1) Key employee intends to separate from service on June 30, 2008. Since distributions may not be made prior to the date which is 6 months after the date of separation, what's the earliest date payment may be made without violating 409A (not the safest date), based on the based available guidance?

a) December 30. 2008

b) December 31, 2008

c) January 1, 2009

2) Suppose the payment is not actually made until January 15th. What is the month of constructive receipt for 451 purposes?

a) December 2008

b) January 2009

Assume there is no collusion between employer/employee to determine the timing of the distribution for tax year purposes. I have a hunch that there is an argument that the employee can be constructive receipt in 2008 without violating 409A.

What is required when a sole proprietor who has a SEP later incorporates? Does he need to complete a new Model 5305-SEP? Does he need to set up a new SEP account?

It is clear that 403(b) plans are subject to 401(a)(9) RMD rules. However, it does not appear that 403(b) plans are subject to the 401(a)(14) required beginning date rules that apply to qualified plans. Does anyone have a contrary thought, and, if so, can you point to any authority on the subject?

I have a plan where the plan document states the benefits commencement date (presumably the annuity starting date) is the 1st of the month following the retirement date.

But for lump sum distributions (due to true up by TPA and actuary, election form processing time, and that payments are only made on the first and fifteenth) in actuality it could be as many as 60 days after the retirement date before the participant receives his/her check.

Participants are now asking for the back interest for the 60 or so days in which the benefit distribution is being processed. Do participants have a right to this interest when seeking lump sum form of distribution? Is the annuity starting date the DATE OF DISTRIBUTION, meaning there is technically no administrative delay when a lump sum is provide?

I have some support for this notion that there is no administrative delay (and therefore no interest earnings need be paid) from Clevenger v. Dillard's Dept. Stores, 41 EBC 2705 (2007). The court held that the annuity starting date = date of distribution for lump sum forms. But I can't tell for sure how it arrived at that conclusion -- it did mention the PBGC regs, but I don't think its holding was based on that as the argument was in a last minute brief by one of the parties. I think its holding was based on the Treas. Regs. re: administrative delay in 1.401(a)-20 Q&A-10(b) and how the Regs. were silent about any kind of delay for lump sum forms.

Another case, Stephens v. Retirement Income Plan for Pilots of U.S. Air, 464 F.3d 606 (6th Cir. 2006) seems to militate for the notion of requiring plan sponsors to pay interest while participants wait for their distributions to be processed after their plan document designated retirement date (although the court never got to the merits of whether the participant actually deserved interest - just that it was remanded for jurisdictional reasons).

As always, thank you for your input -- this is truly a great resource.

Anyone know the names of any magazines that specialize in retirement plans as subject matter? I have about a handful of library cards, so access to Infotrac is not a problem, but I want to restrict my search to know magazines that specialize in retirement plans.

Feel free to describe any intriguing cases, distinctive problems, or other situations arising out of complying with or dealing with 401(a)(31). I have do a presentation regarding 401(a)(31).

I know you can use the SH feature for start up plans as long as the plan year is at least 3 months long.

However, I've been told that a SHMAC is not available for a start up plan at all, and the SHNE must be used in the first year. Is this true? If so, why? Can you point me to a reference.

I've done a search on this topic and can't seem to find an answer.

Thanks in advance.

My client initially only had a SEP Plan for 2007. His business is fairly new and he was going to have to make his first contribution for 2007 for an eligible employee who had worked 3 of the last 5 years. His CPA advised him to set up a profit sharing plan, which he did, but he had already contributed $2,500 to his SEP prior to establishing the PS Plan. He would prefer that all contributions be made through the PS Plan for 2007. Is it possible to withdraw that $2,500 contribution, subject to applicable taxes and penalties, giving the appearance that there will be no funding for the SEP in 2007 for himself or the eligible employee? Or is he required to make the contribution for the employee for 2007? If so, and if he decides to terminate the SEP now, is he required to make a contribution for himself and any other eligible employees for 2008 since the plan was in existence for a portion of 2008?

I am 66 years old and wish to retire.I want to close my 401k account but,am told that I must pay the 20% tax right now.Is there any way I can delay paying this until next years taxes?

My wife has a 401k that she would like to close out. We have been told there is a 20% tax and a 10% early withdraw fee that we have to pay upfront(by the company managing the plan). She became totally disabled while working for a company about 10 years ago. Since then the company was sold(the local office shut down) and we have no idea how to get in touch with them.

A tax lawyer(free consultation during tax return season) told my wife it should be possible to get the the 10% penalty waived since she is disabled. The administering 401k people say she needs some kind of coding information from her old company for this to happen. The rep tells her he does not have a phone number so he can not get the info. However, to close out the account it would seem his company must have a way to contact them.

Should documentation from Social Security stating she is disabled be enough for the 401k company?

Is there any way to reduce the 20% tax withdrawal?

Any help will be greatly appreciated.....

Has anyone got a request for an amendment like this?

Plan Section 1.3 should be amended to refer to IRC 417(e) interest rates and mortality table as Rev. Proc. 2001-62 may not apply in some future year.

btw... this is a Relius IDP for Cash Balance Plans for plan effective on 1/1/2006 and submitted on 1/22/2007.

I understand that eventually the AE was going to be amended, but should it be required for initial determination?

Thanks

A small plan was certified for 2007 based on 2006 EOY. The AFTAP was under 90%, so the presumed AFTAP for 2008 restricts lump sum benefit payments. If I understand things correctly, there is currently no provision for a small plan utilizing EOY valuation to certify for 2008, but based on an EOY certification the AFTAP would exceed 80%.

How would the plan go about terminating and distributing lump sums? Is that even a consideration until further guidance and/or technical corrections are available?

I seem to recall reading a thread about this quite awhile back; can't find it...

Participant takes hardship distribution December 5, 2007. Plan has 6 month suspension period. Participant is eligible to resume contributions as of 06/05/08. Does participant have to wait until an a plan modification/entry date (quarterly so it would be July 1st) or can participant resume contributions as soon as 6 months expires i.e. June 6th?

I have read through the plan doc info/hardship provisions, but this specfic issue is not addressed that I can find anyway! Client doesn't care either way, but wants to be consistant (even tho' they have very few hardships).

We have a client that decided to file an on-cycle DL application without EGTRRA amendments - client thought that a frozen plan did not have to be amended for legislation enacted post-freeze. Naturally, the reviewing agent caught this (wasn't hard to do) and slapped the plan with the $25,000 Audit CAP sanction. The agent also gave us two other options - plan disqualification or withdraw the application.

It has been my experience that if you withdraw the application in this type of scenario, your case gets forwarded to the examinations branch and here come the auditors - that $25,000 sanction has now become the floor and has nowhere to go but up.

I'm wondering, though, if we could withdraw the application and simultaneously file an Appendix F submission. Technically, once the application has been withdrawn the plan is no longer under examination - unless and until the IRS informs the client that the case may or will be referred, we should have a very small window within which to file the Appendix F.

The pit I feel in the bottom of my stomach is telling me, though, that I'm missing something.

Any thoughts?

For FAS#35 disclosures for 2008, what mortality and interest rates are practioners using? The same as 2007, or the 2008 segmented rates and new mortality? What about plans that are funded assuming lump sums - is that methodology being used?

Has anyone had feedback from auditors on this issue?

My client is a retired minister 85 years old. He has been retired for 20 years. His self employed pension plan has assets of $ 980,000.00. We received notices that the 5500EZ was not filed for 2004, and we responded with a signed return to comply with the notice. Same senario for 2005. We have now been sent proposed penalties of $15,000.00 and $ 11,825.00. We are pretty sure that 2006 was not filed eventhough we have not received any notification. 2007 5500EZ is in the office for filing. My 85 year old client has Alzheimers Disease and my first question is whether that would qualify as " Reasonable Cause". My second question is whether we should notify the IRS that we have related proposed penalties for 2004 and 2005 and most probably 2006 and request that the case be handled as a group or each year separately.

I am looking at a Form 5500 prepared by the insurance co that is also the rk for the DB plan. They show that the benefits as well as funding is insured (and don't check trust on either). However, there is a trust with money in "Separate Account No. 1" which appears to be a money market fund. The insur co. completed the Schedule A showing the money under Part II, number 4 - plans interest in separate account, completed a Schedule D listing it as a PSA (#000) but listed it on Schedule H under #13 - registered investment company assets. Should this actually be listed under PSA? If so, does that really get them where they need to be because it doesn't appear as if the the Separate account filed as a DFE. Also, shouldn't this at a minimum indicate that the funding is through insurance and trust?Thanks.

PAL

If the plan is truly silent, then you have no grounds on which to limit comp by pay period.

Good afternoon,

I have a client who is setting up an ESOP. My understanding is this will be a leveraged plan via an employer loan. However, my client has become very sketchy on explaining the actual accounting transactions for the following 1) the actual transference of stock from the company to the ESOP (a separate entity) and 2) how the monthly contributions to the ESOP will be accounted for.

Can someone shed some light as to the typical DR's and CR's both B/S and I/S that I would expect to see?

Also, a few other items in which they could not explain:

1) How is the employee's investment growing if a) the plan contributions remain at a constant level year after year and 2) the employer is receiving the debt service from the contributions being made?

2) If the outside investments being made result in negative earnings, the debt incurred to cover those investments is then the responsibility of whom to cover?

The last two questions made be a bit specific to my client, but if it is general enough, I would appreciate feedback.

Regards,

LAT

Right now we need to data enter expense ratios for all of the funds we use (we are an RIA) in our various. We get all of our performance data from Principia, but we cannot download expense ratios for some crazy reason.

Does anyone know of a good solution to obtain downloadable expense ratio information?