Just wanted to confirm my understanding of deductibility of contributions. Plan Sponsor failed to make contributions for 2007 and 2008. Amount to satisfy unpaid minimum required contributions for 2007 and 2008, and min. req. for 2009 (as of 9/15/2010, inlcuding adjustments for interest) is $175,000. My understanding is that none of this would be able to be deducted in 2007 or 2008 with a revised tax return because it was made after the deadline for both of those years. Is this correct?

Has anyone seen any guidance on how to handle missing participants in an ongoing defined benefit plan? I'm having a surprisingly difficult time finding any. There seems to be a lot out there on DCs and terminating DBs, but nothing specifically applicable to ongoing DBs.

I would think the search methods for DC plans set forth in FAB 2004-2. However, if the participant is not found, the distribution options aren't feasible in the DB context. What should be done when missing participants start hitting their required beginning dates?

Thanks!

I don't prepare, sign or file 5500s, so I have no EFAST2 PIN. Where is the DOL's public viewing room for filed Forms 5500? I can't find it . . .

Can a 457(b) plan sponsored by a tax-exempt employer be amended to adopt the "deemed severance" rules from the HEART Act?

If it can adopt this, must the plan also apply the 6-month suspension of if a participant takes such a distribution?

An employer offers a HDHP and an HSA. Currently the employer makes a contribution to the HSA on behalf of its employees. The employer wants to try to keep the HDHP grandfathered under health care reform. Can the employer go ahead and eliminate the employer contribution to the HSA without disturbing the grandfathered status of the HDHP?

The regulations really focus on changes to the health plan itself. Any thoughts on whether the change to the HSA would impact the HDHP?

Thanks.

I posted on the 5500 site and got no reponse. Maybe someone here has the solution. Do we need a bond that exceeds the ER Stock?

Question realates to Small Plan Audit and Bonding. I have a plan that has employer stock as an OPTION. We are filing a 5500 and Schedule I. I am wondering about the required bonding. The employe stock is over 5% of the plan assets. Employer stock is not traded. (small company) I don't understand the Qualifying Employer Securities below. I looked up the sight and I still am confused. Do they need a bond covering the entire amount of the Employer Stock to get out of the Small Plan Audit Requirements?

Thanks

Pat

I"n the case of an individual account plan, any assets in the individual account of a participant or beneficiary over which the participant or beneficiary has the opportunity to exercise control and with respect to which the participant or beneficiary is furnished, at least annually, a statement from a regulated financial institution referred to above describing the assets held or issued by the institution and the amount of such assets;

Qualifying employer securities, as defined in ERISA section 407(d)(5); "

This is probably something for an attorney to work out, but I would appreciate any thoughts or ideas.

A 401(k) plan participant passed away. She named her 3 sisters as beneficiaries in the plan. However, she also had a will, which stated that all of her assets are to go to the children of her 3 sisters.

Question #1: Does the will supercede the beneficiary form? Who gets the 401k account, the 3 sisters or their children?

After the participant's death, the 3 sisters want to waive their benefit. Their intention is to have their children receive the 401(k) assets.

Question #2: Can the sisters waive their benefits in the 401(k) Plan?

Question #3: If they can waive, does 401(k) balance get distributed pursuant to the will (the children)? If not, where does it go to?

Thanks

With respect to a 457(b) Plan sponsored by a local government entity, an executive-level employee has worked under an employment agreement for several years, under which the employer agrees to contribute 6.5% of employee's wages into a 457(b) Plan. (This is above and beyond other standard benefits, including contributions into state retirement/pension system). (Part of the goal of the arrangement was to make the overall salary appear lower).

For 2010, employee has proposed that the 6.5% be recharacterized as an 'employee' instead of an 'employer' contribution. (Goal is that this makes his 'salary' for the year appear 6.5% higher, making his 'high three years' higher for state pension purposes - he's nearing retirement).

The 457(b) employer contribution amounts have been going into the 457(b) plan on a bi-weekly payroll basis in 2010.

The proposal would leave the 2010 contributions in the plan (no distribution), but a 'correction' would be made so that the employee would include the amounts for 2010 as income, and the government entity would pay applicable employer taxes on the amount. The total amount contributed for 2010 would be unaffected.

I'm stumped on this one.

Doesn't seem right, and yet, because of government and 457(b) status, I'm not finding any specific provision that prohibits it.

Because of his executive status with respect to the government entity, could be a possible prohibited transaction (in addition to any other problems)?

Anyone else out there who works more with government plans (this is not my specialty area), who can weigh in?

A member of the government board, whose permission is required, in order to approve this change for 2010, is objecting. I've been asked (by the executive) to either prove it can (or can't) be done... (Executive's position is that it's his compensation, either way....[so of course, he think's it's no big deal]).

Defined Benefit Plan was frozen effctive 01/01/2006. Conditions of the freeze included no fresh participation after plan freez date.

Doctor wants to terminate the plan that is now over-funded. According to the plan document, excess is to be distributed among all participants.

Do we have to consider a bunch of employees that would be participants had the plan not been frozen? If so, at what rate will they accrue benefits? Under what code section?

Does anyone feel that they are getting an unusual number of 2007 Late 5500 Notices? Or is it just that the IRS has sent out a ton of them in the last couple of months?

If a plan was established in 2008 and contributions were never made:

1.would the plan need to file 5500s with $0 balances? Assuming testing is not necessary since no contribs were made.

2.would the plan need to go through the normal plan termination process?

I can't seem to get a straight answer on this.

Recently, a number of former airline pilots contacted us regarding the payment of their benefits by the PBGC. Typical situation is that the pilots began receiving benefits prior to the airline bankruptcy, selected a level income option, and were recently informed by PBGC that their benefits are being reduced because of the social security offset taking affect. When PBGC took over, the pilots pensions were significantly reduced b/c of the maximum PBGC payouts, but are now below PBGC's maximum level b/c of the reduction for the level income option they selected. Seems to me they should still be entitled to PBGC's maximum guarantee.

Anyone have any experience with the airline pensions or how PBGC administers level income payments?

A state govt entity makes periodic contributions to its plan (no-coda). Distributions are paid in house and the plan reimburses the corporation. The corp then reduces its contribution by that amount, so for example if they were due to make a $20,000 contribution, but paid $5000 in distributions, they only would deposit $15,000. Is this allowed? They are pooled accounts.

unlike your office, where everything is entered correctly all the time, I had to come up with a way of checking data, which over the years, well, is just not correct.

this census report will print messages under the following conditions: (its getting out of control, but it does catch things!)

(after eligiblity has been run- some message make no sense if you run the report before eligibility is processed)

1.ee term prior year but has comp this year hint:must be rehire or maybe its just the last paycheck that showed up in the new year.

2. ee is Age 70 1/2 (actually age 69 1/2 but what the heck, I like to know a year ahead of time)

3. Bad date of birth (this came about because the import didn't include the century, so the year imported as 2048 rather than 1948)

4. 0 comp but active (ee must have quit but no one told you)

5. ee is inactive or ineligble and no reason provided (probably as a result of takeover and ee wasn't coded properly. I think this could play mind games with the 5500 participant count)

6. ee is inactive but has no term date (don't ask me how I ended up with this, different users with different abilities and multiple over-rides over the years, anything is possible.)

7. number of break in svc if > 3 (just in case he should forfeit at 5 and Ididn't run a forfeiture transaction)

Since I don't use home e-mail address, I put secret messages in there such as "ee paid out in 2009" just cuz.

It has been my understanding that a document sponsor has the exclusively right to amend or determine who is eligible to amend their prototype. Also, I understood that amendments by secondary parties resulted in an IDP for which a determination letter would need to be obtained. Allowing just anyone to prepare a valid amendment could cause chaos for the TPA but I was wondering if that gudeline was statutory, part of the determination letter process or part of the service agreement between a document provider and the plan sponsor. Any thoughts?

What’s the difference between an accountant and an actuary? An actuary is like an accountant, only without the personality.

What’s the difference between an introverted actuary and an extroverted actuary? An extroverted actuary will look at YOUR shoes.

One-liners

There are three kinds of people in the world; those who can count and those who can’t.

A pair of jumper-cables walk into a bar and the bartender says, “You can have a beer, but don’t start anything”.

A horse walks into a bar and the bartender says, “Why the long face?”

I have a client that terminated their DB plan in 2007. They have been approached by a consulting firm claiming they have a strategy to recover portions of past PBGC premiums. Has anyone else run into this and know what the strategy might be ? Of course, they take a percentage of the recovered premiums. This also seems a little strange to me.

A Native American tribe established a 457(b) plan years ago to permit employees to make pre-tax deferral contributions. Their consultant advised them that they were eligible to do so as a state or local government employer. After the law changed to permit tribes to establish 401(k) plans, the 457(b) plan was frozen, but accounts remained in the plan and some of them are now quite large.

In fact, the tribe is not a state or local government and therefore was not eligible to establish this plan. The tribe would like to terminate it, but of course is concerned about minimizing the tax impact. I believe that there was a similar problem years ago with tribes that had established 403(b) plans. When the problem came to the IRS's attention, the tribes were permitted to "correct" the problem under EPCRS by terminating the plans. Participants were allowed to roll over their distributions. (I believe this arrangement was also enacted into law as part of PPA.)

I'm sure this tribe is not the only one with a problem 457(b) plan. Has anyone else encountered this issue and/or does anyone know of any IRS initiatives to fix the problem?

It is not uncommon for employers sponsoring plans with few participants to write paper checks for lump sum distributions at the federal income tax withholding. We are likely to have:

Proposed Regulations Expand the Use of Electronic Payment System and Discontinue Paper Coupons Next Year

WASHINGTON — Consistent with a Financial Management Service initiative announced in April of this year, the IRS today issued proposed regulations to significantly increase the number of electronic transactions between taxpayers and the federal government.

The proposed regulations (REG 153340-09) would eliminate the rules for making federal tax deposits by paper coupon because the paper coupon system will no longer be maintained by the Treasury Department after Dec. 31, 2010. The proposed regulations generally maintain existing rules for depositing federal taxes through the Electronic Federal Tax Payment System (EFTPS).

Any guesses whether or not the EFTPS will apply to pension payments. As an aside, I looked at the website and it appears the only way say to make estimated taxes is to provide the IRS with your personal checking/savings account routing number.

Fairly plain vanilla DB plan; uses high 3-year average compensation out of last 10 years preceding termination (not last 10 "years of service," but last 10 years). Employee works 20 years and leaves. Comes back five years later and completes 3 or four additional years of service and terminates again (younger than NRA). Upon rehire he took a lesser position paying less than he made when he left the first time. His high 3-year average drops significantly, so much so that even with the additional years of service his accrued benefit is less than what it was before he left the first time! Is there some overriding rule in ERISA that says this is not allowed to happen? Assuming there isn't, do DB plans ever have plan language to prevent this from happening?