Considering a plan with no early retirement provisions, but allowing Lump Sums upon termination. Reading 417(e)(3) and Reg. 1.401(a)-20, Q&A 17, is it still the case that we have to offer the QJSA annuity available immediately if the Present value is above $5,000?

Seems a little counter-intuitive to be offering annuities when there is no early retirement. Has there been any update or guidance on this?

This falls into the category that clients don't always follow instructions that they normally follow and to quote Forrest Gump, "It Happens."

A 300+ life DB plan for a not-for-profit organization does not provide for in-service distributions. Further, the plan provides for a late retirement date that is the first day of month coinciding with or next following the actual retirement date. An HCE turned 65 on October 4, 2009 and indicated he would actually retire on November 9, 2009. In August 2009, the HCE was given an election package that provided for a lump sum distribution effective December 1, 2009. Instructions were provided not to distribute payments until on or after December 1, 2009 and then only if HCE had terminated employment as planned on November 9, 2009 (which he did). The same personnel have been administrating the plan for years.

On November 9, HCE terminated employment and was handed a lump sum check on November 9 for $1,020,000, which was the payment for December 1 distribution date. Had the distribution been calculated as of November 9, the amount would have been $1,016,000.

Thoughts?

IRS sent a CP-403 for 2007 5500 for 2 plans of the employer.

We have a USPS mail label showing the return filed timely, but no signed original.

If we send a newly signed file copy with evidence of timely filing, what happens if DOL later asks for return. Have we made any additional trouble? If IRS accepts it as a timely filing, is that enough?

When determining HCEs for a Puerto Rico Test, is there any flexibility in the rounding method? For example, with 16 employees, 1/3 would be 5.33. So should there be 5 HCEs or could there be 6?

Any thoughts, greatly appreciated.

Yesterday...

Income tax was due, I had to pay...

All the funds I tried to hide away...

I don't believe, I'll eat 'till May.

Suddenly...

I'm not sure that I am fiscally...

Ready for responsibility...

Oh yesterday, came suddenly.

Why, I

Owed so much, I don't know, I couldn't say

May be

Forms were wrong, how I long, for yesterday.

Yesterday...

Seemed like prison time was on its way...

Now I need a place to hide away...

While keeping IRS at bay.

Why, I

Owed so much, I don't know, I couldn't say

May be

Forms were wrong, how I long, for yesterday.

Yesterday...

Taxes due, I filed come what may...

Losing all deductions that's my way...

Of giving IRS my pay.

mm - mm - mm - mm - mm - mm - mm.

If a 457(b) plan wishes to terminate in 2010, must the plan document first be amended for PPA, HEART, and WRERA prior to distriubtion of plan assets?

Ditto. I also know a number of other individuals are looking for a fully integrated copy of PPACA. I started doing it myself, but it would take much more time than I have available right now.

A 401(k) plan allows a participant to have up to two loans outstanding at any time. The participant could either take two loans with up to 5-year terms ("personal loans") or one personal loan and one principal residence loan. A participant has purchased undeveloped land. S/he is interested in having a home constructed on the lot which will become his/her principal residence. Can we make a principal residence loan in this instance if it has been a few years since s/he purchased the land?

I posted a message today (04/16/2010) @ about 3:10 pm (my time). The time in the message is 3:10 am.

Yes, I've checked the time zone setting under "My Controls/Board Settings". In fact, it gives the current time as exactly 12 hours earlier than my clock/watch/etc.

Is there some other setting I've overlooked?

From the EOB:

The regulations issued on December 29, 2004, provide that, if a short plan year is created by plan amendment, the ADP and ACP safe harbors is available if both of the following conditions are satisfied: (1) the plan year immediately preceding the short plan year satisfied the 401(k) safe harbor rules (i.e., the plan already must be a safe harbor plan when the plan year is changed to create a short plan year), and, (2) the plan year immediately following the short plan year also satisfies the 401(k) safe harbor rules. See Treas. Reg. §§1.401(k)-3(e)(3) and 1.401(m)-3(f)(3). If the plan year immediately following the short plan year is also a short plan year, then the safe harbor requirements must be satisfied for at least the 12-month period following the end of the short plan year (unless the exception for plan terminations, as described in 2.c. below, applies).

According to the EOB, the conservative approach is to amend the plan year BEFORE the short plan year begins. So your short plan year be from 1/1/2011 through 9/30/2011. But that is based on one Treasury officials remarks at an ASPPA conference, and Sal definitely felt there was room for interpretation. Especially considering the only two requirements set forth in the regulations COULD still be satisfied if you made 1/1/2010 to 9/30/2010 your short plan year.

I disagree with everyone. Ok, just kidding, I agree too. I am such a sheep.

Hi all,

Do the rules on non-monetary compensation apply to just indirect compensation or both indirect and direct compensation, on the 2009 Schedule C? So, in other words, do the rules on non-monetary compensation apply to meals, tickets, gifts, etc. received directly from the plan? Is non-monetary compensation received directly from the plan reportable compensation on the Schedule C?

It would make sense if non-monetary compensation concerned both indirect and direct compensation. But much of the guidance I've seen out there treats non-monetary compensation as a subset of indirect compensation. The directions aren't very clear on this.

Or is the logic that non-monetary compensation received directly from the plan is considered indirect compensation?

Thanks for your thoughts.

Go Braves!

Just read a summary of the health care bill that states that Sec. 10105 and 10101(d) of the Affordable Care Act involves new nondiscrimination rules for insured plans. Does this mean that all companies that offer health insurance, must follow basically the same nondiscrimination rules for pension plans? Is there an exclusion for small companies under 25 ee's?

The 1/1/2009 valuation calculates a maximum deductible contribution of $100,000. This is calculated as of 1/1/2009. So if the contribution is not actually made until 1/1/2010, it gets discounted back to the valuation date, correct? So in essence, the maximum deductible contribution can be larger than the $100,000?

Employee properly elected an amount to be withheld in 2009. Due to administrative error, withholding did not occur through the full year and the full elected amount was not withheld. What are the options the employer has to put the employee in a neutral position (as if the full amount was withheld in 2009)? Thanks!

It appears that, for a partial IRA conversion to a Roth in 2010, the IRA holder will need to wait until December 31, 2010 to value the consolidated IRA balances and determine tax consequences (assuming there is basis in the IRAs and they weren't all deductible contributions). My question is, does this "pro rata" valuation date of 12/31 apply when all IRA balances are converted (i.e., not a partial conversion)? Can the IRA holder in this instance use the IRA valuation as of the conversion date?

An employer wants to merger two 403(b) plans - one provides for hardships and loans and the other does not. As I read the regulations, a plan merger would need to comply with the plan to plan transfer rules. Specifically, the requirement that the receiving plan must provide that to the extent any amount transferred is subject o any distribuiton restrictions under 1.403(b)-6, the receivng plan must impose restrictions on distributions... that are not less stringent than those imposed on the transferor plan."

I am thinking this means that the transferred amounts cannot be made available for loans and hardships. But couldn't the transferred plan be amended to provide for loans and hardships before the transfer? And then aren't we in the same place as with 401(k) plans where the IRS has esstentially said you can allow these types of options because it is treated like a plan amendment?

We restated a document for EGTRRA and are going to submit it to the IRS for approval. Is this plan exempt fromt he user fee?

401(k) plan

less than 100 EE's

at least one NHCE

initial effective date, 1/1/99

My little chart says it is exempt, but I want to make sure.

Our company is closing- one of the employers is starting a new company or taking over this company. They have decided to close the 401k plan. However they have mentioned that there will be charges incurred, administrative charges to close it, and these charges will be charged back to the employees. This is a very small company.

Is this legal? do they have to give written notice of any administrative fees they will charge?

I have another 401k plan with a company I used to work with, and they charge quarterly fees for administrative costs, and they have always given at least 30 days notice of any changes to the plan.

There are very few employees in the plan, but there are also some former employees that are still in the plan. If charges are legal and incurred would it be to all members in the plan, I assume. Is there some reasonable way to determine the actual fees and how they are divided amongst the employees?

who would I ask these questions? Attorney General?