NQDCP provides that shareholders can, at any time, cash in their shares. The act of cashing in of their shares gives them the right to an in-service deferred compensation "Bonus" in the same year.

The shareholder can elect not to take the Bonus, in exchange for the right to a Deferred Compensation Payment only upon actual termination from service.

The Deferred Compensation Payment is calculated based on an average of compensation formula. The Bonus is computed using the same formula reduced by 25%.

Is the Deferred Compensation Payment subject to a SROF because it is materially greater than the Bonus? Or is this an impermissible haircut because the shareholder can elect to receive a deferred benefit subject to a penalty?

I think it is subject to a SROF and not a haircut because its not entirely discretionary (i.e., only in the year of retirement of shares) and it is not an insignificant cut (more than 10%).

This design is intended to pass muster under the 2009 regs.

I'm newly retired (age 62) and will be living on existing savings from now on. I will need to begin withdrawing from investments for living expenses and I need to know if it makes sense to sell some additional stock to continue funding an existing HSA. I would initially be selling out of a taxable S&P 500 index fund and paying capital gains, leaving the IRA money for later. I expect to have to pull about $50k out per year and with other income would have a gross income of about $70k. No mortgage or other source of significant deductions, if that matters. Any advice will be appreciated.

Does the excise tax on late refunds applicable if the plan is also making a 1-to-1 QNEC to satisfy the 2006 ADP test?

If so, on what year's 5330 do I report it? '06 or '08?

Thanks in advance.

If a participant owns company stock inside the plan greater than 5% of the total stock out there, is that participant considered to be a 5% owner? He does not own more than 5% of the stock outside the plan.

A carrier has found a willing buyer for a block of COLI business. What basis is used to calculate the carrier's gain on sale of the block?

Has anyone taken a look at the new 5307 form? We're starting to get our process going because we've start EGTRRA restatement. In particular, if a plan is filling in 5307 and is an ADP/ACP safe harbor plan, there's no spot anywhere on the form to mention it. For example, page 2 asks if the plan has 401(m) match. If the plan had no 401(m) match but had a safe harbor match would we check no here?

Thanks for the help.

Trying to figure out if my client is exempt from the $1,000 Form 5310 user fee.

Small DB plan terminated 7/31/08. Current participants are doctor, spouse. Only NHCE was paid a lump sum in May 2008.

Form 5310 will be filed Aug 2008.

Rule says you must have an NHCE "Participating" and that the determination is made at the time of the 5310 request.

If I'm out of luck above, what if we argue that the NHCE is due a few more dollars of interest because the lump sum was figured based on 5/15/08 payment and actual payment was made at the end of May.

I provide actuarial services to a TPA and I was just sent the 1/1/08 data. The situation is: DB plan with an owner past NRA and receiving annual actuarial increases on his AB. His 415 benefit limit is based on his high 3 average salary of $125,000. The owner died during 2007. The plan death benefit is the PVVAB. As of the date of death the PVVAB is restricted to the 415 lump sum limit (this restriction just happened btw). The spouse has not taken the distribution yet. The spouse was entitled to $1,290,000 at the date of death. At this point in time if I were to value the deceased participants PVVAB the amount would be $1,250,000 ($40,000 lower) becuase he has aged a year and the 415 maximum lump sum is based on the comp limit. Can she now take out the $1,290,000 she was entitled to at the date of death? I guess that would be looking at it like at the date of death she became a participant in the plan with an account balance rather than an annuity. Not sure if that's acceptable?

The plan is now being terminated. At 1/1/07 the assets and liabilities were very close. During 2007 there was a large increase in the assets and now there are significant excess assets. I can't see how the spouse could share in that given the death benefit is the 415 lump sum but if anyone has any ideas I would like to hear them.

If a small plan has a 12/31 valuation date for calendar year 2007, can it switch to a 1/1 val date for 2008?

It appears to me that PPA 06 Sec. 302(d)(1) takes away the automatic approval to a BOY val date that was in Rev. Proc. 2000-40. But looking onward in PPA 06, I'm not sure this isn't allowed in this case.

Employer discovered they had missed depositing SIMPLE IRA deferrals. Some of the employees are no longer employed, and some may have cashed out their SIMPLE IRA. How would the employer handle depositing the late deferrals (plus earnings, etc.) if the IRAs have been closed.

What happens if the employee has moved out of the country and can not be located?

Thanks for the input.

Plan Year = Limitation Year = Calendar Year.

Benefit formula = 100% x hi-3 amc

Deferred retiree, age 69 at 12/31/07

Hi-3 amc = 38113

AB at 12/31/07 = 20334 = actuarially increased 415 $ limit = Grandfathered Accrued Benefit

At 12/31/08 the 415 hi-3 = 18750

Is he entitled to an actuarial increase on the GFAB, or is he capped at 20334?

Possible answers:

1. Of course he is. The AI is part of the AB and protected by 411.

2. Of course not. The 415 limit, in this case now 18750, trumps all.

Thank you for any and all thoughts.

A client (about a hundred employees) wants to allow participants to defer into the plan earlier. This affects no HCEs and does not affect any testing (the employer contributions do not need 401(a)(4) testing due to the design). The plan is not even close to top heavy.

However, the plan is a calendar year safe harbor plan. Currently the eligibility for deferrals and matching are the same (one year, age 21, semi-annual entry). Starting September 1, they want to allow recent hires to defer after 6 months, age 21 with monthly entry dates for deferrals with no changes to the eligibility requirements for safe harbor contributions. They currently foresee no HCEs ever being in this early group, so the "Otherwise Excludable" rule makes that group okay (as far as I can tell).

I know the IRS received comments regarding the types of changes (amendments) that should be alright to do mid-year for a safe harbor plan.

Any problems with doing the above? Any grapevine comments from the IRS about allowable mid-year SH plan amendments?

I am desperately looking for a needle in a haystack.

In March 2006 IRS announced a relief initiative whereby it would be allowing employers who had not amended their SIMPLEs to conform to EGTRRA to do so by the end of 2006. Further, the IRS said that it would be sending letters to employers who it had identified as having SIMPLEs through a W-2 match to remind them to amend their SIMPLEs. The IRS published the sample letters on its website: Letter 4083 and Letter 4084. Unfortunately, neither sample letter is currently available on the IRS website (at least that I could find). If you have copies of these letters and can make them available to me, I would be most grateful.

Can't find this directly addressed in a prior post (maybe because it's obvious) . . .

Calendar year corp. maintains a DC plan with a calendar year plan/limitation year. Plan is terminated in mid-year. In determining the maximum permissible deduction for the year of the plan's termination, does IRC Section 404(l) require pro-rating compensation for a short plan/limitation year due to plan termination? (I would think not, since the deduction limitation is based on the compensation paid during the sponsor's taxable year, rather than the plan year or limitation year.)

Suppose we currently have a DB plan with Doc and two helpers. The entity is a C-Corp. The Plan's current NRA is 52 and Doc is 45 with 13 YoS. Helpers are age 35 with 2 YoS. Suppose we change NRA to 65 but allow for unreduced early retirement at 52/20 YoS. Now, suppose it's for real that the Doc will call it quits at 52. So, the expectations are the Doc will terminate at 52 and so goes the corporation. The helpers will not have 20 YoS at 52, so their benefit at 52 will be the accrued benefit payable at 65. That's how we expect life to play out.

Question: Can we fund the plan under the assumption that it ends when the Doc turns 52? That is, can we assume the employees will not work long enough to get a fully-subsidized early retirement benefit but the Doc will?

If a participant enrolls in Dependent Care Assistance for their child Through their employer's S125 plan. They have contributed each pay period but has not submit any claims for the child's care yet. They then find out in the middle of the year that the child is not theirs. Because they technically do not have any qualifying individuals, can they retroactively de-enroll form the dependent care assistance plan?

I'm not sure what I'm missing here, but is it possible, if acceptable to the employer, for an employee to surrender restricted stock to the employer in satisfaction of the withholdings tax in relation to an 83(b) election with regard to the restricted stock? It doesn't seem right, but I don't find a prohibition of it.

example: ER awards EE 100 shares of restricted stock. EE wants to make an 83(b) election. To do so, he must pay x, which has the same value as 30 shares of stock. So he offers to surrender 30 of the 100 shares. What's wrong with this idea?

We have a client who invests some of the plan's money in a Real Estate LLC. He gets a K-1 which we use to value the asset etc.

For purposes of ERISA Bonding, does this qualify as a "statement from a regulated financial institution"?

We're ok with the participant directed piece of the puzzle, just unceratin as to whether the K-1 reaches the standard of "a statement...."

Thanks for any input.

Participant took a loan from the plan. Repayments were by payroll withholding. Loan was paid off as scheduled in August of 2007. Now we find out that withholding continued bi-weekly for several months to the tune of $10,000, which was deposited into plan each pay period.

Aside from the obvious question of why the participant did not notice that amounts were being withheld each pay period, what should be done about it now?

Any thoughts will be appreciated.

I have a Participant who would like to roll in funds from an International Pension Plan into a US 401(k) Plan. The Plan states it allows rollover from 401(a) or 403(a) Plans, excl. aftertax; 403(b) annuity contracts, 457(b) Plans, IRA or annuity under 408(a) or 408(b) and Roth 401(k). Would a foreign pension plan fall under the 401(a) or 403(b) section plans?