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?

can the employer use mistake of fact to withdrawal an unallocated contribution they made wrongfully thinking the plan would be top heavy?

I had always thought that Church plans were exempt from COBRA. Now I am finding out that they may elect to offer COBRA.

Once a Church offers COBRA, can they ever go back and claim that they are exempt?

Would they be subject to the same penalties for noncompliance if they choose to offer COBRA, but do it improperly?

I have gotten an emergency call from the Executive Director of our Temple on this matter, and I am afraid they may have gotten themselves into some sort of trouble.

Thanks.

A closely held corporation promises to pay an executive NQDC. Can the shareholders of the corporation personally guarantee the corporation's obligation to pay, or does this result in economic benefit/constructive receipt? The obligation to pay is not funded by the corporation in any way, nor does the executive have a security interest in any of the corporation's assets. Still, it seems to me that the guaranty is a form of security that would result in constructive receipt.

My client worked for co' for 8 yrs. Co. funded pension plan under ERISA.

Co has let go about 15 individuals this yr alone (join the club, right)

other ee who have been let go and were vested were given the proper forms

for obtaining their pension funds, either to roll-over, or take a one-time payment.

The administrator told client that her share was "frozen" due to a new law

passed by the Senate indicating something to the effect that since there assets

have decreased by more than 80% they can not release her share.???

I didn't think there was any provision that would allow the seperated ee to

not have access to their funds,

i just sent a letter to the plan administrator, am I going to havce to file claim in fed. court?

thanks,

Joe Dadich, Esq, CPA

seepajd@hotmail.com

Southfield, MI 48034

Plan sponsor recieved laon paperwork from employee, including spousal consent that was notorized. For whatever reason the spousal signature was questioned, and a quick check showed that it had been forged. The notary is a fellow employee of the person who applied for the loan.

So the PA has notorized paperwork that they believe to be bogus. First advice, get an attorney. second advice, don't release the check.

But what experience, if any, do other members of the forum have? Plain old opinions are welcome as well.

I have always tried to have an owner or officer sign plan documents and amendments.

I have a Plan where the controller is a trustee, but not an owner or Pres., VP., Secretary or treasurer.

Does a trustee have the authority to sign the amendments? In this case, the 415 amendment?

Fact set: Owner of company signed TEFRA agreement that stated he would start taking his balance out in 15 annual installments starting 2 years after he ended his employment. Our company bought his company and his payments began in 2001 as per the agreement. He had 77th B-day 3 months later.

My opinion is that his TEFRA payment must be made in 2009 or else he violates the agreement and faces penalty.

Am I wrong? If so please point me to the specific section of the regs.

IRA owner had already attained RBD and was taking RMDs. He died in 2008 prior to taking RMD for this year. Does the RMD have to be made for 2008. If so, to whom? The designated beneficiary? The estate?

If the designated beneficiary is the spouse, does that change the answer?

Thanks.

I have a 1/1/08 funding val and wish to amend the benefit formula to increase benefits (1 person plan) and reflect the increase in my FT and TNC for 2008.

According to 412(d)((2) of the code, which appears to have replaced the old 412©(8) of the code, you can amend the plan after the plan year, but within 2.5 months after the end of the plan year, with an effective date on the valuation date, and incorporate the amendment into the 2008 funding numbers.

If you look at the reg. 1.430(d)(1)-(d) - it gives authority to amend the plan with an effective date during the plan year, but it must have been adoped on or before the val date, in order to consider the admendment in your 2008 funding results.

What was left out, which is what most of us do with our small DB plans, is what to do with an amendment that is adopted prior to the end of the plan year, and effective on the val date. A strict reading of the code and reg indicates that this amendment CANNOT be reflected in the 2008 val.

This is odd. If I am considering an amendment now, it appears that I should actually WAIT until after 12/31/08 and have the client sign the amendment by 3/15/09 in order to be in compliance with 412d2.

Has anyone dealt with this issue yet?

Comments would be appreciated.

Thank you.