I would appreciate any opinions as to whether the following definition of Actuarial Value of Assets for an End of Year Valuation is likely to be allowed under the new funding rules to begin in 2008:

"Beginning of Year Fair Market Value of assets brought forward to the end of the year by adjusting them (increasing) by the pre-retirement interest rate" (BOY assets X 1.0i ).

It's not really an "average" like the new Code sections for PPA 06 talk about so I'm wondering if this will work. Any opinions ?

For what it's worth the code cite is attached that describes alternative options to FMV.

AVA_Assets_2008.pdf

In paragraph (e)(4)(v)(A) dealing with investments in a default fund prior to Dec. 24, 2007, the DOL uses language that states "an investment product or fund designed to guarantee principal and a rate of return generally consistent with that earned on intermediate investment grade bonds" - I'm being told by investments folks that the rates of return on stable value funds would not be as high as the rates for intermediate grade bonds.

What is the DOL trying to say with this provision?

If an employee has a traditional 401(k)/403(b) and a Roth account in the same plan and must take RMDs, does the employee calculate the RMD for each type of account (Traditional and Roth) separately? Can the employee choose to take RMDs only from the Roth account or from the traditional account or is the employee required to take RMDs from the each type of account (traditional account Roth account)?

I "inherited" a terminated DB plan and we can't find the last participant to payout. Lump Sum value is about $11,000. According to the instructions for Schedule MP, only a plan subject to Title IV can use the program. Is there something equivalent for a non-Title IV plan? Thanks.

VEBA owns an annuity contract and receives payments thereunder. Do those payments have to be reported on Form 1099-R even though they aren't generally subject to tax, i.e., VEBA is generally tax-exempt.

A VEBA that is a MEWA wants to start an insurance agency. I have concerns regarding the prohibited transaction rules of ERISA and also tax law. This arrangement will qualify under PTE 84-24 so long as the VEBA does not exercise influence over management. The VEBA will own a minority share of the private stock of the insurance agency (for-profit corporation). To avoid the sharing of commissions, the insurance agency can declare dividends on its stock to get $ back to VEBA.

Now the concern: VEBA wants to make a capital contribution to the insurance agency. This appears to be a prohibited transaction under ERISA because the plan is transferring assets to a party in interest. I cannot find an exemption for this transaction under DOL guidance. Additionally, I have concerns that the transfer of assets by VEBA to insurance agency constitutes a inurement not permitted under VEBA regulations.

Anyone have any thoughts?

A client hires professional employees on a temp-to-perm basis, and would like to have them covered by their very generous plan from the day they start as "leased" employees (they want it to be a selling point to attract the employees). That's in quotes because these employees are (almost always) hired as "real" employees usually 90 - 180 days from the day they walk in the front door.

So... while these employees are employed by the employement agency, they are not employees of the sponsoring employer, so they can't be in the plan. And I can't call them "leased" employees because they don't meet the 1 year discussed in 414(n)(2).

Is there anyway to get these employees (or should that be in quotes?) into the plan? The company is trying to be more generous, and is shocked that it is so difficult to do so. Thanks.

Old client - new auditor - large plan

Auditor wants to see 10% of retiree original calcs and forms - many going back 20+ years.

Auditor says they must select from those receiving payments - not necessarily processed during audit year.

Considering IRS statute of limitations and PBGC record retention, this seems abusive.

Is this is a reasonable request to audit calcs done 20+ years ago? Are there any relevant auditing standards here?

Just trying to confirm that 204(h) notices are still required if a contribution formula is reduced in a MPP?

Thanks.

My wife owns a S-Corp and several years ago we started a cafateria plan. I am a former accountant and took it upon myself to become educated about 529 plans and wrote and implemented the plan. It has been running for over five years now and everything has gone smoothly. The plan is very small and only has three or four participants during any year out of four or five eligible employees (I know that my wife and I are not eligible to participate of course). I understand the basic rules and regulations about eligibility and participation as well as how the plan needs to operate and as far as I can tell we are doing everything correctly. If we had to pay a TPA to implement and administer the plan we would probably not be able to offer it to the employees as it would probably cost us more than it saves the employees in taxes. The main reason we started the plan is to be able to offer health insurance to the employees that needed it while not having to pay for employees that don't need it (the plan is funded by salary reduction agreements). We also have a medical FSA that a couple of employees take advantage of and a dependant care FSA which no one currently uses. I am comfortable that as a whole we are running the plan properly and have been very careful about making sure I am following the rules. I know it is a bit after the fact but I am looking for opinions from people who have more experience working with 529 plans about whether we are making a mistake operating this plan ourselves. I waded through the rules and regulations and although there are alot of them they all seemed pretty straight forward when applied to our situation. As long as we run the plan correctly as far as enrollment, eligibility, granting benefits, applying the use-it or lose-it rules, etc... should we be pretty safe? Were 529 plans created with the idea that a TPA would always be used or is it feasible for business owners to run the plans themselves? Are there many other small business owners who write and implement 529 plans on their own? I know these are pretty general questions and I will probably get a wide variety of responses so feel free to make whatever comments you would like. Thanks for any input you can offer.

Matt

Hi, I have several IRA accounts. 2 of them I have even distribution withdraws set up. Since starting the distributions the accounts have grown substantially. Is there any way to move some of the money to another account without penalty? Or, is there any way I can increase the amount of the distributions? I am only 51 but retired.

Thanks,

DD

Can an ER define what is reimbursed from an FSA to an EE (via the plan document?).

Can an employer set up a STD plan with two levels of benefits- say 60% for hourly and 70% for salaried employees???? I would think they can since benefits are not being provided under a 125 plan.

Am I missing any nondiscrimination testing issues?

If the employer can't do that, is there anything that prevents the employer from setting up two separate STD plans...one for hourly and one for salaried employees?

Tx. in advance for any feedback.

What happens if a plan sponsor accidently over paid $1,000 on participant distributions (That is the combined overpayment on about 5 accounts)?

How do you correct this?

Do they just make an additional $1,000 deposit to make the cash account whole? Any ideas?

I am actuary in behalf of a frozen, salaried DB plan with 60 participants. The Plan offers unreduced retirement for persons who retire from active service after reaching age 62 and completing 20 years of service. For other actives (and terminated vested), an actuarial reduction applies if payments begins before age 65. The Plan also offers lump sum payments to about 2/3 of these participants on a minimum actuarial basis (though the immediate payment would be lump summed).

The Plan is currently underfunded (on whatever rationale basis you would like to postulate). The Plan's investment counselor is suggesting that once the Plan gets funded on a PPA 2006 basis, that the funded status can be maintained by immunizing the portfolio. I had always thought of immunization making sense for a large groups of pensions in a periodic payout status where the only contingentcy is

mortality.

In this particular situation, the patterns of distribution are unpredictable and leveraged by a few handfuls of participants. So, it may not be possible to maintain a 90% funded percentage. In addition, it would seem that by investing purely in fixed instruments, the plan would be foregoing investment opportunity and the bottom line is that aggregate contributions (at least in theory) would be higher.

Any comments on the counselor's investment recommendation? Am I overlooking the obvious?

Basically what my description says. I cannot find out anything about QDRO for my ex husband's pension since it was filed with the court in 2001. All I have is a card saying it was filed. I've tried calling everyone I can think of. I don't know any of my options.

Any help would be very much appreciated.

It's a very simple thing we do every year. We want to review the IRS Instructions for the 5498 Form. What could be simpler?

If you haven't done it before, here's the link to their Forms and Publications: http://www.irs.ustreas.gov/formspubs/index.html

Go there and try to find the 5498 instructions. Under 2007 5498, you'll find the 5498 information-only form and the 5498-ESA information-only form and the 5498-ESA instructions, but you won't find the 5498 Instructions under "5498"!

So, are they really there or perhaps they don't really exist?

They're out there, you just have to remember that the IRA 5498 instructions aren't logically listed by the form number 5 4 9 8, they are under Form 1 0 9 9-R." We aren't kidding.

Please join us and email a constructive comment to the IRS: PLEASE SEPARATE THE 1099-R and 5498

Instructions.

Try this email address: Irs.gov.website.helpdesk@speedymail.com

If that email address doesn't work, go to www.irs.gov and click on the CONTACT IRS link at the top of the page. Go to the bottom of the next page and click on SEND US A COMMENT ABOUT THE WEBSITE.

Thanks!

A frustrated 5498 preparer!

A DB plan sponsor amended the plan to offer terminated vested participants the right to an immediate lump sum (they already had the right to take a lump sum at early or normal retirement date). There are a few participants who elected not to take an immediate lump sum (can you believe?) and so the Plan has decided tol purchase a deferred annuity in their behalf.

The annuity contract will include the lump sum option. However, the insurer indicated the contract will pay lump sums in accordance with the Plan provisions in effect at time of annuity purchase. So, a lump sum paid at a later date would not, for example, reflect PPA2006. This allows the possibility that two persons (one for whom the annuity was purchased, the other, an active employee who later terminates) could receive lump sums at the same distribution date but calculated on two different actuarial bases.

Can anyone who has had experience with a similar annuity purchase provide any legal basis that the insurance company's treatment relinquishes them from applying an actuarial basis that would otherwise have applied had the annuity not been purchased?

Client has decided to terminate their 401(k) plan as of 10/31/2007. They are in the process of adopting an amendment/resoltuion to terminate and to cease any 401(k) deferrals. They have asked us to process the ADP test immediately, utilizing the data through 10/31/2007. Since the amendment resolution does not make a short plan year, can the testing be done utilizing the data through 10/31/2007? Or do we have to wait for 12/31/2007? Of does the client have the option?

Any advise would be greatly appreciated.

I haven't been able to find this issue directly addressed by either IRS or DOL documentation, so figured I'd try here. I am wondering if a plan with a short plan year (plan was merged into another plan) is eligible to file a 5558 to extend the 5500 filing deadline 2.5 months after the normal due date. There is nothing in the 5558 instructions indicating this wouldn't be possible, but I've heard murmurs that it isn't allowed. This particular plan has a 3/31/07 year end thus an initial 10/31/07 filing deadline, and the potential extension would be to mid January 2008.