A sole proprietor (SP) operates two (2) separate and distinct businesses. No employees in either enterprise (never has been - never will be).

For 2008, SP has a separate Schedule C for each "business" - one with a "Net Profit" the other with a "Net Loss".

SP has an SEP. Must the 2008 "Net Profit" and "Net Loss" be further "netted" for SEP contribution purposes, or can a contribution be made only by the business that had a "Net Profit"?

Thanks!

I have been reviewing a sale of assets transaction, and I noted that the 4204 Sale of Assets language specifically limits the purchaser's withdrawal liability for the purchased operations to the liability calculated using only the last 5 years of contribution history for the operations. For most plans that use the presumptive method, adding up an employer's propotional share of UVB pools for each year in the last 20 based on the employer's proportional share for that year, this would wipe out up to 15 years of UVB pools that the seller would have had included in its withdrawal liability for a purchaser of the seller's business.

It doesn't seem like the result the statute is going for, if the goal is to ensure the stability of the plan, why exclude up to 75% of the UVB pools used in calculating the seller's WL when assessing the purchaser of those operations?

Is my reading correct? Is there any guidance confirming this reading? Thanks.

Notice 2009-27 IRS Guidance on COBRA Subsidy in Q&A format including information on "involuntary termination" for purposes of qualifying for same.

n_09_27.pdf

Here's the situation. QDRO says that awarded to ex-spouse is $xx,xxx as of "date of segregation". Does that meet the "clear award" standard of IRC § 414(p)(2)(B)?

My concern stems from shifts in the value of the employee's DC plan account one day to the next. The current market volatility makes this concern more vivid. It takes a plan administrator time to review and determine that a received order is a QDRO. Then there is a time lag for the implementation--the segregation--from the time the plan administrator sends its instruction to the recordkeeper/custodian. The speed in turning this around is relatively quite quick (a matter of 2 to 3 weeks). Given that the regulations specify a reasonable amount of time, no more than 18 months, a 2 to 3 week turnaround time seems reasonable. After all, the outside parameter mentioned by those regulations is 18 months. However, there’s a big difference in the proportion of the employee’s account that gets carved out if that was effected by recordkeeper/custodian on March 9 when the Dow Jones was around 6,400 as opposed to last Friday when it was around 7,700 hundred. That’s just a couple of weeks. My concern is the possibility of an employee pointing a finger at the plan administrator if the 'segregation' took place on March 9 when it would also have been within the reasonable turnaround time to have done effected the 'segregation' on March 27. What I do not like is the perception that could spawn out of the potential for market timing manipulation by the plan administrator, at least it might look that way from the employee’s perspective.

Any thoughts on whether the Plan Administrator could insist on an exact date (e.g., April 5, 2009) rather than "date of segregation" in the name of needing that clarity per IRC § 414(p)(2)(B)?

Employee loses health coverage due to employer moving him to part-time (reduction in hours). At first glance, I would think that the new COBRA subsidy would apply. It is a termination from or "involuntary loss" of coverage. In a sense, they are being termed from full time employment with health coverage and moved to a PT job without. But, does this really meet the definition of "involuntary terminition of employment"? After reviewing the DOL website, I can find no support for this interpretation. Has anybody seen anything related to this?

Thanks!

We have just taken over a plan which received an IRS Notice of Overpayment for the 2008 Form 945. In review of the notice, it has come to light that the incorrect name of the entity was used on the SS-4 filed to receive a TIN. The correct EIN, Plan Name, Employer Name have been used on all other form (5500 etc.) Does anyone know the process to fix? Will a letter to the IRS indicating the name error suffice? Is there a form to use? Any help will be appreciated. Thanks!

What happens to the loan balance, when a participant dies? Is the loan taxable to the Estate or beneficiaries or neither?

Employee involuntarily terminates March 1. Company pays 100% of coverage for first three months of COBRA period (which runs concurrently with this three month period). How long is the employee entitled to receive the COBRA subsidy, for six months or for the full nine?

Is there a publicly available online source for 2008 Plan AFTAPs ? If so please provide the link.

This restatement period, I'm using a volume submitter with an adoption agreement instead of a prototype.

I can't find a code for this. It seems odd to me. Is there a code for Volume submitters and I just can't see it?

Are VS and prototype both 3E?

Two partners in a rate group plan. Each have Net Schedule C (after employee cost and 1/2 se tax) of 100,000.

The employees are receiving only 5% of pay profit sharing from the partnership.

Can the partners contribute and deduct more than 20% (can they borrow from EE amount under 25%) or are they stuck with 20%?

In other words, total EE pay is 100,000 but partnership is only contributing 5,000 for the employees.

Can the partners plit the other $20,000 (up to the 25% of pay limit for the EES) or are they stuck with 20% and rest of deduction is lost?

Thanks!!

Have had numerous client calls but now one who is serious, has a 401(k) plan with self direction. Participant (shareholder attorney) who wants to investment in gold coins. Would presumably obtain, put is a safe deposit box. My first thought was you cannot do this but seems upon a quick reading appears you can invest 401(k) funds in gold coins. I find no guidance or private letter rulings on the subject. Does anyone have any thoughts other than run. Thanks.

I slugging my way through my first Annual Funding Notice for a PBGC plan under 100 lives. It replaces the SAR report.

I'm using the PBGC model notice and following the instructions at the bottom of the model notice which refers me to sections under ERISA 303 for definitions of each component (e.g., plan liabilities). Reading those ERISA sections they do not refer or allow any use of prior year data for this FTAP purpose which is no surprise as even the IRS relief was not in the Code itself.

Question: Is there any ERISA/DOL relief similar to IRS relief to to use prior year data for small EOY plan valuations ? If not, I end up with a different PBGC FTAP for the same year than my funding/distribution FTAP under the IRS rules/relief.

2 different FTAPS results for the same year ???

Hi, I'm new to this forum and am trying to get clarification on the EXACT calculation of the funding ratio that triggers a Lump Sum Payout restriction in a single employer Defined Benefit Plan (with the Plan on a calander year basis). My research tells me (in the 2006 PPA) that if funding ratios are below 60%, no Lump Sum can be paid, and if the funding ratio is between 60 & 80% only 50% of the plan benefits can be paid out in a lump sum. What is not clear to me is what defines "funding ratio" for THIS purpose, and what is the valuation date for the assets & liabilities in THIS calculation.

When I look at the actuarial schedule B that accompanies the IRS 5500 filing, it appears that the funding ratio is at the BEGINNING of the plan year (for what its worth, company 10-k filings also seem to use BEGINNING of Plan year asset & liability valuation dates in the section on pension funding ratios).

Example: The IRS 5500 for "Plan Year" 2007 was filed in Sept. 2008. In this filing, the asset & liability valuation dates for the funding ratio calculation was the BEGINNING of the Plan year (1/01/07). Similarly, for plan year 2008 (with the yet to be completed 5500 filing later in 2009), I'm assuming that 1/01/08 (the BEGINNING of the 2008 Plan Year) will be the valuation date for the funding ratio calculation. If these BEGINNING of year dates are used (in the funding ratio calculation) for the purpose of Lump Sum restrictions, since the stock market didn't collapse until the 3-rd quarter of 2008, it would appear that 1/09/09 would be the FIRST time that the big stock market drop would come into play, and THIS corresponds to the Plan Year 2009 filing completed in 3-rd quarter 2010.

So here is my conumdrum .... Why am I seeing articles that say these Lump Sum restrictions are happening NOW (for 2009 payouts) if the relavent funding ratio uses a BEGINNING of year valuation date 1/01/08 (not 1/01/09) for the 2008 Plan Year and the big stock market drop would not yet be reflected?

Bottom line ..... does the big drop in the stock market in starting in the 3-rd quarter of 2008 FIRST impact funding ratios associated with 2009 or 2010 Lump Sum payouts?

Thanks for any clarification you can provide

Does the Supreme Court's decision in Kennedy v. Dupont Savings & Investment Plan apply to church pension benefit plans as well as ERISA plans?

A PBGC covered plan (about 10 participants) terminated at the beginning of 2008 and had all assets distributed in December, 2008. Is the annual funding notice required to be prepared and distributed to participants (there are 0 participants as of 12/31/2008)? I couldn't find this answer in the instructions.

We have a client who makes a SH 3% nonelective contribution after the end of the plan year and currently owes their contribution for 2008 (they filed for an extension). This employer may either dissolve or declare bankruptcy in 2009 and they've asked if such an event would exempt them from the obligation they have to fund the 2008 SH contribution. They did not terminate the plan in 2008.

My feeling is that they are still obligated to make the 2008 contribution even in their dire situation, but wondered if someone else has a different answer to that. Thanks.

Employer currently has 25 employees 3 are HCE's.

Employer Contributions consist of a 5% SH PS, 100% up to 5% match (stated), and a 5%

fixed PS (not discretionary).

They are in the process of hiring 18 people from a rival company. (plan has 2 month wait for elig. only)

The problem is that they don't want to exclude these employees from the plan they just don't want to give them all of the benefits which is probably harder to do. They only want to give them the 5% SH PS.

I know that we might not be able to amend the plan currently because it is a SH plan, but what options do we have?

We were told we can amend the plan for next yr to exclude these employees from the stated match and fixed PS but we don't think it will pass coverage.

We were looking to create a QSLOB for these employees but I beleive that there is a 50 employee min to create a qslob.

Any suggestions will help!

Employer currently has 25 employees 3 are HCE's.

Employer Contributions consist of a 5% SH PS, 100% up to 5% match (stated), and a 5%

fixed PS (not discretionary).

They are in the process of hiring 18 people from a rival company. (plan has 2 month wait for elig. only)

The problem is that they don't want to exclude these employees from the plan they just don't want to give them all of the benefits which is probably harder to do. They only want to give them the 5% SH PS.

I know that we might not be able to amend the plan currently because it is a SH plan, but what options do we have?

We were told we can amend the plan for next yr to exclude these employees from the stated match and fixed PS but we don't think it will pass coverage.

We were looking to create a QSLOB for these employees but I beleive that there is a 50 employee min to create a qslob.

Any suggestions will help!

We are freezing benefit accruals in several cash balance plans. Notices and amendments will be timely, but the question regards the language for the amendment. We have used the following:

"Notwithstanding anything herein to the contrary and unless further amended, no benefits shall accrue under the Plan after _________."

Should we elaborate and provide that for purposes of benefit accrual, the counting of Hours of Service shall cease? What has been your experience with the wording of the amendment?

Thanks.