Employer had SEP in 2008 and wants to do a SIMPLE in 2009. Are there any issues with terminating the SEP and starting up the SIMPLE this year? Can they use the same IRA that they used for the SEP? Do we have to formally terminate the SEP?

I know this is an old issue but does anyone take the position the IRC 415 high-3 limit cannot go down in present value after the NRA ? Example:

Sole Owner/Participant has NRA of 62 and has 10/10ths of his High-3 Limit (which is less than the dollar limit) at age 62 but does not retire and does not electo take post-NRA in-service distributions. He later funds a large amount leaving the plan somewhat over funded and with economy downturn shortly after that he cannot increase his High-3 comp average. Thus, his highest PV of IRC 415 was at age 62.

Is there any argument to preserving the IRC 415 High-3 Present Value at age 62 or must I use the PV at age 65 since his comp average did not increase after age 62 and the annuity factor at age 65 is smaller than at age 62.

Thanks for any thoughts and opinions. Client might be inclined to be a little agressive if there is any arguement at all for the PV at age 62 but if that's clearly a 415 violation he'll use the PV at age 65.

Ok - so I am preparing this determination letter request - Form 5300 and am preparing the ratio percentage test determination on lines 13. Client supplied the data. 2 related companies - 2 plans. We have already filed the d-letter for the other company and it passed with a ratio percentage over 97%. In the company we are filing the determination letter there are 80 total active employees. There is 1 highly compensated employee in this company eligible to participate, 124 in the other company ineligible to participate in this plan. Total number of eligible non-HCEs in our plan is 80, total number in the other company ineligible is 1100 for a total of 1180.

To me it seems like it is a no brainer and it automatically passes. 1 HCE in this company eligible to participant in the plan 124 in other company ineligible. The percentage eligible is less than 1%. 80 NHCEs in this company eligible, 1100 that are not. That's a little under 7%. So, for easy math lets say it passes by 700%. What is my ratio percentage that I put in the d-letter? I would think it would be 100%...not anything higher.

Thank you so much - bit of a rush with last minute restatements.

I know where you had a money purchase pension plan merger, the PPD document allows you to subject the entire account (including non money purchase amounts) to the QJSA provisions for those who have money purchase amounts remaining and exempt the entire account from the QJSA provisions for those that do not.

This makes sense from an administration point of view because it is easier than simply making the money purchase portion only subject to the QJSA provisions. In that instance you can have a single participant whose distribution falls under both the QJSA and non-QJSA rules.

My question is whether you have to do BRF testing with regard to offering some participants an annuity option on their non-money purchase pension amounts while not offering it to other participants.

A client has Sch C earned income of 400k for 2009.

The client's entity is in a state that has community property rights.

The inquiry is even though there is one self employement tax calculation can the income be split between each spouse thus enabling larger pension deduction for the two participants?

Conservatively, I would prefer that the spouse receive W-2 from the entity as an employee for services rendered and then be included.

Or what about having each spouse have a self emploment tax calculation for each of them?

Of course, the spouse would have had to actually earn the income by working for the company.

Curious to get any thoughts on this.

Thanks.

I have a defined benefit plan that has been frozen for more than a decade. It experienced a mass withdrawal and termination a decade ago as well. The plan is insolvent and is administered by the PBGC. Is a NIP required?

If I take the 2 year option (conversion split between tax years 2011 and 2012) does that mean I can’t make additional conversions applicable to tax year 2010? Also, does that mean that I can’t make any additional conversions for tax years 2011 and 2012 beyond the conversions made in 2010? If not, I am compressing three years potential conversions into two.

Thanks for any help.

A husband owns company X and his wife owns company Y. They are a contolled group, as Y manages X. Although it was explained to them that they would only need one plan to cover all employees in both companies, they insist on having a plan for each company and not covering the other company's employees, preferring a new comparability 401k/PS plan with every provision identical. X has many NHCEs while Y only has the owner and will never have NHCEs.

I'm thinking that the maximum PS contribution (and perhaps the deferrals and match) to plan Y would be determined by including all participants from both plans in one general test with the wife being considered an HCE. Is there a way for each plan to be tested separately so that larger contributions can be made to plan Y?

X and Y are leaning towards having both plans use a matching contribution safe-harbor design, which I understand will have to be tested for meeting the top heavy requirements if a PS contribution is made (presumably with both plans once again tested together). For good measure, X and Y have different FYEs, but I assume having different PYEs won't make things worse if the plans are tested in a consistenct manner every year. Are there any other complications that may arise out of this type of arrangement? Thanks in advance.

employee left employment on 4/27/2004 - was 80% vested and left the money in the plan

employee was rehired on 10/03/2009

he worked 501+ hrs in 2004

Is employee starting all over with a 1 year wait enter on the quarter?

If a participant is taking a distribution of non-Roth money from a qualfied plan and directly rolling that distribution into a Roth IRA, can the participant elect withholding on that distribution?

a non-profit employer has over 200 employees and has about 80 individuals participating. It is a non-ERISA plan with only employee money in the plan. Do they have to file a 5500 since they have over 200 eligible employees?

Thanks

A client has a SIMPLE plan in 2009.

The owner of my firm wants to implement a cross tested plan for client.

My understanding is that the SIMPLE plan can only be terminated at the end of 2009 and then in 2010 a cross tested plan can be implemented.

That is, a qualified plan cannot be implemented in 2009 where the SIMPLE contributions are applied to a cross tested plan for 2009.

Are we in agreement with my interpretation? Are there any other interpretations?

Thanks.

The ESOP loan and amortization schedule calls for payments to be made on March 1 and Sept 1 each year, but the company doesn't make a contribution (therefor the ESOP doesn't make a loan payment) until say April 1 and October 1. Its always the same payment but since its late more of the payment is going towards interest than principal. In the end that causes the ESOP to pay more in interest than originally determined under the original amortization schedule. I know in the normal business world you have interest accruing until a payment on a loan is made, but I thought ESOPs you couldn't make it pay more in interest than what was scheduled? I don't have anything to back that up so please enlighten me...

Is a 5330 required to report a prohibited transaction (late contribution deposits) when the amount of the excise tax is zero? If not, is there a problem with reporting this transaction on the form 5500?

Can contributions be made on account of scabs during a strike?

PPA gave the DOL one year after the enactment of PPA ( by August 18, 2007) to develop one of more model pension benefit statements.

I've seen Field Assistance Bulletins 2006-03, and 2007-03 that basically talk about timing of statements and good faith compliance on a number of topics. But were the model statements ever released?

Question:

An Employee works for Company A and contributes $10,500. He leaves that company and goes to work for an unrelated employer (Co. B) and contributes another $10,000. Would the entrie $10,000 contributed at Co. B be considered regular deferrals or would $5000 be considered regular deferrals and $5000 be considered catch up.

Your thoughts would be greatly appreciated!

"Your Rollover Options" in Notice 2009-68 does not included the notice of the 30-day period that is required by the following 1.402(f)-1 A-2(a) to allow waiver of the 30-day period.

Following is the notice of the 30-day period in the Special Tax Notice in Notice 2002-3:

"Your Right to Waive the 30–Day Notice Period. Generally, neither a direct rollover nor a payment can be made from the plan until at least 30 days after your receipt of this notice. Thus, after receiving this notice, you have at least 30 days to consider whether or not to have your withdrawal directly rolled over. If you do not wish to wait until this 30-day notice period ends before your election is processed, you may waive the notice period by making an affirmative election indicating whether or not you wish to make a direct rollover. Your withdrawal will then be processed in accordance with your election as soon as practical after it is received by the Plan Administrator."

1.402(f)-1 A-2(a):

"(a) This paragraph (a) is satisfied if the plan administrator provides a distributee with the section 402(f) notice no less than 30 days and no more than 90 days before the date of a distribution. However, if the distributee, after having received the section 402(f) notice, affirmatively elects a distribution, a plan will not fail to satisfy section 402(f) merely because the distribution is made less than 30 days after the section 402(f) notice was provided to the distributee, provided the plan administrator clearly indicates to the distributee that the distributee has a right to consider the decision of whether or not to elect a direct rollover for at least 30 days after the notice is provided. The plan administrator may use any method to inform the distributee of the relevant time period, provided that the method is reasonably designed to attract the attention of the distributee. For example, this information could be either provided in the section 402(f) notice or stated in a separate document (e.g., attached to the election form) that is provided at the same time as the notice. For purposes of satisfying the requirement in the first sentence of paragraph (a) of this Q&A-2, the plan administrator may substitute the annuity starting date, within the meaning of section 1.401(a)-20, Q&A-10, for the date of the distribution."

I am trying to figure out what effect a spin-off of some subsidiaries has on the annual ESOP allocations. As it stands, there was a parent with 5 subs. 4 of the subs were sold off and employees left with them. The subs appear to still be part of the plan because the participation agreements have not been terminated.

The issue involves the paying off of the remaining liability on the exempt loan owed to the parent corp which will be paid at the end of the plan year (12-31). Allocations to accounts are made at the end of the year for the contributions made throughout the year. When the exempt loan is paid off, all of the shares in the suspense account will be allocated. My question is to whom does it go-- does any of it go to the formerly affiliated employees? Previously, allocations were made to all affiliated employers (so if parents made contribution, it was deemed made on behalf of parent and all affiliated subs). Any clarification on these rules would be greatly appreciated.

Is there any negative effect from making a Top paid group election. If we were considering making a top paid group election to help pass testing, is there any potential negative consequences for doing so. It appears to me that the election may be made and changed pretty freely. I realize it's a very general questions, but I was wondering if anyone has any general thoughts or comments.