must the employer have the child pay separately?

3-If the child pays separately, does he pay the Employee-only rate or does he pay the difference between the Employee + Children rate and the Employee-only rate?

Any help is appreciated.

Hi,

We are a private 9-12 high school in Massachusetts and are re-writing our handbook this year. I am interested in revising our vacation policy and would love to know what other independent schools do for their faculty and administration. This is what we currently do:

Faculty: school breaks and summer off; 10 sick days; personal time at the discretion of the Head of School

Administrators (director level): 20 vacation days per fiscal year; 10 sick days; personal time (only after all vacation time has been used) at the discretion of the Head of School

Administrative Staff (support level): 10 vacation days per fiscal yr; sick and personal same as Administrators

Currently, vacation days roll over from year to year and do not expire, with no cap. Also, vacation time does not increase after a certain number of years...you always just get 10 or 20 days depending on your classification.

I don't like our current policy and would like to change it -- any sample policies or comments would be greatly appreciated.

Many thanks!

~R

If an amended 5500 requires a Schedule P, the schedule that applied to the filing year must be scanned into pdf and then filed as an attachment. My question is, must the actual signature be included on the scanned document? If yes, then it seems odd as it would be viewable on the site.

Opinions seem to vary widely on how to properly apply Section 415 to DROP accounts. However, according to my research it appears to be generally accepted that, where the DROP accounts are credited with actual earnings, the DROP account is treated as a separate defined contribution plan for 415 purposes under Section 414(k), and is therefore subject to the annual addition limits in 415©. My question is: Would both the monthly employer contributions and the earnings credits be subject to the 415© limitations? Or would the monthly employer contributions be treated along the lines of plan-to-plan transfers, and not counted as annual additions for purposes of 415©?

Alternatively, would anyone care to challenge the premise on which the question is based (i.e. that this would be treated as a separate DC plan)? Would your opinion change if earnings were credited at the entire plan's actual earnings rate? What if there was also a minimum guaranteed rate of return?

Any and all thoughts are appreciated!

I am a receiving a monthly lifetime defined benefit pension from a large company I used to work for and each year they send me an Annual Funding Notice. In comparing the 2008 notice to the 2009 notice I see that each of them, in the paragraph titled Fair Market Value of Assets, make this same statement: “For the Plan, fair market value is currently used as the actuarial value.”

The 2008 paragraph goes on to say that as of 12/31/08, the FMV of assets was $2.763 billion and the plan’s liabilities were $2.936 billion.

The 2009 paragraph goes on to say that as of 12/31/09, the FMV of assets was $2.945 billion and the plan’s liabilities were $3.384 billion.

All well and good so far.

The 2009 notice, on page 1 under the paragraph titled Funding Target Attainment Percentage, states that for the 1/1/09 valuation date the “Total Plan Assets” (line 2a) were $3.039 billion and “Plan Liabilities” (line 3) were $2.474 billion.

So how can the FMV of assets go up by more than ¼ billion dollars between 12/31/08 and 1/1/09?

And how can the liabilities go down by almost ½ billion dollars over that same 1 day period?

I called the toll-free number listed in the notices and put only the first question regarding assets to them. The response was that the asset value changed for three reasons: benefit payments, company contributions, and fluctuations in market value.

I pointed out that MV fluctuations didn’t make any sense since the markets are closed on New Year’s Day. It didn’t faze him. I then pointed out that probably the company was not open for business on New Year’s Day and likely wouldn’t be making a contribution that day. Also not fazed. And wouldn’t that be an awfully big contribution? No reaction. Then I asked wouldn’t benefit payments made on January 1 decrease, rather than increase, the asset number from the day before. Still not fazed. That’s how the conversation ended. (We didn’t talk about the change in liabilities -- can't imagine it could have gone anywhere useful.)

So what’s going on with these numbers? Anybody have any experience with this?

[Note to me: Mike 975908041701]

Is anyone using Form 5500-SF for 412(i) plans? If so, what asset figures are you putting on Line 7 (considering that in prior years 412(i) plans didn't need to complete Sch. H or I)?

Thanks for any help.

Has anyone been unfortunate enough to have to deal with the new definition of "Eligible Charity Plans" that came out in the Pension Relief Act of 2010 as well as possible subsequent technical corrections?

If so how have you or how will you be filing the 2009 Schedule B?? For example, will you be using the 2007 Schedule B marked up for 2009 plan year?? Special attachments??

Can funding methods be changed for 2008 and/or 2009 and if so, how??

Are contributions reported on Schedule SB (if previosly filed) locked in??

If employer elects to use PPA method for 2008 and Pre-PPA method for 2009, how is the pre-PPA credit balances, amortization bases and methods carried forward from 2007 to 2009??

With regard to the special rule use of the third segment rate as the current liability rate, do any of hte funding relief provisions apply, that is can we use a lookback month and is the basis subject to change until eventually locking in at some point??

I realize this is probably not a mainstream topic, but any help would be appreciated. Thanks.

Can a health plan require a participant to submit a QMCSO to the plan within 31 days of the court order? I have reviewed the statute, regs and DOL information but cannot find anything on this one way or the other.

Anyone take the DB Exam lately? I'm considering doubling up during ASPPA's Fall Exam window and taking the DC-3 the first day of the window and the DB exam on the last. That would give me about 6 weeks to study for the DB. I don't really have any experience with DB plans but usually do well study and taking exams. I was just wondering if there were any big differences in the DB exam as compared to DC-1 & DC-2. It looks like the recommended reading for the DB exam is a 300+ page study guide and then a 1200+ DB reference guide. I'm guessing the reference guide would not have to be read completely but just read the areas the study guide outlines. Can anybody confirm that?

Thanks for any info.

Section 412 of ERISA requires that the plan have a fidelity bond, unless the plan meets one of the statutory exceptions.

I have an insurance company that is being liquated by the State Dept of Insurance, this could take until the end of the year or next year, in the meantime they stay in business and they want to continue their 401k plan. They have not been able to renew their bond because of the pending liquidation. Can they operate an ERISA plan without a bond, or I should say, what is the result if they do? I cannot find a stated penalty under ERISA. The fiduciary risks DOL investigation, and remains personally liable for any crimes or acts of commission. If DOL audits the plan they are likely to find this as a deficiency but what other consequences could there be if the plan does not have a bond?

Thanks

Have a client who wishes to convert their current IRA to a Roth IRA. Current IRA is invested in stocks, with a cost basis of $100/share and market value of $300/share.

When doing the conversion, is the amount includable in income based on the $100 cost basis, or the $300 market value?

Has anyone dealt with issues involving:

- 2 participants terminated in the "applicable period" and were rehired 2 months later - same plan year -not that this means anything since our applicable period is 18 months? Due to 2 months not employed, one still worked 1000 hours each Plan year and received an employer contribution each year, but the other worked 900 hours in a Plan Year and did not receive an employer contribution that year. 401(b) passes.

-same as above but DOT is in one plan year and rehire date is in next year and also after the end of the applicable period

Generally, the guidance indicates that a participant becomes 100% vested if a partial plan termination has occurred and participant terminated during the period and employer cannot offer a rebuttal as to why a partial termination has not occurred. However, guidance on short-term absences between DOT and rehire date cannot be found.

Can an ESOP provide that, in the event of a default on an ESOP loan, voting rights associated with pledged shares are transferred to the sponsor or other lender?

Would this run afoul of the DOL's exempt loan reg (default provision)? I cannot find anything out there on this and my client believes it can be done (without providing a basis for that view, natch).

Company X maintains a number of welfare benefit plans providing benefits to its active and certain former employees. For its former employees, X has a separate plan document and offers particpants a choice among different medical, dental and employer-paid life insurance options. For medical purposes, the retirees are rated for experience separately from their active employee counterparts (which results in a substantially higher premium payment for retirees). However, for Form 5500 purposes, the active and retired employee plans are bundled with certain other active employee coverages and filed under the bundled plan's plan number.

Does X's plan for its retirees meet the retiree only exception for purposes of HIPAA and the PHSA provisions added by PPACA?

I have a money purchase pension plan that contributed more than the plan limit to an employee's account (the compensation amount was incorrect). By the time the error had been discovered the employee had already terminated and rolled over the account balance.

We're trying to get the custodian to return the excess, but they are resistant. The former employee is offering to cut us a personal check (it's not a lot of money). Would this be OK?

What else could be done?