The employer is responsibile for selecting the investments for non-elective PS contributions going into the plan. EEs handle the investments of their own deferrals and the match. The employer discovered that, for several years, the PS assets hadn't been invested in accordance with instructions that were sent to the Trustee many years ago. He admits that he hadn't been closely monitoring statements and didn't discover the error until recently. The employer is willing to make the earnings adjustment, but this error doesn't seem to fit under the "covered transactions" section of the Voluntary Fiduciary Correction Program. Should it be submitted under that program anyway? We're also wondering how far back he needs to go. Isn't there a statute of limitations?

I just inherited a 403(b)(7) plan (not an organization exempt from filing under Title I of ERISA) that never prepared the old "limited filing" Form 5500's for the years it was in existence. I have been provided the necessary information to prepare the 2009 Form 5500-SF.

Using the new EFAST2, how do you think I should go about preparing the late returns? Using the limited filing option? Not filing the late returns and have the tear-stained letter ready? I don't think the client would be able to retreive the financial information for the late years, except for maybe 2005-2008.

Anybody have an opinion? Thanks for any replies!

Hi,

We normally do not handle defined benefit plans but are trying to help a client. The client has a single person 412i plan. They had a prior recordkeeper that installed the plan and maintained the plan document - which appears to be up to date. The do not wish to have their prior recordkeeper handle the termination of the plan.

We are terminating the plan document - obtaining a terminating amendment from the plan document provider (datair - which is what we use for our defined contribution plans).

We are filing for termination with the PBGC.

My question is, can the client roll his money out of the defined benefit plan before receiving a statement from the PBGC? He wishes to roll the money out now. He is the only participant in the plan. I thought he had to wait for the PBGC to issue their statement before he could distribute - but since this is a single person plan thought I should check into this.

Thank you.

A participant terminates on 12/31/2008. His final paycheck is paid in 2009. Is that employee included on the 2009 ADP/ACP test? No last day rule for match. Would they also receive a SHNEC on that compensation?

What is the first step to make investment that makes our life happy even after retirement?

A one participant/owner implements his own profit sharing plan.

No other employees.

His plan has say 100k in assets.

The owner wants to invest in art work with some of the plan assets.

As far as I know this is an allowable investment. Does anyone know for certain that such an investment is permissible? Or know otherwise?

Thanks.

A one participant/owner implements his own profit sharing plan.

No other employees.

His plan has say 100k in assets.

The owner wants to invest in art work with some of the plan assets.

As far as I know this is an allowable investment. Does anyone know for certain that such an investment is permissible? Or knowotherwise?

Thanks.

We are finding more and more accountants are telling us that when they figured the amount of self-employment earnings for line 14 of the K-1 they have already taken into account the self-employed individual's (SEI's) own contribution.

Now, I am not an accountant, but I have researched the self-employment issues with regards to qualified plans extensively. My understanding of the way it SHOULD be done is that only the deduction from the common law employees would be taken out before computing the amount for line 14. The deduction for the SEI's own contribution is taken on the Form 1040.

Has anyone else been told this? Am I wrong in my statement about how it should be done?

If the accountant's are doing it this way, are you grossing up the amount on line 14 by the SEI's own contribution before calculating the deduction for 1/2 of the self-employment tax (which again I believe should be the proper way since my understanding is that the self-employment tax is figured before the deduction for their own contribution)?

Let me know your thoughts!

Thanks,

Laura

Im sorry if this has already been posted somewhere--I have searched and cant find an answer.

Question:

Can a plan stop the accrual of benefits for a participant who remains employed by the sponsoring company past the plan's normal retirement age? I know the plan is not required to pay benefits, but can it cease accruals. If the plan sends a suspension of benefits notice, does that allow then to cease benefit accruals?

Thanks as always

Hi,

We have a client who is on the datair volume submitter plan document. They are a calander year plan. The client signed their 2007 amendments on 2/20/09. At the time, I thought this was correct because 415 would have come into effect on 1/1/2008. For this client, we had found some other amendments that were signed late and had filed under vcp to correct those - but this 2007 amendment was not included in vcp. Datair says that the 2007 amendment should have been signed by 12/31/2007 because it included wording to comply with the Heinz Act 411-d regarding vesting.

So now the plan is being audited by the IRS. I am stressed that this 2007 amendment will cause problems. Can anyone give their thoughts on wether this should pose a problem. I am going to argue that there is anti cutback wording in the document that would protect the vesting issue.

Thanks for any help.

Apparently (I've been asked to post this) Relius generates a validation error when a lookback month is entered in line 21b when the full yield curve has been used, and this validation error prevents filing.

Are there others out there who have experienced this and perhaps found a solution, or is everyone leaving that blank even though they may have used October 2008 rates?

We have a plan that had 2 late deposits in 2009 and we have calculated lost earnings and prepared Form 5330. Some of the lost earnings are for Roth deferrals in addition to the pre-tax deferrals. Do we deposit the earnings to the Roth deferral source or should all earnings be deposted to the pre-tax source? I haven't been able to find any guidance on it and we have differing views here in the office. Any thoughts are appreciated.

We provide tpa services for a number of plans that have individual brokerage accounts. When we process a taxable distribution we have withholding that needs to be paid into the federal government. We have had issues with the trust federal tax id being disallowed after a couple of years of non-use. We are considering having the deposit made using the Plan Sponsor's tax id and filing Form 945 and 1099-R using same. Anyone have a concern doing this?

401(a)(17) applies on limitations to matching contributions based on a percentage of pay. Howe does this work administratively when you do a pay period by pay period match (say 100% of the first 3% of compensation deferred) based on pay period compensation. Pro-rate the limit by pay period? Just stop the match but continue the deferral after someone hits the 401(a)(17) limit for the year?

Today is National Venting Day so let me be the first kid on the block to whine.

In following the AAA's approach, I've notified the client to request me to certify the 2010 AFTAP for a plan that was frozen 12/31/2009. The plan is sponsored by an extremely profitable not-for-profit organization. The plan's AFTAP has always been above 100% (In fact, they dumped a lot of money into the plan so they could make lump sum distributions to a couple HCEs). It is now 122%.

It appears PPA's effect is to punish everyone whether or not a crime has been committed.

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.