An employer has life, disability, health and dental plans each with over 100 participants. Their ERISA attorney says they can use the policy as their plan document. Since each of these types of insurance is on a separate policy do they need to file a separate 5500 for each?

A client has old contracts under a non ERISA 403b plan. These contracts were frozen and no contributions for any employee have been made since before 2005 so they are orphaned contracts under Rev Proc 2007-71. The client has subsequently set up an ERISA plan, with a plan document. The question now is do the old orphaned contracts need a plan document, are they really part of the ERISA plan, or can they be excluded altogether as orphaned contracts such that no plan is required? For 5500 purposes it seems they would have to meet the requirements of FAB 2009-02 and 2010-01 to avoid 5500 reporting. But what about for plan treatment purposes?

How are you handling these situations? I suppose the conservative approach was to just prepare the plan document, but apparently this was not done in many cases, and now we are in 2010.

Any thoughts would be appreciated!

Thanks!

The Plan has 9 adopting employers, all part of a controlled group of businesses. Three of the adopting employers laid off between 20 and 30% of their workforce (most of whom were participants in the Plan). Overall the Plan lost approximately 10% of its participants to the layoffs of the 3 adopting employers. The auditor of the Plan says that the Plan most likely had a partial plan termination only with respect to the 3 adopting employers that laid off over 20% of their plan participants and all affected participants of those 3 adopting employers should be fully vested. The employers do not want to vest the affected employees. I say that partial plan termination is determined by looking at the Plan as a whole and therefore, since the overall layoffs total less than 20%, there is a presumption that no partial plan termination occurred.

Any thoughts are greatly appreciated. Thanks!

One-participant plan

TNC = $100,000 and FT = $200,000

Projected monthly benefit at NRA = $16,250 (415)

Death Benefit = AE of accrued benefit at death

Funded (partially) with Variable Universal Life; Death Benefit = $3,000,000 and Annual Premium = $30,000

Cash Value = $40,000 and Cash surrender value = $0

(a) Any problem with incidental death benefit if total contribution = $70,000 (trust) + $30,000 (insurance) = $100,000? What is procedure for testing?

(b) What is asset? CV or CSV?

Thanks.

5500s will be submitted using IFILE. I note that attachments may be created either on the specific form (e.g., enter age service array) or using the edit form attachment to include a pdf.

In the good old days, we simply piggy backed all the attachments to the 5500. Can this still be done -- i.e., add a single pdf glop (assumptions, plan provisions, age/svc array) or must each attachment be included to a specific spot?

A LLC or partnership issues a Sch K-1 showing Guaranteed Payments to Partners (GPP) on line 4 and shows Self-employment (S/E) earnings on line 14A.

I am now getting a little confused about the "normal way" of computing the maximum contribution made to a retirement plan.

I'm wondering if things can be structured to reduce the net S/E income taxed on the form 1040, and still get a maximum contribution made to a retirement plan.

Generally, I have considered the S/E on line 14A as the number to use for simple, basic computations for determining the amount to pay into a retirement plan. The amount listed as GPP is ignored for purposes of computing the maximum contribution made to a retirement plan. Pretty straight forward, but a year with low income can result in the partner/member being limited from contributing the maximum annual amount into his retirement plan.

SO WHAT IF THE TAXPAYER WANTS MORE RETIREMENT PLAN DEDUCTION?

Generally if the GPP payment is increased the expense of the GPP offsets any increase to S/E. So any year-end changes to GPP do not affect the S/E income (other than to the extent of minority interests in the entity).

But when the operations of the business are not enough to allow the maximum retirement plan contributions, then generally if the GPP payment is capitalized (rather than expensed) then a larger GPP results in a larger S/E income. So by increasing his GPP, he is allowed a larger retirement plan deduction.

My new thought today is in lieu of capitalizing additional GPP, the partner/member is paid for services outside the entity and is issued a 1099-MISC which is reported on the taxpayer's Sch C.

In this case he'd show S/E income on the Sch C, and could establish a retirement plan for the Sch C income.

As a result, the LLC/partnership would have additional expense for the service fees paid out to the individual. This would reduce S/E income (perhaps even to a negative) on line 14A of the Sch K-1.

When preparing form 1040-ES the positive S/E income from the Sch C is netted with the negative S/E loss shown on the Sch K-1, and the result would be a reduction in S/E tax.

As an example, taken to an extreme: a LLC with zero net income and no hope for a retirement plan deduction – could otherwise pay $200,000 as a sales commission to the member and report a $200,000 loss. The $200,000 Sch C would support a retirement plan deduction.

The $200,000 loss on Sch K-1 would totally offset the S/E income from Sch C when preparing form 1040-SE. In this extreme example, the taxpayer would then have a maximum retirement plan deduction and would have paid zero S/E tax.

I am looking for cites to attack or to support this extreme example.

Comments please?

I am on an industrial disability pension. My attorney and my spouses attorney decided on a QDRO and a QDRO drafter; both sides split the cost. Mistake.

The drafter sent a copy of the DRO to the Plan Administrator without my counsel even having seen it. Suffice to say it's all worded for my spouse and not for me (although a memo provided me and my spouse by the drafter would make you think otherwise)... and written so vaguely that my Industrial Disability might be taken. Granted, there is plenty of California case law against this happening, but Judges here haven't been using that case law until appeals!

So, I'm in a pickle. What do I do? Can I contact the Plan Administrator myself and give them the memo/DRO summary that I got from the drafter of the QDRO that clearly shows the intent of the QDRO was to divide my service retirement and not my IDR? If only that memo was what the drafter actually put in the DRO!

I fear there was collusion behind the scenes.

What can I do?

We have a 401K plan that has participant loans. Some individuals that have loans outstanding do not have sufficient wages available during weekly pay periods to repay the loans per the terms of the loan agreement (i.e. they are getting a zero balance check after all taxes/deductions). Our TPA will automatically reject partial payments and refund the partial payment to us. If the amount is being withheld from employee's paycheck but not remitted until a "whole" payment can be made per the loan terms, is this considered a late contribution or prohibited transaction? Is there any difference if the full amount is withheld from a subsequent paycheck (i.e. two full loan repayments are made in the next pay period). Some questions have been raised and I was wondering if anyone here could help. Thanks!

I have a one participant.

He has a DB plan from his consulting work (Sch C and K-1 income). He joined a sole-proprietor and participate in its DB plan (W-2).

Is there any problem here with 2 DB plans? 415? 404 deductible?

Thanks.

All references to paper Form 5500 filings under EFAST 1 have been removed from the 866-GOEFAST (866-463-3278). Also gone is the ability to verify if/when a paper Form 5500 was received.

When I called, the EFAST 2 rep took my info and the plan's info to leave a voicemail at the Office of the Chief Accountant. Supposedly, they will call and verify the filing was received.

Listen carefully to the options. While option 3 works in the same manner, it will say "the filing has not been received by the EFAST 2 system". The EFAST 2 system does not include history of paper filings, only EFAST 2 electronically signed & transmitted filings.

The phone number for the Office of the Chief Accountant is 202-693-8360.

I'm researching options to replace the tax calculation module in my existing pension distribution system. The best fit, so far, uses payroll tax tables and rules. Do pension income tax withholding rules differ greatly from payroll tax withholding rules? Where would I find the differences documented? Would anyone recommend a pension withholding specific tax calculation system? Is using payroll tax rules an acceptable practice? Thanks!

I have an individual who has never filed Form 5500, and always was subject to the EZ rules: owner-only plan, no other participants. Plan probably has been above the filing floor for 10 years or so. So, DOL's delinquent filing program is unavailable.

What are people's experiences in recent years with getting filing penalties waived/abated in these circumstances? (This has only happened to me once, about 5 years ago, with 2 Forms 5500-EZ--we did get an abatement after-the-fact.) The client will have a heart attack--and maybe me, too--if the filings are followed by penalty letters of $25,000 for each of 10 years!

The Corbel VS document says that interest credits are posted only once per year - at the end of the year. I have a calendar plan terminating and distributing August 1.

Do we:

1. Not have the current doc language?

2. Ignore the doc and credit interest to the distribution date?

3. Apply the document and apply interest only to the preceding 12/31.

4. Credit interest to the pay data because this is a plan termination and different rules apply (and that is kind of what is right anyways)?

I know there are Jeffersonian-like debates on whether or not you are allowed to credit interest only once per year but as a practical matter that is what this document says.

Opinion please. Ours internally are split. Thanks.

Does anyone know where I can find a checklist showing required and optional provisions of a cafeteria plan document to review them for compliance with IRC 125?

Using Relius Gov't Forms and Web Client for the filings. We are third party administrator firm with an actuary and our firm has signed up as transmitter and filing signer for the filings. On the bottom of the Relius Gov't Forms Plan Info Worksheet you enter information for when the plan gets published to Web Client. I have been using our e-mail address and our bosses name (with actuary in the drop down menu). I guess I should be leaving this blank since we don't need an email to tell us that it was published. Correct?

Also, while in Web client and signing as service provider (Web Client is showing "as preparer"), it has something about the Administrator popping up as I'm entering the user ID and PIN. Any one else having this problem? I continued to enter our credentials submitted the filing.

Salary.com and similar sites typically do not specifically address career positions that are devoted to the pension arena. Mostly I see "benefits generalist", administrator, analyst or other HR positions (recruiting, etc.)

Is anyone aware of a site or resource that provides comparative compensation information for pension professionals, in either consulting or corporate roles?

Wondering if anyone out there has experienced the problem that we have ~ as you know, if you mark the 5500 SF as being a one-person-plan, then you eliminate the need to answer some of Question #8 ("Other/Rollovers", etc.). We had a OPP, so we left those fields blank, as per the 5500 instructions. However, when we filed the 5500SF, it came back as a Stop b/c the form didn't balance!

So we had to use our collective brain power to figure out 1st of all "WHY" and second of all, how to get it "through" the filing!

Has this happened to any of you?? Was our collective brain power dim? Maybe there is a solution that we did not think of.

Thanks.

Sometimes when I hit save in a plan it give the error that the plan has already been electonically signed when we have not even published the plan yet? Does anyone else have that issue? This is in the Relius Govt Forms software - not in web client.

We have our clients sign and save their signatures, then we will efile the return. After signing the 5500 with the credentials, the systems states Signatures Saved. We then click EFile and send the return.

When and why would we use the "finish" button in the action grid? If a client signs the return and saves, then clicks finished, we cannot efile, we have to republish then efile. Any ideas?

I have a situation with a client that has me stumped. Existing 401a profit sharing plan effective in 2000. Employer discretionary contributions only, 100% immediate vesting. The TPA who set up plan was misinformed and thought the employer was a governmental employer (not subject to discrimination rules). So they set plan up to cover only a select group of HCEs. In addition, the employer has a 403b that covers staff employees (all those excluded under 401a plan). Now, 10 years later, a new TPA discovers mistake (employer is NOT a governmental employer) and thinks the original TPA tried to set up essentially a 457f plan using a 401a prototype plan document for governmental employer. Of course, because they thought the employer was a governmental entity, no Form 5500s were filed and the 401a plan has not been restated for EGTRRA (they in are Cycle A, 1/31/07 deadline). My mission now is to figure out how to correct this mess. Here's my proposal - establish 457f plan, transfer assets/liabilities from 401a plan to the new 457f plan and then terminate the 401a plan. What I don't know is what to do about the qualification issues with the 401a plan (discriminatory, no 5500s, no EGTRRA restatement). Do these even matter since the assets are being transferred to a nonqualified plan? Any suggestions or guidance would be greatly appreciated!