A one life (sole prop) DB plan, end of year val. Client wishes to terminate and roll money into IRA before end of 2005, but expects considerable income and would like to use income and make a contribution for 2005. Since self employment income is considered earned on 12/31, is there a way to terminate the plan prior to 12/31, but still use the 2005 income?? Thanks.

A plan sponsor is switching from a Final Average Pay Plan to a Career Average Pay Plan in the middle of a Plan Year (5/31 for a calendar year plan). My question pertains to the 401(a)(17) compensation cap. Is it permissible to use the following approach:

Final Average Pay Benefit = Use full $210,000 comp cap but employees would only be credited with 5/12 of a year of service (service completed before amendment). So an HCE over the comp cap would receive $210,000 X benefit formula X 5/12.

Career Average Benefit = Prorate $210,000 comp cap to 7/12 for partial year. So an HCE over the comp cap would receive $122,500 ($210,000 X 7/12) X plan formula

Is there any guidance on this type of situation or would a private letter ruling be the only method by which to obtain comfort?

Dr. A is 100% owner of Company A (no other employees)

Dr. B is 100% owner of Company B

Both doctors are 50% owners each of Company C

They have a SEP for the employees of Company C. Can Dr. A have a uni-(k) for himself in Company A? As a side note, he currently is benefitting from Company C's SEP.

during the late 90's when you could use gatt or pbgc rates the employer did not do gatt either timely or correctly. is there any way to still use the gatt rates? thanks

i am not a pension professional so please bear with me. back in the late 90's when there was a voluntary period in which you could use gatt or use pbgc rates fpor db termination a plan did not do the gatt amendment correctly or timely.

there has been no distributions to date9its a long story) is ther any way that the plan can now be terminated at gatt rates/ thanks

My husbands company has a 401K plan set up with Lincoln Retirement in the form of an annuity. Expensive and not very good. The company does not match, but has a seperat account for profit sharing.

Which would be better for us?

Keep investing into the 401K to keep our taxes lower?

Stop adding to the 401K, but invest the same monthly amount into a taxable mutual fund?

We both fully fund our Roth IRA.

Any help would be appreciated.

In the absence of participant election, do the automatic rollover rules apply to plan termination lump sum distributions regardless if the plan has amended to the $1,000 threshold limit to eliminate the need for automatic rollovers?

The only reason I ask is because we subscribe to Accudraft for our document provider and our most recent document updates included the following statement regarding an update to the automatic rollover amendment...

"A consensus has now developed in the pension community that the automatic rollover rules of Internal Revenue Code Section 401(a)(31)(B) apply in the case of a plan termination even if the plan has been amended in such a manner that the automatic rollover rules do not apply while the plan is in operation (e.g., by reducing the cash-out threshold to $1,000 or less)."

This is the first I have heard of this. I thought if there was truly a "consensus" that someone out there would have heard this.

Has anyone?

Quick question (and I tried to search if this had been covered - because I imagined it had, but could not find it - so here goes):

We have an all insured LTD plan (established in 1998) and we never filed a Form 5500 for it because we were always under 100 participants (separate plan document, SPD, etc. numbered 504).

On January 1, 2003 (first day of plan year) we went over the 100 mark to 104 participants.

Question: How does the 80/120 rule work with this?

Can we file the same form as last year because we are not over 120 (which was no filing at all) or do we have to enter the DFVC program starting with the 2003 filing and file on time for 2004?

I seem to remember under the pre-1999 forms we could not file - but I am no expert and my be wayyyyy off base.

Sorry if this is a repeat - but I'm not sure where to go.

Company A purchases company B. Both cos. have a qualified plan. Company B runs separate from Co. A for a yr. In yr two the assets from co. B are transferred to Co. A's plan. Would this be considered to be a related rollover or unrelated rollover?

Company A does not have a retirement plan. Company B has a 401(k) profit sharing plan. Company A acquires Company B. Company A does not want to have a retirement plan and wants to terminate Company B's plan. Company B has partcipants with outstanding participant loans. All Company B employees will become employees of Company A.

Can Company A terminate Company B's plan and what would happen to the outstanding loans?

a 403(b) which currently runs 7-1 through 6-30 will be amending the plan to a calendar year effective 1-1-06. for the short plan year(7-1 through 12-31) will participant deferrals be limited to 402(g) based on deferrals from 1-1-05 through 12-31-05? or can they put in full 2005 py limit($14,000) since 2005 py will be a short plan year?

It's difficult to find succinct guidance about the various effects of late plan contributions. For example, an employer's income tax return is due on 03/15/05 (no extension) and includes an accrued PSP contribution. Oops...the employer goofs and doesn't make its contribution until May 2005.

1. When it deducted the contribution on its return, the taxpayer made an irrevocable election to pay the amount. The employer can't amend its tax return to rescind the contribution. Even though the contribution's late, the taxpayer still must pay it.

2. Sec. 404. The taxpayer isn't entitled to a 2004 deduction. Doesn't the employer amend its 2004 return to remove the deduction (although not the contribution)? And, doesn't the contribution now have to squeeze into 2005's Sec. 404 limit, based on 2005 compensation?

3. Sec. 415. This deadline (04/15/05) also passed. Aren't the contributions included in the 2005 Sec. 415 limit (not 2004, as had been intended)?

4. Is the employer subject to any excise tax or penalty for the late payment?

Is there an excise tax on excess annual additions? The excess annual additions were comprised of elective deferrals and employee contributions and were returned to the employees in April for a calendar year plan.

Just found out a client of ours had a recent ownership change will now makes them a member of a controlled group. Our client has a 401(k) plan and one of the other members has a SIMPLE IRA plan.

Does the transition rule come into play? Does the member who has the SIMPLE IRA continue to make contributions into that plan? Or can the SIMPLE plan be discontinued and the member adopt the 401 (k) plan?

In June '04, company changed corporate name, address, plan name and EIN - the 401(k) addressed these changes with a Resolution, etc. For the '04 5500 filing, do we just put all the new information on the actual form and attach a note giving prior co. name/plan name/address and EIN? Thank you in advance.

Recently took over the admin for a DB plan ; the sister PS plan is administered elsewhere - there are 10 benefiting HCE's , 6 benefiting NHCE's , & 24 excluded by virtue of job description - the entire group of 24 is covered under the PS plan - there are no statutorially excludables ; the benefit formula is safe harbor .

Participation is passed ( i.e. 401(a)(26) ) since 40% of 40 is 16.

Coverage (410(b) ) is satisfied under ratio percentage by aggregating the plans and treating them as one.

Question: In order to aggregate plans I thought comparability of the plans had to be demonstrated using something like the principles under Rev. Rul. 81-202 , for example. However, regulation 1.410(b)-7(d)(1) doesn't seem to require comparability ??

I have a plan that allows participants to start receiving monthly benefits upon attainment of normal retirement age (age 65) while remaining employed on a full time basis. I was hoping someone can help me with the calculation of the subsequent accrued benefit.

Plan year = 3/1 - 2/28

Actuarial Equivalence = UP84 at 5.5% (pre and post retirement mortality)

John reached NR on 6/1/2004 and began receiving monthly benefits in the form of a life annuity in the amount of $1,684 per month. I need to calculate John's accrued benefit as of 3/1/2005.

The document says that "At the close of each Plan Year prior to the Participant's Actual Retirement Date, a Participant shall be entitled to a retirement benefit equal to the greater of (1) the Actuarial Equivalent of the monthly retirement benefit such participant was entitled to at the close of the prior Plan Year, or (2) the Participant's Accrued Benefit determined at the close of the Plan Year. The monthly retirement benefit shall be offset by the actuarial value of the total benefit distributions made by the close of the Plan Year.

How do I calculate the "actuarial value" of the benefits John has received as of 3/1/2005?

Please use actual numbers.

Thanks!

A HCE elected deferral of $5,000 for the year and must now reduce election to $3,000. Can spouse now elect $2,000 under his employer's dca??

Thanks.

Probably a stupid question, but I'll ask anyways. Have a plan that excludes bonuses, overtime and commissions from definition of comp. Do hours worked for overtime still get counted as hours of service towards plan eligibility and vesting? My gut feeling is yes since the doc says that an hour of service is an hour that an ee is directly or indirectly compensated for or entitled to be compensated. I'm getting comments that are making me second guess myself.

Client has a Safe Harbor Plan using the 3% nonelective. Compensation is defined as W-2 compensation plus deferrals. One HCE has auto included and the other has key man insurance included.

Does the compensation for the SH allocation include the auto and insurance? Does the compensation ratio test need to performed?