In determining net periodic pension cost as of the measurement date: 1/1/2010

What expected distribution is used - actual distribution for the period 1/1/2009 - 12/31/2009 or expected distribution for 2010 which is usually produced by the valuation run

Secondly is the expected contribution(weighted) measured between 1/1/2010 - 12/31/2010

thanks

If a plan (for a chiropractor) was established in 2005 and has a nra of 55, didn't the nra need to be amended to at least 62?

Hello:

Need some help please.

Client has a minimum loan amount in its loan policy of $3000. Although I find nothing in the way of a regulatory/statutory guidance for a "maximum" minimum loan threshold, I have actually never seen a plan impose minimum in excess of $1000.

I am concerned this client is violating a rule, or in the very least an auditor would find that this discriminates in favor of HCEs, but would like to get others' thoughts on how to support my concern, if others believe it is founded.

andmik

I have a participant who elected to participate in the Dependent Care Account ($5,000) for the 1/1/09 - 12/31/09 plan year; however upon review of the census data the client provided, no monies were withheld from this individual and he has been reimbursed the entire elected amount. What are their options...1099? Thanks.

I've seen some discussion of this type of thing in an ADP testing context, but not in the basic 70% testing. I tried a search and didn't find it.

5 HC's who have satisfied age and service, and are participants in the plan. One is the owners wife. The wife for 2009 received zero compensation and had zero hours, but has not "terminated" employment.

A strict interpretation of 410(b) would probably lead me to include her, but she clearly isn't "benefitting." Under this thoery, only 80% of HC are benefitting, so only have to cover 56% of the NHC.

This seems very wrong to me, and allows for some rather gross manipulation in family situations. I think a much more reasonable result is to exclude her from the testing altogether, have 100% coverage for HC, and therefore require 70% of the NHC.

Last I knew, there was no official guidance on this. Has that changed? Opinions? Thanks!

Safe harbor DB plan with 6/30/09 year end fails ratio/percentage coverage test and is intended to be aggregated with a calendar PS/K plan. Together they would pass the Average Benefits Test. The Plan Sponsor has a calendar fiscal year end and files an extension.

As I understand it, the DB plan 7/1/2008-6/30/2009 would be aggregated with PS/K plan year calendar 2009.

By when must profit sharing allocations, which are necessary to pass the Average Benefits Test, be contributed?

If the answer is other than 4/15/10, can someone offer a cite?

Q 40 of the DOL's FAQ's about the 2009 Form 5500 Schedule C indicates that a plan administrator need NOT report a service provider as "failing to provide information necessary to complete the Schedule C" (line 4 of Sch C), if the plan administrator receives a statement from the service provider indicating that a good faith effort was made to make timely changes and despite such efforts, the service provider was unable to complete the changes for the 2009 plan year.

My question is - how many service providers are planning on providing such a statement to their clients? If you've made changes to your system(s) that you feel cover most or all of the required Schedule C reporting, are you also planning on providing such a statement? Thanks in advance!!

A participant terminated employment, he is NOT yet age 59 1/2, and has NOT met the 5 year requirement on his Roth Contributions - he is going to have a Non-Qualified Roth distribution.

This participant would like to roll his Roth 401(k) to a Roth IRA.

1) Would his earnings still be taxed because it is a non-qualified distribution?

2) Is the plan be responsible for 20% mandatory withholding on those earnings?

Any guidance you can provide would be greatly appreciated!

Should a plan report a qualified plan distributed annuity (QPDA) as a non-taxable distribution in Box 8 of 1099-R, leaving box 1 and 2a blank?

In the following articles, Bob Toth indicates that 1099-R reporting is required because the distribution of a QPDA is a in-kind lump-sum distribution:

http://www.businessofbenefits.com/uploads/...m%20401k(1).pdf

http://www.bakerdstreamingvid.com/blogdocs...t_Annuities.pdf

But, isn't the distribution of a QPDA exempt from reporting since it is reasonable to believe the QPDA distribution is not includable in gross income under IRC § 6047(d)(1) and IRC § 3405(e)(1)(B)(ii)?

I was discussing an amortization extension with a fairly high up IRS representative and they reminded me that the Trustees are not allowed to increase benefits to ANY plan during the extension period.

In other words, if during the period of the extension the union negotiates a higher contribution rate for the defined contribution plan, they have violated the terms of the extension. I knew they couldn't increase benefits in the db plan, but I didn't know it applied to ANY plan.

Just thought I would throw this out there for the group’s consideration.

I am working with a Profit Sharing Plan that the IRS is auditing for 2007. This plan, which was administered by the ADA (American Dental Association), was terminated and paid out in 2008. During the audit the agent found where a participant was not paid the correct vesting percentage due to the plan termination. The participant has elected to take a taxable distribution of the amount due her.

The plan sponsor closed his corporation back in 2003, and the Federal and State Tax ID's were also closed. The former president of the company is writing distribution checks for this participant from his personal bank account.

Will I have to apply for new Federal and State EIN's in order to process the taxes withheld on this distribution? Or is there another way to deposit and report these taxes? The ADA is not involved in making this distribution.

Thanks.

Does anyone have any recent experience with what kind of issues found during an examination that the IRS will consider a true "qualification issue"? Would a failure to make RMDs where the participant was notified of the need to do so but did not take action to receive a distribution constitute a serious qualification issue? The plan document provides that RMDs will be made and they have been made except for these few instances where the participant took no action. Apparently the plan did not proactively and unilaterally process RMDs. Even if the missed distributions are low, I am not sure whether this can/will be used to extract large sanctions from the plan sponsor. Any thoughts?

As long as a participant's aggregate 401(k) election does not "take into account" more than $245,000 in compensation, does it matter if a participant first elects to participate in a 401(k) plan at some point in the year after which he has already earned $245,000? In this case, the deferrals would technically be made out of compensation beyond the first $245,000. Perhaps it's all fungible, however.

It is clear from the 2008 FOrm 5500 instructions that a corporate extension (assuming all conditions are met) can automatically extend the 5500 due date until the due date of the corporate tax return.

There is a principal at my office (he is a CPA) who is not satisfied that the Form 5500 instructions are sufficient proof to support the availablility of using a corporate extension as an automatic extension.

He wants to know of the "law" supporting such an option. Does anyone know of a code section or regulation that provides for the use of a corporate extension as an automatic extension?

Thanks.

In 2520.104a-5 (a)(2) it states the due date as 7 months after plan year, unless extended. See "when to file" instructions of appropriate annual Return/Report Form. So that may be the extent of info in the law and regulations.

In the situation where a participant takes a distribution and tax withholding is sent to the IRS, if he is rehired and wants to repay his distribution so he can have his forfeiture restored, does he also have to repay the amount that was sent to the IRS as withholding or does he just have to pay back the net amount? Thanks!

We have a plan that contains a timing distribution provision which according to the sponsor was never intended. In a nutshell, the plan delays actual distribution for 1 year after a distribution event. An executive is now thinking about terminating and was shocked to see that they would have to wait a full year for their money.

I don't believe there is anything that can be done to correct this problem. This doesn't appear to qualify for the IRS correction "programs".

Is there anything we can do to fix this? I assume the IRS wouldn't be very receptive to a self correction through a retroactive amendment. Another problem is that there is little to no evidence that would support the sponsor's position that they never wanted a 1 year delay.

We will be amending the plan to remove the 1 year delay on the distribution of future contributions (2011 and beyond).

I have an LLC where the 2 owners take a draw. They have 2 other employees.

All 4 of these people are covered by a union with collective bargained benefits.

The owners are only in the union to get health insurance ( but they are still part of the small union pension plan )

Is there any way they can exclude the common law employees under the union exclusion rule, but include themselves only in a SEP plan for the LLC ?

THank you.

I recently came across a situation where the plan documents have for the plan's nearly 20 years of existence provided for profit sharing contributions, but not included a 401k feature, and called for trustee direction of investment of pooled accounts, but allowed for participant direction of investment. (The investment adviser when asked over the years would simply assure the ER that it could do these things because it is the ER's plan, so the ER could do what it wants--never mentioning the need to put those design choices into the plan documents.) Also, ADP testing has only been sporadically performed for the plan.

I have been hired to prepare an EGTRRA restatement, and will add provisions to reflect the practice going forward. Of course, my concern at this point is the past.

The different rates of returns that different employees have had since operationally being permitted to direct their investments presents a problem. Since the plan document has not allowed that, an employee whose rate of return has been lower than what the plan average has been could make a claim for more benefits than are in his account. And of course, any employee could make a claim against the trustees for investment underperformance if that is the case (I do not know).

Has anyone approached the VCP or CAP units of the IRS with a similar situation and know what might be their inclination for remedying such a situation?

Any experience sharing is greatly appreciated.

Can we add an option form of benefit to a DB plan which would be a lump sum distribution ONLY if you agree to rollover as elgible rollover distribution? We want to prevent people from losing their retirement (spending it etc) - but want them to be able to pick another plan if they want to upon termination etc. Any thoughts? I can't find anything that prevents this (or allows it). I don't see it violating the nondiscrimination rules but may be missing something... any thoughts?

So, I'm taking over a CB that has been combined with a 401(k) Profit Sharing Plan for 401(a)(4) testing.

The 401(k) PSP document was drafted using an integrated allocation rather than a cross tested allocation. The amount of the PS contribution is discretionary.

If what should have happened is that the NHCEs needed to get a 5.5% PS contribution and the HCEs get 0% PS contribution, would it be possible to say that the employer decided not to make a profit sharing contribution, thus causing a testing failure, and then make an 11g amendment giving the NHCEs a 5.5% allocation?

Then we would amend the 401(k) to provide the correct allocation going forward.

Is that pushing it too far?

Thanks!