This has been discussed before but we are getting renewed pressure from some clients to obtain a POA to signt he 5500. According to the 2848 instructions, a POA can only be used to sign a TAX return in a few isolated events, including absence from the country, severe illness, etc.

Can anyone confirm whether or not the DOL has indicated spefically that this standard should also be applied to a 5500 even though it is not a TAX return?

I have to imagine this is coming up all the time these days...

(*By the way, we would never do this for our clients, but we would prefer to be able to come back and say it is not even possible).

For purposes of the funding cushion under 404, we must ignore benefit increases to HCEs resulting from plan amendments adopted or effective during the previous two years.

Is an automatic indexing of 415 or 401(a)(17) considered an amendment within this context?

Employer established a 401(k) Plan on 1/1/05. Plan's eligibility provisions provide: you may defer as of your date of hire but must have a year of service and be 21 to receive employer contributions. Plan entry date for purposes of employer contributions is next following 1/1 or 7/1.

One 10/1/05 Employer hires several employees from local hospital and wished to grant them credit for prior service with hospital for purposes of eligibility and vesting and to allow the new employees who met the yesr of service requirement immediate entry into the plan on 10/1/05. Plan was amended to provide this.

2010 rolls around and EGTRRA restatement is signed which includes language stating the years of service with local hospital count as years fo service for eligibility and vesting.

Employer gets around to reviewing SPD which also contains this language and says: wait! we only did this when we hired a gaggle of employees on 10/1/05. We don't do this anymore.

As it turns out Employer has only hired one employee from local hospital since 10/1/05 and it was recently enough that they can comply with the plan provisions.

My question is: is there any problem with amending the plan to delete this provision?

Have other experienced this issue when prior service grants are made with a particular organization and the employer continues to hire employees from such organization? ANy thoughts/comments are helpful.

Hi all -- Published our first large 4k Plan filing. It has assets with an insurance company who issues the 1099-R; so I have a Sch A and Sch R with the insurance companies EIN listed. I get no errors when I validate on the Relius Govt software.

However, the web client software validation (on the E-Fast button) is reporting an Edit Test ID of 'Schema Validation Error" with a message of "The 'EIN" is invalid - The value 'lists the 1st 8 digits of the Insurance Company EIN here' is invalid according to its datatype 'EINType' - The Pattern constraint failed."

Any ideas?

I've reported the incident to Relius, but they told me it would be a while before someone would get to it.

I re-typed the EINs into the Sch A and Sch R again just because and republished, but still getting the message.

An S corporation maintains a defined-benefit pension plan for its only employee, who also is the corporation’s only shareholder. The plan provides a pension that’s designed to meet exactly the IRC § 415(b) limit.

This business owner has flexibility in setting her salary: for example, she might pay herself as little as $50,000 or as much as $150,000. (For this inquiry, assume that she could defend anything in that range as no less than, and no more than, reasonable compensation for the owner’s leadership of the business.)

If feasible, this hypothetical client would prefer to get an actuary’s work only once for a year, and before she decides how much salary she wants to pay herself for the year. Moreover, deciding how much income to devote to pension funding rather than other investments is a part of the business owner’s financial planning.

Assuming that all other amounts and facts are constant and the only variable is the participant’s salary, could it really be as simple as saying that the amount needed to fund the current year’s accrual of the pension varies proportionately with the salary? Would this funding amount needed on a salary of $100,000 be simply double the funding amount needed on a salary of $50,000?

My small brain worries that the idea that funding falls in a line following the salary is too facile. But I’m hoping that the BenefitsLink mavens can show me why it isn’t that simple.

Don't know where it came from, so I can't give credit where deserved. It seems like there should be another paragraph...

I try to explain pension funding to people like this: imagine you're making Vichyssoise soup for the King of France, and you need ten potatoes. His birthday is, quite auspiciously, on Bastille Day (July 14th). It's currently early February. You're not going to buy ten potatoes now, but you figure you will plant some potatoes in the ground so that, by the time Bastille Day rolls around, you'll have the ten potatoes you need to satiate Le Roi. Seems like a sound investment, right?

Unfortunately, the King is guillotined and replaced with a fatter, hungrier king, who demands twenty potatoes in his vichyssoise. You won't have nearly enough. On top of that, an early frost and bad advice from your RIA and your actuary means that your potatoes are at risk and must report liquidity shortfalls on their Schedule SB, and now your potato supplies are in the hands of the Potato and Bean Grower's Cooperative (PBGC.)

What is the benefits of a SEP IRA and how it differs from SIMPLE IRA?

Is it possible to have a CIC payment event, but also specify that no payment will result if employee separated from service more than 3 years before the CIC event?

This question specifically relates to the definition of "eligible charity plan" in Section 202(b)(2) of the new DB funding relief bill, but I think the issue and the answer are broader than that. A number of provisions in the Code or ERISA refer to a plan that is "maintained by" an employer. What does it mean to say that a plan is "maintained by" an employer in a controlled group or affiliated service group setting?

Would it be enough that an employer's employees were participating in the plan, or that the cost of those participants' benefits was charged back to the employer by another member of the controlled group sponsoring the plan? Must the employer have adopted the plan as a participating employer? What if the employer has adopted the plan as a participating employer, but only the main plan sponsor has the authority to make amendments?

Any thoughts are appreciated. Thanks.

Here's my opinion. The regs are very clear that:

a) You do not need to take a loan if it would increase your hardship

b) You are allowed to rely on the representations of your employees for this "needs" portion of the test (assuming safe harbor standards are being used).

SO, if the employee represents to you that the loan would increase the hardship, then it should not be required to make the employee take a loan first. Really, the only way we could possibly have "actual knowledge to the contrary" would be to get copies of their financial information, mortgages, credit cards, personal investment accounts, etc.

Am I way off base here?

Does a one participant plan include a cash balance plan sponsored by a PLLC that benefits only PLLC members but holds the vested accred benefits of retirees and other participants who are former PLLC members?

The plan has an active participant who is a greater than 5% owner and turned 70.5 in April of 2009 (DOB 11/09/1938). Since the 2009 RMD was not required this plan year will be their first minimum distribution they plan on taking. The plan would like to know if this year is technically considered the first RMD year allowing the participant until 4/1/2011 to satisfy the minimum distribution or if 2009 was the first even though it was not required meaning that this year's minimum distribution has to be made by 12/31/2010.

Here is a typical example of retirement asset diversification.

Late June we were successfully publishing 5500s to Web Client and the notifications were promptly sent to the plan sponsor notifying them of the return being ready for review and signing. Flashforward to this week and suddenly no email notifications are going out. The publishers are getting their notification confirming the plan has been published but no other notifications are being sent out. We did just switch to the Single Sign On as all of our clients utilize the Plan Sponsor Web and that was supposed to simplify the sign on requirements. Anyone else running into this problem?

I use Relius Govt forms and plan characteristic codes are one of items that carries forward from one year to another. But when I looked at the plan codes in the instructions for the Form 5500SF, they do not seem to be the same as they were last year. I know I am "overwhelmed" but I don't remember seeing this anywhere. And, if they did change looks like Relius would have carried them forward correctly. Example 3E indicated a prototype plan in 2008, but in 2009 the insturctions say it is a "one person plan that satisfies coverage".

I assume the plans my clients have filed and have been received by the DOL that have the incorrect codes will have to be amended at some point and time.

I am looking for information about the best and most cost effective software for plan administration (eligibility, vesting, contributions, etc.) and recordkeeping (fund/share accounting at the plan and participant level, loans, hardship availability, etc.). In the perfect world there would be one application that did both well. If you have a system or systems that work well, feel free to share the info. Likewise if you have something that doesn't work so well.

Thanks in advance for the feedback.

If you answer Yes to this Line 13a question "Has a resolution to terminate the plan been adopted during the plan year or any prior plan year?", you are then supposed to enter the amount of any plan assets that reverted to the employer this year. The instructions say "enter 0, if no reversion occurred." However, if you do enter 0, you then get this error on the RGF software: "DOLX-1075SF line13a is checked yes and an amount greater than zero is not provided for line 13a-amount."

When speaking to RGF about this, they say that this is a DOL warning, and there is nothing they can do about it!! I also get this error if I try to leave it blank. The only solution I can think of is to enter $1. Any thoughts?

We have had several clients recently that have received letters from the IRS indicating that the 2007 Form 5500 was not filed. We have copies in our office of the signatures and many are trustworthy clients that would not have missed sending the form in. In addition, several of these clients sent their forms in via certified mail and have the proof they need.

I am wondering if others are experiencing the same thing with their clients. Is it possible that these letters are being generated by mistake. I have read several posts debating the merits of sending a letter, calling the IRS, or just having the clients "take it in the seat" and file through DFVC and pay the amount owed. Are you seeing the same thing and has anyone had consistent luck with any particular method of dealing with this?

Questions "m" and "n" of the Part IV on Schedule H pertain "individual account plans" and "black out" periods

I have submitted 5500 drafts for two plans that are audited by different accounting firms. One auditor says leave "m" and "n" blank since they clearly are not relevant. The other says the instructions for Schedule H, Part IV say to leave no question blank unless instructed so they advise to answer "no" to "m" and "yes" to "n."

Like Rhett Butler, I don't give a . . . and want only (a) for all the auditors in the world to be happy and (b) the 5500 filing not to be kicked out.

How are other practitioners completing "m" and "n?" Can anyone supply specific guidance?

On November 17, 2009 there was a discussion in this forum on Section 432(e)(3)(B) of ERISA which provides that the rates provided by the trustees and relied upon by the bargaining parties are to remain in effect for the duration of the collective bargaining agreement, even though the trustees are required to update their contribution schedules yearly. It seems clear to me that if the rates, say under the default schedule, go up after the parties adopt it and while the collective bargaining agreement remains in effect, any such increases in the default schedule rates cannot be imposed on the employer until the agreement expires. However, I have a pension fund that agrees with this conclusion but says it will nontheless impose a 5-10% surcharge on any employers who are not making any additional increased percentage contributions under future revised schedules. This seems like an end run around the inability to impose higher rates on the employer. Any thoughts?