I have a prospective client that is interested in a Section 132 parking and Transit plan but at this time, we are not administering this plan.

Where can I get the best information either online or by manual on administering these plan ?

I contributed to Compay A's Def Comp plan for approx 5 years. At that time Company A spun off the operation I was associated with and the Def Comp balance and liability for payment shifted to the new Company B. This company put in place an identical Def Comp plan to the parent CoA (seamless transition) and I continued contributions of salary and annual bonus for another 5 years to Company B.

Company B suspended the Plan at year end 2005 due to concerns over 409a.

Over the last 3 years both Company A and B have slid from investment grade to junk.

My investment elections ( non changeable) were for 10 equal installments after retirement.

Realizing the risk to my "savings" from potential bankruptcy of Company B I have requested that the plan Administrator ammend the plan as allowed (I think) by the Transition regulations for 409a to allow a one time change in the payout election schedule. This was done by registered letter to the Company B legal address.

FWIW I am currently eleigible for retirement and expect to do so in the next 6-12 months.

So far, I feel am being stone walled by the bureaucracy. This is a large company and they have little incentive to "do" anything other than ignore me. My intuition is that the functionaries inside the Company finance dept could care less about the jeopardy of plan participants and would prefer to run out the clock rather than actually act on my request. I have sent registered letters and email notes and solicited the intervention of HR, but so far all the response I have gotten is that the Company is "studying" the impact of 409A and if there are any changes to the plan I will be notified.

MY QUESTION IS... in these circumstances does the Plan Administrator have any fiduciary or other legal or ethical obligation to consider my request that I can appeal to in an effort to get the plan ammended?

Thanks for your time!

A plan recently transferred to our TPA firm with a large forfeiture account balance (approximately $100,000). According to the document, forfeitures should be reallocated annually. We have no way of determining the last time the forfeiture account was reallocated but it is safe to say that it has been several years. To complicate things, we are only able to obtain information for the 2005 plan year. How do we reallocate the forfeiture account? Also, what penalties would result from failing to comply with the document?

404(a)(1)(D)(i) IN GENERAL. --In the case of any defined benefit plan, except as provided in regulations, the maximum amount deductible under the limitations of this paragraph shall not be less than the unfunded current liability determined under section 412(l) section 412(l)(8)(A), except that section 412(l)(8)(A) shall be applied for purposes of this clause by substituting '150 percent (140 percent in the case of a multiemployer plan) of current liability' for 'the current liability' in clause (i).

This paragraph shows the change in the law. The old rules determined the UCL at the EOY. I know this was clarified in Gray Book answers. Now the new rules specifically point to 412(l)(8)(A).

(A) Unfunded Current Liability

The term "unfunded current liability" means, with respect to any plan year, the excess (if any) of--

(i) the current liability under the plan, over

(ii) value of the plan's assets determined under subsection ©(2).

412(l)(8)(A) is clearly the current liability at the beginning of the year. On this alone, I would take that the new UCL calculation is based on beginning of the year current liability and ignoring the current liability normal cost.

However, being that the old rules referenced 412(l), which then referenced 412(l)©(8), and because the old rule was an EOY determination, I feel fairly confident the new rules are too an EOY determination.

Anyone disagree?

Husband and Wife, 2 companies, both want a plan. Wife is a pediatrician owns 100% of her practice. Husband is a neurologist owns 100% of his practice. Based on controlled group rules at first look I figured controlled group, but now not so sure because they are competely seperate businesses and neither is employed, manages, or has any decision making capabilities in the other's business. Maybe that is irrelevant though.

Regardles. we have 2 companies with no other employees and it seems silly for them to have two plan documents, and pay for two completely seperate administrations. I know that one company could sponsor the plan and then the other company could adopt the plan as an affiliated entity.

My confusion comes up in how many 5500s are required? One person in my office says that she has this same situation for one of her clients and they only file one 5500. Another person in my office says she would file two 5500s.

I am trying to quote a price and of course it depends on how much work is involved here. So...

1) 1 document or two?

2) 1 adminstration package or two?

3) 1 5500 or two?

What is typical practice for attaching an audit report to the Final Form 5500 for a short plan year? For example, a merger occurs on 5/31. For the plan that doesn't survive, is it typical for the auditor to complete a five month audit and attach a separate audit report to the final Form 5500 or would it be acceptable to attach the audit report for the surviving plan.

The PFEA replaced the 30-year treasury rate with a rate of 5.5% when determining maximum benefits under 415 w/r/t lump sum payouts.

This meant for lump sums with ASDs during the 2004 and 2005 plan years, a rate of 5.5% had to be used when determining 415 limits. However, my understanding has been that this change was only for the plan years 2004 and 2005 and that for plan years beginning in 2006 the rate for lump sums under 415 reverts back to the 30-year treasury rate.

Does everyone agree or does anyone know of legislature that requires continued use of the 5.5% rate?

Thanks.

Prospective client has called my firm asking for help. His current administrator just told him that they feel its best they part ways. I get the impression because his plan is a little screwed up and the administrator wanted to wash his hands of the problem.

The client has no employees and his business is real estate. he is a realtor. Supposedly he didn't know that you couldn't have a mortgage (which is guaranteed by him individually) on a piece of property inside the plan. Apparently his current administrator told him (after the fact) that the mortgage would have to be in the name of the plan, not his personally. Also the property is being rented. The plan is collecting rents and paying the mortgage. The client is not claiming any income or deducting any expenses on his personal return. So now I am also thinking he has UBTI.

My thought is that he needs to sell the property with the mortgage immediately. He also needs to talk to his CPA about UBTI and possibly amending some tax returns. Honestly I don't know anything about UBTI but the plan acting as a landlord really makes me feel that he is running a business inside of his plan.

I could just tell the client that I'm not interested and he needs to find someone else, but that is not in my nature. I would like to help if I can. Any suggestions?

Can royalties be used as compensation for a qualified plan?

With the PPA now signed, I would like to be able to provide education on the topic and provide CPE credit for CPAs. Do I need to begin with the state board of accountancy? I am guessing I would need to provide the seminar materials to be approved that sort of thing. Anyone know the process?

Ok - here's my situation...we have a client where one of the partners is leaving and joining another firm. He currently has an outstanding loan balance. He has already checked with the his new Employer's plan administrator and they will accept his loan balance as a rollover (we'll be providing them with the backup loan origination forms and amortization per their request).

The plan I adminster, however, does not allow for distribution until after the val date following termination; in this case after 12/31/2006. All plan distributions are done once the safe harbor contribution has been made in the following year (could be as late as Oct if the client is on extension (self-employed partnership).

The loan provisions of this plan state that the loan becomes due and payable upon termination of employment. According to the plan loan policy, the loan will default in the quarter following the quarter in which the last payment was made if payments cease.

The client wants to work with this terminated employee to address the loan situation. They don't really want to change the plan distribution date, because then they will be doing multiple distributions whenever someone leaves. I'm not sure if they want to change the loan policy to allow for repays from terminees to keep this loan current.

Does anyone have any suggestions?

During the 2005 PY, a broker accepted personal checks as deferral deposits from 3 participants. The plan administrator was unaware of this, and therefore showed only the deferral amounts actually deducted from payroll on the W-2s. 2 of the participants have terminated and rolled their accounts into IRAs, while the 3rd employee still has her money in the plan. One participant even exceeded the 402(g) limit by $3,000.

The client rightfully feels that they should not have to amend the 2005 W-2s and corporate tax return, but that the participants need to amend their returns instead.

How do we go about correcting this?

I read a prior post on this issue, but I have another question. if the margin account results in a "negative" cash balance at the end of the plan year, wouldn't this amount be reported as a payable on Schedule I of form 5500?

I have a 401k Plan. They have 28 segregated Brokerage accounts, one for each Particpant.

The Trustee sends the money to the Trust on time each payroll period.

The Brokerage House does not credit interst to the cash postions?

How do you go about calculating lost earnings, since the cash position changes everyday/month due to account activity.

Can an employee whose marital status is single designate his estate as his beneficiary for the purposes of payment of any lump sum death benefit that his beneficiary may be entitled to under the provisions of the pension plan?

Thanks!

We've got a Profit Sharing Plan, PYE 12/31/2005. Discretionary contribution was funded timely, 5500 completed and filed, participant statements distributed, etc. and we get a call today from the client informing us that an employee that was listed as a new hire on the 2005 census was really a participant from 1998 - 2002 (but he never had an account balance). Turns out he was called to active military duty back in 2002, which is why he left. Anyway, he returned to work in 2005 and we didn't give him a contribution because he got deleted from our software system after years of inactivity so he looked like a new employee.

Side note: they did not make a contribution 2002, 2003 or 2004, but they did in 2005.

To correct this (pursuant to Rev. Proc. 2006-27 page 76 (2)(a)(i)), we've given him a 2005 contribution based on what would have been his full-year wages had he not gone on military leave in 2005. His contribution will be deposited this week, and the client will take this as a deduction on their 2006 return.

My question is: do we have to amend the 2005 5500 and Schedules to account for his contribution, or can we just show it as a current year contribution in 2006? I'm sure the RIGHT thing to do would be to amend the 2005 return and re-run all the reports, but is it really necessary? This guy's contribution is only about $500, and it will take several hours to re-run everything. Any thoughts on this?

Thanks!

I've got a PLR that I'm trying to interpret for one of our accountants and I think I understand what's going on but would like some confirmation....

Can someone give me a brief laymans explanation of the unfunded liabiliities described in 412(b), their required amortization periods and the connection to the reduction of future accruals and actual cash dollar outlays so that I can correctly explain this to them...

I've seen a few summaries that say the repeal of the PBGC variable rate premium full funding exemption is effective for plan years beginning in 2008. It was my understanding this provision is effective for plan years beginning in 2007. Coudl someone confirm the effective date of the full funding exemption repeal. Thanks.

We are coming toward the end of a strike situation (we hired permanent replacements, etc.). Now, we finally have an agreement - but the new agreement provides that we no longer have to contribute to the Union's multiemployer-DB plan (rather we are putting a 401(k) plan in place - sponsored by the employer/not the union - per the terms of the new C A).

Because the union agreed to this, do we have a withdrawal-type of situation? I'm a little confused because some of the striking employees have accrued benefits under the union's multiemployer DB plan - but we no longer have to contribute and no employee accrues any more benefits under the union's DB plan (per the new agreement).

Do we have to send a letter to the fund asking for our withdrawal liability or have we not withdrawn b/c of the accrued benefits that some of the strikers have under the union's pension fund? I'm just a bit confused on how this is all going to play out

Does anyone have any insight as to what the dollar amount limitation found in section 1104(b)(2) of the Pension Protection Act of 2006 means?

It amends IRC section 457(f) . . . and states that a portion of an applicable employment retention plan will be exempted from inclusion in gross income when there is no substantial risk of forfeiture (i.e. the requirement of 457(f)(1)). The portion that is exempted is the "portion of the plan which provides benefits payable to the participant not in excess of twice the applicable dollar limit determined under subsection (e)(15)." For 2006, the (e)(15) amount is $15,000.

Does that mean that $30,000 per year or $30,000 total can be exempted from the 457(f)(1) requirement of inclusion in gross income?

Thanks