a bank esop is asking for a SAS-70. They read an article about "Proper Employee Benefit Plan Documentation" and it recommended that they keep a copy of it on file. However, is that required with Employer securities? They do have some cash assets, but wouldn't a SAS be provided by the entity that invests the money?

If a plan sponsor does not restate plan by 4/30 does that mean the plan loses its qualified status? Or atleast have to go through VCP corrections program?

What would happen if plan restated in May and is then submitted to IRS in May?

What would happen if plan restated before 4/30 and submitted to IRS after 4/30?

If plan not submitted by 4/30 is it pointless to submit and better off not being submitted to IRS?

Thanks.

I have a individual taxpayer client who is being audited. He works for a company that sponsors a 401(k) plan (in which he has no ownership). He also has a 50/50 partnership with his brother and that partnership sponsors a plain profit-sharing plan. The partnership and the company are not related in any form or fashion.

The taxpayer maximizes his 401(k) contribution and that is on his W-2. The partnership declares a $46,000 contribution for him and that passes through to him on his K-1 to go to his 1040, page 1.

The agent is saying that he has made an excessive contribution under 402(g) because he can't deduct $46,000 on page 1 of his tax return AND have $15,500 (this was 2008) on his W-2 as an elective deferral. She says that without a 457 plan this isn't possible. I don't understand her position. Am I missing something??? Unless she is saying the partnership is sponsoring a CODA (which she doesn't seem to be implying), I don't see how we have exceeded the 402(g) limit.

Any help is much appreciated!!!!

James

If an individual has been a sole proprietor for several years, incorporates during 2010 and the new corporation subsequently adopts a defined benefit plan, is the earned income from the sole proprietorship eligible to be used in the determination of 415 high 3 compensation?

I am working on the ASPPA CPC ESOP Module this quarter and am not getting any of the answers associated with the question regarding annual addition limit. Is there anyone who can help?

The particulars are: C Corporation, HCE receive less than 1/3 of the ESOP contribution, looking for the 2010 annual addtion limit for Employee A based uon the following information:

Employee A earns in excess of $500,000

Elective Deferrals = $16,500

Matching contribution is 100% of first 4% of compensation

ESOP leveraged stock forfeiture = $3,450

ESOP contribution is $24,500 (including $8,875 in interest)

My understanding is since company is a C-Corp and HCEs are receiving less than 1/3 of the ESOP contribution, that the annual addition limit would be

Elective Deferrals + Match + ESOP Contribution (less interest) AND you ignore the forfeiture amount. So if my math is correct I think the annual addition limit is $16,500 + $9,800 (100% of 4% of $245,000) + 15,625 (ESOP excluding interest) = $41,925. This answer is none of the five provided.

Am I calculating correctly? If not, what am I missing? Thanks.

I'm looking for an imaginative solution. In the 401(k) we manage (Acme Widgets) there are 2 owners, their sposes, and 2 unrelated employees. All employees defer into the 401(k) since inception in 2006. Here's the problem: one of the spouses made $8,333 deferrals in both 2007 and 2008. She also made deferrals into a 401(k) Plan ata bank she also works at if $15,000 in 2007 and 2008. We just fouk this out. She is under age 50.

Can anyone think of a corrective action that has the least adverse consequence?

Thanks to anyone who can come up with a good solution.

Any thoughts on possible ways to work the following scenario:

Company has long-time employee who has history of going out on disability (STD and LTD) and returning to work. Employee is about to go out on LTD again. Company likes the individual (sympathetic disability issues) but is tired of the back and forth and would like to terminate individual's employment. Company would give individual "severance" amount equal to 6 months salary in exchange for termination and signing a release, etc. Problem is that the severance payment would offset amounts to be paid under the LTD plan so company would like to delay that payment until individual's eligibility for LTD stops. Problem is there is no way to predict when the individual will no longer be eligible for disability. Plan provides coverage up to age 65 if disability continues. In the past, the individual was only on LTD for a few months and that is likely to happen again but there are no guarantees of that so it's theoretically possible (although very unlikely) that the payment could be delayed for a number of years--well past S-TD exemption and separation pay plan exemption requiring payment by end of second year following year of separation. I'm not seeing a clear way to exempt this or make this comply with 409A. Thanks.

I have found many helpful web sites that offer RMD calculators for "account balance" retirement plans. I have not located a similar site for defined benefit plans. Please let me know if you have found a web site that caclulates RMDs for defined benefit plans.

Thanks!

Back in 2006 a rollover was deposited into a plan, we just found out that that rollover consisted of monies from several different IRA's (SEP IRA, Conduit IRA, Traditional IRA and a ROTH IRA). Note this money came into a Qualified plan in 2006.

Participant wants to withdraw all his rollover monies now, my question is how do we go about doing the 1099R's for this? Especially since 2 of the rollover amounts should never have been allowed to rolled into the plan to begin with.

Thanks for any help you can provide.

I have a DB plan that started in 2005. Plan gives benefits to all employees. In 2008 the plan document was changed to give x% to class 1 employees and y% to class 2 employees. However the plan document also says that service prior to 2007 is excluded. Can you just disregard the '05 & '06 service for those employees who were employed during those years.

Saw the below post on another website but with no satisfactory answers- I have a similar issue- all comments appreciated....

I have a plan that is frozen w.e.f 1-1-2010. I am currently doing disclosure work for year ending 12/31/2009 and under FAS 88 I plan to show the effect of the curtailment. -

Gain due to the curtailment (basically PBO – ABO = $400,000).

Accumulated loss in AOCI = $ 2,000,000

Transition gain/loss = $ 0

Prior Service Cost = $ 0

So I adjust the curtailment gain against the accumulated loss and still end up with a loss of $ 1,600,000. Future service of actives is about 10 years

What are my options of amortizing this loss

(a) amortize it over the next few years (say 3-4 years)

(b) recognize the entire loss in this year

© other???

Client plans to terminate plan sometime in 2010 but nothing has been confirmed as yet on this. I realize most of these decisions are based on discussion with auditor/client but they don’t really have much to say on this topic. I’d like to know what others in similar situations are doing……….

The 5500 instructions seem to limit the commission information reported to insurance companies only, but what about a non insurance product with an insurance company (such as Nationwide Trust product). For that matter, commissions are paid on non-insurance groups as well (such as American Funds). Shouldn't these commissions be recorded on this line as well?

I realize that the Service Members Civil Relief Act (SCRA) states that if the loan is greater than 6% the service member can send a notice upon return from duty asking to lower the loan rate to 6%.

We have a plan sponsor trying to put a spin on this to say can the rate be lower than 6%. SCRA says the loan rate cannot exceed 6%.

My view is that this only helps if lets say the original loan is 9% interest and upon return from military leave he wants to reduce it to 6% this is ok. But lower than 6%??

A recently hired employee has medical from his former employer, a county gov't. I think this would qualify as an "employer-sponsored plan" and therefore be ineligible for pre-tax fsa treatment. Is someone able to confirm that that is the case?

Is anyone aware of a stututory reason (under the IRC) why non-US income is ineliglbe compensation for purposes of a DB plan subject to 401(a) and 501(a)? Our plan's definition of comp does not refer to 3401(a) or W-2 wages, (but I want to change that when we restate our doucment in 2010). 401(a)(17) does not seem to be specific about comp being limited to US compensation. Any help is appreciated.

Our company "demerged" from a company in 2008, however our plan participants remained in a multiple employer plan managed by the former company until the end of 2009. My question is as we set up a new 401k plan (new plan document under own tax id number) with board resolutions of effective date of 1/1/2010 plus plan document lists effective date of 1/1/2010 as a calendar year plan; however, the plan asset transfer for our group of participants was initiated on 12/31/2009 with an approximate 5 day period (technically 1-2 business days due to a holiday (1/1 and the weekend) in which the plan assets were "settled". This was a plan to plan transfer with the same recordkeeper & trustee (Fidelity). Based on the plan effective date, I have been assuming that we would not be filing a form 5500 until the 2010 plan year is due (7/2011) despite the fact that technically plan assets were transferred out of the former plan on 12/31 and eventually show as "credited" to the new plan on 12/31/2009.

Can anyone comment on whether this seems accurate? Our whole intention was to set up a new plan for 2010 going forward. The issue of the plan to plan transfer being initiated on 12/31 and eventually listing a transfer date of 12/31 seems to bring this into question or does it?

I am finalizing a December 31, 2009 end of year valuation. A 2009 AFTAP was issued by 9/30/2009 based on 2008 valuation numbers (since an end of year valuation). The client still has not made the 2009 contribution yet. When I send out this 12/31/2009 valuation can we do a revised AFTAP Certification based on the assumption that the minimum contribution will be deposited on 9/15/2010? (we would specify the amount of the contribution in the AFTAP Certification). This AFTAP would include the Funding Target at end of year (includes Target Normal Cost), the COB and PFB would be increased by the effective interest rate to the end of the year and the assets would include the discounted expected contribution. It would be revised again if the contribution is deposited on a different date.

Or would the 2009 AFTAP include the Funding Target (ignoring the accrual (Target Normal Cost) for the year) and actual assets as of 12/31/2009 (no contributions made so far for 2009) and the COB and PFB with interest (effective rate) to end of year. This is the way that it comes out of our valuation system

However, I read that the Schedule SB (line 15) must be the AFTAP certified for the plan year. I assume this would include the 2009 contribution. So if the last AFTAP last certified does not include the 2009 contribution then it is issued again once the 2009 contribution is deposited to match up with the Schedule SB?

We have a plan that has unallocated forfeiture money even though the plan was frozen as of 12/31/2007. I assume the amendment did not address forfeitures and neither did the recordkeeping system. At this point, should they be reallocated, and how? To all participants with an account on 12/31/2007 even if they have by now taken a distribution, or can we look at active accounts today?

Please help, I'm trying to help my elderly mother address an issue with late filed 5500s for 2006-2009.

My father passed away unexpectedly in 2007 from an injury just before the 7/31 filing deadline for 2006. My mother didn't know what she needed to do, and turned it over to their CPA who failed to file timely for 2006 and 2007.

My mother filed 2008 herself on an incompatible form (not machine readable).

2009 is now late as the business was discontinued and mother converted the plan to an IRA, didn't know that she had to file with in a certain time period from conversion, she thought she had until 7/31/2010 for the 2009 year. CPA didn't advise her on the filing deadline for conversion.

CPA is being unresponsive and penalties are mounting. The CPA did responded to a notice from DOL for the 2006 filing and has not heard anything back yet.

My mother received a CP213N from the IRS for 2007, which I am planning to reply to for her.

Since the Voluntary Compliance program doesn't cover "no employee", plans how should we proceed?

If the CPA was made the administrator, is she personally responsible for failure to file penalties for the periods under her watch?

I would be grateful for any advice.

Liz

Plan is cross tested (last day + 1,000 for PS allocation requirements), Davis Bacon off-set. Some participants received davis bacon contributions but term'd before end of year (greater than 500 hrs) so not eligible to receive PS allocation. A few received davis bacon ( say $4,000) and would receive allocation of PS of $1,000, so the DB covers PS; and a few received only PS contributions.

Question: How is testing for 401a4 done, which contribution amounts are included for testing purposes? Are all the participants with DB contributions in rate groups or only the PS contributions? Ugh...

Thanks for the assistance.