It's been a while, but I'm back doing 1099Rs again. Does anyone know what should be put in Box 12 and Box 15? The IRS instructions say that these "boxes are provided for your convenience only and need nat be completed for the IRS." I was under the assumption that a distribution that is taxable at the state and local level should be in box 12 and 15. Thank you.

Question: For a bare-bones severance plan that provides severance that (1) qualifies for the separation pay plan exception and (2) includes a provision requiring that all amounts be paid out no later than March 15, 2009, would there be any problem in the plan giving participants a choice between (1) receiving a lump sum benefit in early 2009 (prior to March 15th) or (2) receiving 10 weeks of continued pay in weekly installments.

I suppose there might be some constructive receipt issues with providing that sort of choice but it is not clear to me that 409A would govern if the severance amounts would be exempt under either or both the separation pay and short term deferral rules.

This was from the Winter 2008 Employee Plan News (subscription is free from the IRS)

I know this issue has been raised before, here is the official word from the IRS, common Plan Language errors:

Defined contribution plans still include correction methods for excess annual additions in §1.415-6(b)(6) of the 1981 regulations. However, the final regulations issued in 2007 deleted the permitted correction methods in the 1981 regulations. Plans that include a correction method in the event a participant would exceed the annual additions should be amended to delete the language effective for limitation years beginning on or after July 1, 2007.

......

Thats because you correct the problem using EPCRS

The 2009 covered comp can be found here:

http://www.ifebp.org/Resources/News/Regula...009-02.htm?PF=1

though the rounded values have an error

1969-1972 values should be $105,000, and 1973 and later values at $106,800.

a while back I tried tinkering with a spreadsheet to calculate the numbers and this one actually seems to work - at least it produced the same numbers as were just released. you simply input the new taxable wage base every year.

now if someone can explain how I managed to throw the thing together...

Hey, Merry Christmas all! God bless your holidays.

A co-worker and I were discussing how to help a client in getting a delinquent 5500 filed. It is the final filing due for a plan that was merged after acquisition and apperantly everyone forgot about that final 5500 (oops!). I like the DFVCP approach because it is a fixed fee but my co-worker thought that doing a reasonable cause letter might work. I haven't done one of those in a long time and was wondering what type of experience people are having if they take that route. Is all forgiven and any penalties waived?

Perhaps a What-If analysis would help with this, but the situation that presents itself:

For retirement plans, usually a person must work one year of 1,000 hours before that person can enter into the retirement plan as a participant. However, plans usually have set dates of entry, usually twice during the year. Therefore, a person enters on one of those entry dates subsequent to his attainment of 1,000 hours worked during a one year period. So, for a plan that functions according to a calendar year (January 1st to December 31st), the dual entry dates amount to July 1st and January 1st (the day after the end of the six month of the year and the day after the twelfth month of the year).

So, a person hired on August 1, 2007 who works 1,000 hours would enter the plan on January 1, 2009 (since August 1, 2008 marks the one year anniversary of this person's date of hire, and provided that the person worked enough hours to attain entry into the plan between August 1, 2007 and August 1, 2008, January 1st would serve as the first entry date possible).

Some plans get set up sufficiently generous to allow for a slight retroactive admission (e.g., if a person hired on August 1st, 2007 works 1,000 hours from then to August 1, 2008, that person retroactively enters the plan on July 1st, 2008). I hope to receive responses with suggestions on how to set a file in Excel to automatically gauge both date of entry for plans with normal entry and slightly retroactive entry. What formulas or macros in Excel can anyone suggest to accomplish this?

____________________________________________________________________________

The person who created this file and asked me to work on it created this set of guide information.

Date of Hire plus one year nearest date of either July 1 or January 1

For example DOH Aug 1, 2007 Date of Enty will be January 1 2008*

*Though the person who gave me this file included this hypothetical case in his description, I feel that he may have erred here, since it seems to me that the person would enter the plan on January 1, 2009.

For example DOH June 1, 2007 Date of Entry will be July 1 2008

So dealing with a trust and both named successor trustees have declined trusteeship. How do I find a corporate trustee if the trust has complications? Trust was written under California law.

-CM

The Loan Policy indicates loans should be written with a rate of Prime +1%. A loan was accidentally written at a rate of Prime. This error was discovered 6 months later. What is the corrective procedure? I think the corrective action would be to deposit the missing peice of the payments (the difference in the payments to date if the loan rate was correct and the payments to date at the incorrect loan rate). If that is the case, who should make up these payments, the employee or employer or trustee?

Is anyone aware of formal guidance on an employer's ability to suspend non-elective (and non-discretionary) employer contributions mid year? Client has a July 1 plan year profit sharing plan (no deferrals; no matching contributions) that provides that the employer will make contributions based on a percentage of compensation for the plan year if the employee has been credited with at least 1,000 HOS during the plan year and is an active participant on the last day of the plan year. Even though the contribution is plan year basis and is based on plan year compensation, I think that we can suspend currently since no participant has reached the last day of the year allocation requirement. If the plan did not have this last day of the year requirement, however, I think we'd be out of luck. Some that I've consulting seem to think there may be a Rev. Proc. on this issue (maybe with regard to money purchase pension plans), but I cannot seem to locate.

AFTAP<60% for a plan that distributes consentual lump sums upon employment termination. Reg. says "if participant elects lump sum, the Plan must permit the participant to elect another form of payment or to defer payment to a later date blah blah blah." Let's say the participant is at NRA. Then payment under the Plan terms must start so deferral is not an option.

Suppose (if the AFTAP < 60% as of the annuity start date) the plan offered a distribution option that provided so long as the AFTAP was <80%, the Plan would distribute the life only portion. At the time the AFTAP >=80%, the Plan would then distribute the then present value of the remaining payments. Thus, there is a single annuity start date and the participant may elect a lump sum payment NOW though it would be deferred to an unknown date

Assuming this option seems feasible, it is presumed that the installment distributions would be paid in cash with voluntary FIT withholding applying and would not be eligible to rollover to an IRA; but the lump sum value of remaining payments would be eligibile for rollover and mandatory 20% FIT withholding would apply if taken in cash.

Thoughts on the above???

Say we have a sole proprietorship, where the husband owns the company and the wife is an employee (or it can be a non wife employee).

Point being, we have owner and one employee.

The owner files a Schedule C.

The pension costs for the employee are a Schedule C deduction and the net earned income flows to the owner's Form 1040 where the earned income is allocated between:

notional pension compensation

pension deduction

50% SE tax deduction.

Does anyone have a standard technique of dividing the employee pension cost and the owner pension cost?

Assuming PPA funding calculation.

Do people use the increase in PVAB as a ratio? Or the PVAB at the end of the year as a ratio?

Or perhaps the PVAB at beginning of year less assets (where assets are allocated by ratio of PVAB) and then add increase in PVAB and use the ratio of that sum?

Thanks.

I don't believe the recent technical corrections bill allows for a one participant DB to forgo accrued benefits on termination to avoid lump sum restrictions.

Suppose the 2009 AFTAP is 77% as of 1/1/2009. Could they subsequently fund an extra amount to get them over 80% and have the restrictions lifted for the 2009 year?

My reading of the technical corrections bill (WRERA) is that we no longer have to get plans amended by 12/31/08 for PFEA. We now have until 12/31/09. Does anyone else get the same reading?

I have a client that sponsors a profit sharing plan, a safe harbor 401k plan and an offset defined benefit plan.

The client has, I belileve, created sub accounts for each participant. One for the profit sharing plan account and one for the 401k plan account.

So determining the 401k account balance and profit sharing balance is not a problem.

The 401k plan is a 3% non elective contribution safe harbor plan.

So that means the participants' 401k accounts consist of 4012k deferrals and 401k non elective contributions.

Which means that some of the 401k account is employer provided.

Any suggetions as to a suggested way to determine how much is the employer portion and how much is the employee portion of the 401k account?

Of course if we created 3 sub accounts for each participant then that would work.

Or our firm can do record keeping of the 401k account to allocate the amount that is employer and the amount that is employee.

The employer portion is relevant in order to compute the accrued benefit under the defined benefit offset plan.

Curious to hear comments, techniques.

Thanks.

I'm handling a plan that has already terminated and has payed out the assets to the participants as required. There ended up being excess assets and the company is going to take them back. I understand there is a 20% or 50% excise tax penalty under 4980 but the company is a tax-exempt org so the excise tax does not apply. It seems like they don't have to file a 5330 since the won't be paying the tax... is that correct? Are there any other things the company needs to do besides the possible 5330?

Thanks!

I recall a very old (circa late 1960s) actuarial exam study note [if you got a copy, please post] that discussed the components of interest and compensation. Interest consisted of pure interest (2%), risk (1/2%), and inflation. Compensation consisted of seniority (1/2%), merit (1%), and about 80% of the inflation. Thus, we would use 5% interest and 3 1/2 % salary scale; 8% interest and 6% salary scale.

It is clear that this classical model is as old and tired as my memory. Likely the risk component may comprise more of the interest and pure interest may be higher. Likewise, most of compensation is related to inflation. Thus, 8%/3% may be appropriate.

I drag you guys into this because PPA as usual poses a dilemma. What do you assume for compensation improvement when determining TNC versus what you use for determining the cushion amount. I could envision say for 2009, 0% for TNC, and 3% for determining the cushion amount.

Any thoughts?

A business owner has a Keogh plan that is over 30 years old. 1 person plan, it has always been a 1 person plan. The form 5500 has been filed for every year.

They cannot find their plan document, nothing. They have been with the same financial institution for 30+ years and that institution cannot find a document.

I have read through 2008-50.

I have never done a submission for a plan with zero documents. All of my submissions to date have been for plan document failures due to missing amendments.

Any thoughts? $750 fee? $375 fee?

The fees for not voluntarily indentifying the missed amendments are huge, do you think they apply?

Gust - $3,000

UCA/OBRA 93 - $3,500

TRA 86 - $4,000

T/D/R - $4,500

ERISA - $5,000

This is my first time using this message board, please be gentle.

Thank you

Doctor client brought up an interesting question. Partnership (father and son docs) has had plain vanilla ps plan for years. He has a former employee who has requested distribution by the end of this year (not gonna happen). But he asked if she were to get her money now, what date would we use for value of her account. His plan doc specifies that the "Plan Valuation Date shall be the last day of the Plan Year (Dec 31) and each other date designated by the Plan Administrator which is selected in a uniform and nondiscriminatory manner."

Let's assume value of plan assets as of 12/31/2007 was $1.5 million. Doc's portion was $1.2 million. Current value of plan assets is $850,000. Let's say Doc retired 10/31/08 and wants his money now. Business and plan are continuing. Doc wants his $1.2 million, but he can't have it. If plan is valued as of 10/31 there still is probably not enough money to pay his $1.2 mil. If plan is valued as of today, is that "a uniform and nondiscriminatory manner"?

Blast from the past... This is regarding traditional After Tax (not ROTH).

I have a Ptp contributing $16,000 as After-tax. Does after tax fall under 415 limits or 402g limits? I believe it's 415 but I can't find anything to back me up. Can I get a second?

Thanks!

As I understand it now, the Shortfall Base established is the difference between the assets and the "Transitional" Funding Target not the total Funding Target. Is this retroactive to 1/1/08? In other words, do I now have to redo all my underfunded 2008 valuations?