austin3515

When running testing using net comp, if the owner has K-1 income of say $250,000 AFTER all employer/payroll tax deductions, are other people reducing the comp by the $16,500 in deferrals to test consistently? I'm not sure there is any basis for doing it this way, it just seems like the right thing to do...

Any chance the additional $3,000 was deposited in the following plan year? You could add profit sharing for that next plan year...

From 1.401(a)(4)-11(g) (2) Scope of corrective amendments. For purposes of satisfying the minimum coverage requirements of section 410(b), the nondiscriminatory amount requirement of §1.401(a)(4)–1(b)(2), or the nondiscriminatory plan amendment requirement of §1.401(a)(4)–1(b)(4), a corrective amendment may retroactively increase accruals or allocations for employees who benefited under the plan during the plan year being corrected, or may grant accruals or allocations to individuals who did not benefit under the plan during the plan year being corrected. In addition, for purposes of satisfying the nondiscriminatory current availability requirement of §1.401(a)(4)–4(b) for benefits, rights, or features, a corrective amendment may make a benefit, right, or feature available to employees to whom it was previously not available. A corrective amendment may not, however, correct for a failure to incorporate the pre-termination restrictions of §1.401(a)(4)–5(b). No where does it list top-heavy. Believe me, I love the idea, because it would apply to a plan that I am working on right now, but what is the rationale for triggering -11(g) merely becasue the plan is top heavy. And are you suggesting that I can amend the Plan under 11(g) to, for example, increase allocations to all employees working in the Mail Room, just enough to bring the Plan below 60%?

From the DOL;s FAQ's The signer of the 5500 certifies "(1) that the service provider has been authorized in writing by the plan administrator/plan sponsor to electronically submit the return/report; " To me, that means the organization, not the individual. I woudl assume that depending on the size of the organization, a dew designated "senior" people should do the signing.

We took over a plan, and here's what they do (and have been doing for several years, and allegedly passed audits): -Each employee gets $500 to spend on health insurance benefits, -If people opt out, or if they have lower insurance premiums, the $500 (or the remainder of the $500) is deposited to their account as profit sharing. We're thinking no CODA b/c the employee never has the option to receive it. Let's assume they were on a volume submitter document, each in their own group, and therefore no restrictions on the number of allocation groups. My biggest problem with this is that it seems to fail the requirement that a plan have a definitely determinable allocation method, since the allocation includes these other varaibles (i.e., the insruance premiums and the amount of this stipend). Do you think a favorable determination letter would ever be granted for a document that includes this allocation method specfically?

Bad name for the subject... I though about changing it earlier on, but there were already several posts. I used it because that's what we were all asking for on the asppa petition, but you're right, there is no credential sharing allowed.

Found it in today's benefitslink newsletter... http://www.relius.net/News/TechnicalUpdates.aspx?ID=514

Can you put the link out here for where this blurb came from?

Amen to that, Mike Preston! About the other instances of your signature being out there, the distribution is profoundly limited when comparing it to wide open distribution over the interent, accessible to billiosn of people, including the crooks..

Restructuring is a testing option similiar in nature to testin otherwise excludables differently, so yes it's just "on paper" and exclusively for testing. You "pretend" you have two separate plans, and test both plans for coverage accordingly.

Case in point: a) Owner is 25, and 10 employees are each age 50, so X-Testing does NOT work. b) Plan is integrated at 80% of the taxable wage base, and the owner makes 100K and the 10 ees makes 50K. c) 8 of the 10 are eligible for the PS, but 2 are eligible for just the safe harbor. Question: Does rate group testing pass? The answer is "No" becaue when you impute disparity on this Plan it doesn't give the owner any benefit since he made less than the TWB, yet he is getting a higher rate of contributions. Yet, because we can restructure these plans into two design based safe harbors, no general testing is needed, and this common plan design is not "doomed."

I just think a) this "manual" filing mehtod is legitimately the only conceivable option for some plan sponsors, and b) it should not be availalbe only at the risk of identiy theft, which as we all know is a huge national problem. We haven't officially decided what we are going to do but if we do tell them they must sign, it will have very very strong language suggesting that identity theft is a very very possible outcome from this.

I disagree... Here's what you do: -Restructure the plans into two plans - people who get just the safe harbor (SH Plan) and people who get both (Both Plan). -Treat those people covered by the SH Plan as not benefitting in the Both Plan. If the Both Plan still satisfies coverage, you're OK. -Same thing applies to the SH Plan, but of course there are generally not any HCE's in this plan. Both plans are design based safe harbors and exempt from general testing. Preserving this status is cited as one of the primary reasons for restructuring in the first place. And since many plans now have the 3% SHNEC plus PS with allocation conditions, this is a pretty important thing to be aware of.

I thought it was page 46, but yes I was referring to the actuary stuff on initialing. I'm applying the same logic to the plan administrator signature as the DOL has already applied to the actuary signature. In other words, they've already set the precedent that for security purposes, actuaries are allowed to NOT sign the returns, and instead initial it. I spoke with a forensic accountant who gave me a list of things a crook could do with my signature if he had the opportunity: -Apply for a loan -Sign checks (say, if an employee the businedss checkbook on a table) -Obtain power of attorney Based on that conversdation, I would definitely NOT recommend anyone advise their clients sign their actual signature. And if the DOL ever really gave a client a hard-time about this, I think a perfectly reasonable response is to site security concerns.

We say the testing passed and just keep it simple. Most of our clients wouldn't understand even if they read the year-end letter. If I'm at a meeting, or talking about plan design, or otherwsie involved in a converation on the subject, it would come up. But in my report I just say it passed. This is what I have heard referred to as the KISS policy - Keep It Simple, Stupid

I believe it has to do with trust law, and something about having to have a "corpus" to be anything. So with no money, there's no trust. Maybe a state law thing?

Spousal consent is tied to the automatic cash out thresshold, barring some sort of language to the contrary which you probably will not see in a prototype document.

Page 46 of the 5500 instrutions for this little gem... In my opinion, I would be more than comfortable telling a client to intial as opposed to signing based on that reference.

I'm soliciting a friend of mine forensic accountant for an assessment of just how big of a trainwreck this is... I'll let you know what he says, but if anyone has any inside scoop on how criminals could use this, I would appreciate it... I also thought of just telling clients to hand write their name in all capital letters, or at least just in print.

I completely agree with you...

To say the least I have mixed emotions... We have spent an exorbitant amount of time writing efast credential instructions, efiling mailings, and setting up our web client efiling portal with all custom language, etc. One of the owners of my firm wants to can all this and do it the "new way" to avoid the "support" calls with clients and potential frustration, even though I think it will be very very easy to have them efile with relius' web client. But absolutely, the number one reason NOT to do this is the public disclosure of your signature. Hmmm, what could a criminal do with that I wonder? I'm very hopeful that we'll end up at least trying the efiling/web client thing in the beginning and see how it goes... It's certainly a LOT easier on us that way, assuming (as expected) that clients are going to be able to follow simple instructions to do this.

The EBSA today announced that the EFAST2 electronic filing system for Forms 5500 and 5500-SF employee benefit plan annual reports has a new e-signature option. This option is designed to simplify the electronic filing process, especially for small businesses that use service providers to complete and file their annual reports. Effective Jan. 1, 2010, retirement and welfare plans required to file an annual Form 5500 or 5500-SF must file electronically using the department’s new EFAST2 electronic filing system. More than one million Form 5500 reports are filed each year to satisfy annual reporting requirements under the Employee Retirement Income Security Act and the Internal Revenue Code. EFAST2 is designed to improve the receipt and processing of the Forms 5500 and 5500-SF. Under the new e-signature option, service providers that manage the filing process for plans can get their own signing credentials and submit the electronic Form 5500 or 5500-SF for the plan. The service provider must confirm that it has specific written authorization from the plan administrator to submit the plan’s electronic filing. In addition, the administrator must manually sign a paper copy of the completed filing, and the service provider must attach a PDF copy of the manually signed Form 5500 or 5500-SF as an attachment to the electronic filing submitted to EFAST2. 　 The service provider must communicate to the plan administrator any inquiries received from EFAST2, the Department of Labor, the Internal Revenue Service or the Pension Benefit Guaranty Corp. regarding the filing, and inform the plan administrator that, by electing to use this option, the image of the plan administrator’s manual signature will be included with the rest of the annual return/report posted by the Labor Department on the Internet for public disclosure. 　 The additional e-signature option will be available in the government-sponsored IFILE application beginning May 13, 2010. Filers using EFAST2 approved software to complete and file the Form 5500 or Form 5500-SF should contact their software vendors for information regarding availability of this new e-signature option as part of their software. The current EFAST2 frequently asked questions have been updated, and a new fact sheet and set of frequently asked questions have been developed to help small businesses understand this new option. Those materials are available through http://www.efast.dol.gov. Assistance with the EFAST2 system and the Forms 5500 and 5500-SF is also available toll-free at 866-463-3278. # # #

It happens to be a Corbel document, and Corbel said, and I quote, "there is nothing in the document that would self destruct upon the change in TPA's" But they did have all the same caveats of course regarding the individually designed status.

This is what I thought as well... So if we take over a plan, we really should restate it once we take it over, does everyone agree? Without question, if we don't restate it onto ours, we need to have the client sign any amendments.

We just took over a plan and the prior tpa sent us a letter saying that the plan document is null and void after termination of services. My understanding is that this is not the case. Can someone point me to somethign in a revenue procedure or whatever that addresses this?