A PBGC covered defined benefit plan was terminated effective December 31, 2012. The plan has already been submitted to both the PBGC and IRS. The PBGC 60 day review period has expired but we may wait for IRS approval before assets are distributed.

The plan is underfunded and the 2 majority owners intend to forgo receipt of a portion of their benefits to the extend necessary to make plan assets sufficient. The plan sponsor intends to contribute at least the minimum required contribution to the plan prior to the September 15, 2013 funding deadline. The contributions made prior to September 15, 2013 will be deducted on the 2012 corporate tax return.

Can the plan sponsor make additional contributions to the plan after September 15, 2013 and deduct these amounts on the 2013 corporate tax return? I'm uncertain since the plan terminated effective December 31, 2012 and there is no valuation required for the 2013 plan year.

New spin on the old question.

NRA is 62. Small plan was frozen when participant was 52 years old in 2003 with 10+ years of service and participation. Given the IRS position that 415 applies to the accrued benefit and there was no special language in the freeze amendment, the final annual accrued benefits are $160,000 (2003 $415 limit). Plan is terminating now in 2013, and participant is 62 years old.

What is his allowable lumpsum?

Step 1: Calculate lump sum under the plan's assumtions (417 October rates for prior year)

160,000 x 14.7734 = 2,363,744

Step 2: Under 1.415(b)-1©(3) the actuarially equivalent straight life annuity benefit is the greatest of:

a) 2,363,444/14.7734 = 160,000 (plan's rate)

b) 2,363,444/12.4228 = 190,251 (5.5% rate)

a) > b) = 190,251

Step 3: Verify whether 190,251 is above or below $415 limit to confirm if I can pay 2,363,744 lump sum. Question is if I am still stuck with 160,000 limit, and therefore lump sum is limited. Or I can use $205,000 for this purposes since it has nothing to do with the accrued benefit, and therefore lump sum is NOT limited.

I am representing a public university in connection with their 403(b) plan. One of the issues the IRS is looking into is the aggregation of limits of the university's 403(b) plan with outside plans controlled by employees of the university. The IRS wants the university to inquire of certain employees information on their outside businesses even to the point of how much contributions have been made to the plans of these unrelated businesses. I strongly believe that our delving into matters on behalf of the IRS outside the scope of these employees' university employment is inappropriate. Has anyone had any experience with this issue and, if so, how did you handle?

In 2012, an employer permitted an employee to roll assets over from her previous employer's plan. Somebody just realized that the plan document does not permit rollovers. My initial thought was that this can be self corrected under EPCRS by amending the plan. But after reading Rev. Proc. 2013-12, Section 4.05(2), rollovers are not mentioned in Section 2.07 of Appendix B which means that the employer must go through the VCP correction program. Does anyone else think that this is a bit extreme for this type of error?

We have a new client that has filed a 5500 every year, but has never prepared or distributed a SAR in the past. I'm trying to research what the penalties are for this, if any, and how to rectify the situation, but haven't been able to find anything. We'll of course have them start to do it this year, but is there anything they can/should do for the past SARs?

So we have a plan that currently states if a terminated participant's vested balance is under $5k, they can take the withdrawal immediately. If over $5k, they can't take it until they've incurred 1 Break-In-Service. They want to change the provisions to say only terminated people with vested balances under $1k can take their withdrawal immediately. If over $1k, they have to wait until the close of the first full year that they've been credited with less than 500 work hours (i.e., exclude vacation time and/or sick time hours that were paid)...so not a true "Break-In-Service" by definition.

Does anyone see any issues with making such a change? Could any of this constitute a removal of a protected benefit??

A client, which is a corporation, sponsors a 401(k) Plan and the only participants are the 8 owners.

Is a Fidelity Bond required?

I believe that it is required to be covered by a Fidelity Bond as Q 12 of FAB 2008-04 says that the bonding requirements do not apply to Plans that are not subject to ERISA Title 1, but since there are multiple shareholders of the corporation, then the Plan is in fact subject to ERISA Title 1 (at least according to my understanding).

Full disclosure, I am as my screen name suggests new to this industry, but I wanted some additional thoughts and opinions.

There are many threads on this topic but I cannot find the answer to my specific question:

Participant takes a hardship 7/1/2012. Deferrals continue. July 2013 the auditor informs the sponsor that the deferrals for the six months immediately following the hardship must be returned. Vendor sends a check to the sponsor for the deferral amount and says "make the participant whole via payroll".

Question: Logistically how does the correction via payroll happen? If the sponsor amends the participant's 2012 W2 then they also have to amend their quarterly tax filing and the participant has to amend his 2012 personal taxes. Is this really the only way to make the participant whole?

I am thinking the answer to my second question is yes, but thought I would ask.

Thank you

Plan has been a large plan filer for years. The recordkeeper holding the assets charges a check fee which is not waived for nominal balances. At the end of 2012 there were 4 or 5 terminated participants for whom a small true-up is due or who received a nominal forfeiture reallocation. In each case the allocation is less than the check fee. Jumping forward to 2013, this plan will be right around 100 participants at the beginning of the year. Is there a plausible argument that the 4 or 5 terminated participants can be excluded from the beginning of the year participant count? Again these participants will never see that money due to the check fee.

Thanks in advance for any guidance.

I have a multiemloyer plan where the non-bargaining unit group of a participating employer fails both the ratio percentage test and average benefit test. Unfortunately, the falure was not timely discovered and cannot be corrected by an amendment pursuant to Reg. 1.401(a)(4)-11(g)(3)(iv). Does anyone have any ideas how the plan can remedy this problem? I've seen some references that in a situation like this each HCE must include in income an amount equal to the employee's entire vested benefit not previoulsy included in income, but cannot find support for this in any regulations. Also, what about any penalties on the employer and/or the plan for noncompliance?

Any help would be appreciated.

A couple of years ago, a coworker asked me to prepare distribution paperwork for an alternate payee. I noted to my coworker that the QDRO states that the AP's benefit is not payable any earlier than the "attainment of the Participant's 'earliest retirement age' as that term is defined by internal Revenue Code 414(p)." Since the plan allows for distributions upon termination of employment, I understood this "earliest retirement age" to be the earlier of termination of employment and attainment of age 55 (plan's early retirement age). However, this person was 43 and still active. My coworker told me that it was okay, since the plan sponsor was fine with it and it was more advantageous to the AP. I prepared the distribution forms, but they were never completed by the AP. Recently, I was asked by the plan sponsor to prepare updated distribution forms for the AP. My coworker has since retired, and I think that she was mistaken, as there is no language in the plan itself allowing for distribution to an AP earlier than the date allowed in the QDRO. Does anyone have any ideas of what can be done (amendments, etc.) to allow the payment to this AP?

Thanks!

A QDRO was filed in 1996. The alternate payee (former spouse) has left her money in the 401(k) plan all these years. It is nearing the time for her first RMD. Is it calculated based on the alternate payee's date of birth or the employee's? The Pension Answer Book seems to indicate that the employee's RBD is a factor. That doesn't make sense to me since they have been divorced for so long and the employee has remarried.

Company A sponsors a SIMPLE-IRA.

Company A owns 51% of Company B. Owner A (no ownership in Company A) owns the rest of Company B (49%). Company B is an LLC.

Company B participates in Company A's SIMPLE

Owner A does not receive a W-2 from Company A or Company B, but does receive LLC payments that is declared as income.

Can Owner A participate in the SIMPLE-IRA without W-2 income?

If Owner A cannot participate in the SIMPLE and since no controlled group exists, can Company B start a separate plan (maybe a SIMPLE, maybe a 401(k)) that the owner can participate in?

If so, does Owner A have to wait until the current plan year ends (2013) before starting a new plan?

Thanks for any replies

Investor has a 457(b) governmental plan and plans to work until age 75. Can he/she defer the first RMD until the year of retirement from the governmental job? While working at the governmental job must RMD from a former employer's 403(b) plan start at age 70-1/2 or can the first RMD from the 403(b) be deferred until retirement from the governmental job?

Disclaimer: I'm a pension administrator at a pension consulting firm, and I'm being asked to join the Dark Side of employee health benefits. So I may not be getting all the terms or concepts right; please feel free to correct me.

I got a call from an insurance broker who tried to explain to me that private health insurance exchanges are being set up that will allow the participants to pay for part of their insurance on a "defined contribution" basis. I was his first thought when he saw those words, which is nice, and he wanted to know if we were going to jump into this arena. Presumably, there will be documents to write at the front end, and most likely some kind of annual reporting each year.

I have a feeling this is not "defined contribution" the way I know it - 401(k), profit sharing, etc. And I don't see how the two are related except that they share terminology (which the IRS does all the time). Can anyone point me to someplace I can get more information on this, or just explain to me that I'm meddling in affairs that may be beyond my bailiwick (which I'm not against expanding)? Thanks.

In a 401(k) plan that provides for a safe harbor match - does the plan have to say "This is/is not a safe harbor plan" (and be amended each year in which it is not such a plan) or may it say "This plan will be a safe harbor plan for any plan year in which the Employer distributes a safe harbor notice."

I was thinking that safe harbor plans that use the contingent notice for the 3% nonelective safe harbor contribution had to be amended each year to say they were or were not a safe harbor plan but that the rules was different for matching contributions.

Any help is appreciated!

1/1 plan year, plan sponsor determining HCE status for the 2012 testing year (1/1/2012 to 12/31/2012), and they use the Top paid 20% definition.

To determine the 20%, they must look at their employees in 2011 - and rank them by compensation earned in 2011.

But I have a question on the service exclusion. §1.414(q)-1T Q-9 says that you can exclude "employees who have not completed 6 months of service by the end of such year". It goes on to say that service in the immediately preceding year must be added to service in the current year.

Is "such year" defined as the testing year or the lookback year?

If an employee is hired on 8/1/2011 and terminates on 5/31/2012, could they be excluded when determining the 20% for the 2012 testing year?

• If "such year" is defined as the lookback year, then yes - they can be excluded. They do not have 6 months of service by the end of 2011. "Such year" is defined as the lookback year - which is 2011.
• If "such year" is defined as the testing year, then no - they cannot be excluded. They have in excess of 6 months of service by the end of 2012 - because you have to add in their service from the preceding year (2011). "Such year" is defined as the testing year - which is 2012.

I know there is an example in the regulations - but it's not helping me at all.

And by the way - the Coverage & Nondiscrimination Answer Book defines this exclusion by saying:

The following employees may be excluded from a determination of the top-paid group:

• Employees who have not attained age 21 by the end of the plan year
• Employees who have not completed six months of service at the end of the plan year

When I think of "plan year", I think of the plan year being tested (2012). So that would lead me to believe the second bullet above in the example is correct. It would be nice if the regs & answer book used "determination year", "testing year", or "lookback year" - instead of "such year" and "plan year".

Any opinions?

For a one participant Defined Benefit Plan:

The 5500-EZ instructions indicate that the schedule SB should not be filed but instead it must be retained with plan records. The instructions also indicate that the enrolled actuary must deliver the certified schedule SB to the filer no later than the filing deadline.

It appears there is no requirement to actually wait for the schedule SB before filing. For example, if a client is on extension until 10/15/13 but files the 5500-EZ on 8/7/13, is that a problem if the SB is not signed until 10/14/13?

Thank.

Partnership has fiscal year 10/1 to 9/30, their 401k plan year is calendar year - when are contributions due for tax deduction purposes? - 7/15 of each year? (i.e. the fiscal year for the partnership of 10/1/12 to 9/30/13 ends within the plan year 1/1/13 to 12/31/13 so contributions must be made by 7/15/14 (i.e. 9 1/2 mos. after the fiscal year's end) - I believe this is correct...

Hypothetically you have a CB Plan and a cross-tested 401k PSP. The compbnied Gateway is 7.5%. The average DB Allocation rate for NHCEs is .5%. So an NHCE would need to receive 7% in the PSP to meet the GW requirements (7.5% - .5%). What about a participant who does not benefit in the DB Plan in that year? For example, an employee is a participant in both plans, receives a 3% safe harbor contribution in the 401k PSP, but does not meet the allocation conditions for a cash balance credit (1,000 hours). Would this participant need the full 7.5% in the PSP, or still only the 7%?