Effen

I agree it MAY work using Windows 7 - XP Mode, however my understanding is that requires a system reboot in order to get the machine into XP Mode. Then, once in XP mode, the Windows 7 applications won't work. Therefore, in order to prepare a 5500 you would need to reboot, then reboot again when you are done to put your machine back into Windows 7 mode. Not a very practical answer for an office where people don't work on 5500s exclusively all day long.

Just an FYI that Relius does NOT work with Windows 7 machines. The sales people tell you they have work arounds, but the techs confirm they don't really work. We signed up with Relius before we knew this, and are now scrambling to find an new vendor.

If they rejected the lump sum and took the annuity 18 months ago, what makes you think they would want a lump sum now? You can't force them to take it. Just go buy the annuity - its what the participant elected.

One of those listed has late retirement provisions in their document that are so ambigious they are unworkable or illegal. I have spoken to them several times about it and they have admitted the provisions don’t really comply with the law - after I pointed out the applicable provisions of the law. When I ask them how we are supposed to interpret the language so we can do a ben calc they told me they would check with their actuary friends and get back to me. Seems to me if they wrote the document they should understand what it means, not asking their actuary friends to interpret what they wrote for them. Anyway, just one example. I'm not big on canned documents because often the subtle stuff no one reads ends up costing the clients 10X what they saved. Plus my experience is that you generally get very little help from the providers on anything even remotely technical. But hey, that’s just me. Maybe those guys are your friends so they will actually call you back.

Law practicing document provider - I generally call that an oxymoron.

I think the main reason for the surcharge is to give employers an incentive to re-open the contract. That said, the 5% surcharge is often significantly less than the rehab plan will call for. I think you need to contact your representitive trustees if you want to move quicker on the rehab plan. They are really the ones in control of the situation.

If you are taking them over, and it isn't your signiture on the SB, I don't think you have any obligation to make sure the prior actuary got all the proper elections. Just my opinion from a reasonableness point of view. Holland used to say that once you signed a Sch B you owned the credit balance, I guess the same logic could be true here, but 10 years from now I don't think you would be worried about all their past elections. Do your best to document as much as possible. If they didn't elect to create a PFB, don't use one. If the prior actuary told you they used their COB, assume he has the election - if it isn't your signiture, I don't think you need to see it.

Example 1: If there was no election prepared, how could the client have "used a portion" of the COB to offset the MRC? They couldn't have used it, if they didn't elect to use it. How did you know that was what they wanted to do? If they told you verbally, I would ask them to document their decision at this point. However, the actuary should not have signed the SB without a written election. Example 2: Just because they made excess contributions doesn't mean they created a PFB. If they don't elect to add the excess to the PFB, then you have no PFB. Example 3: I don't think I understand your question. You keep saying "balance election", but you need to be more specific. There are many elections that impact the COB or PFB. When you say "minimum contribution", do you mean the required contribution assuming they were going to use the COB to offset? (TNC + Shortfall amort - COB?) If so, and you don't have an election to use the COB, you probably need to re-file the SB showing a deficiency (or whatever they call it now). However, it may be a better idea to ask them to confirm the decision they previously made in writing at this time. The old days of one simple straight forward “minimum” are gone. The “minimum” changes based on the employer elections. I don't see much forgiveness on these elections. If anything it is the one thing I can see the IRS coming back and examining. Maybe not the content of the elections, but simply do they exist. I think it was pretty clear that they were necessary and to just say you didn't do them for 2008 would leave you fairly exposed. I think “good faith” means you at least gave some effort to comply.

Are you saying that you (or the actuary) signed an SB based on certain elections that weren't documented? It might help if you provided a specific example. I think you probably have a lot of good faith room for 2008 & 2009, but I don't think you can just ignore the requirement. If you filed the 2008 SB assuming they were going to elect to use their COB, but you didn't actually get the election, you should probably ask the client to send you their file copy which I am sure would be properly signed and dated. If one isn't available, you probably need to amend the SB. If you are talking about adding something to the prefunding, or reducing the prefunding/cob, then I think you just operate as though they didn't elect to do it, unless they want to give you their file copy again. I doubt there will ever be any correction procedures available, other than sanctions against the actuary. If the client didn't make the election, the actuary shouldn't be preparing SB's as though they did. I beleive in order for an election to exist, it must be documented. If it isn't documented, it never happened and the SB needs to be prepared accordingly.

Also, if you are an ASPPA member and an EA, then you are now also an ACOPA member. Their board useful and often gets a little higher level of discussion, but it is very clumsy to work with. Threads are often very difficult to follow and find. Not nearly as well organized as Benefitslink.

I did a little more research and found that the IRS has been putting the following on their 431(d) extension approval letters: I questioned thier position and thier reply was that they were concerned that people could use other plans to circumvent the intent of 412(f) before PPA and 412©(7) after PPA and therefore, they will treat increases to other plans as a violation. So, it looks to me like this is similar to the ".5% rule" to determine if someone is benefiting under 401(a)(26). We can explain the IRS's position to the Trustee and let them decide if it is worth the fight.

We generally use expected benefit payments for the expected benefit payments. In other words, what you expect to pay during 2010. I didn't really understand your second question, but generally the expected contributions is also what you expect will be contributed during the next fiscal year.

EXACTLY! If they want the lump sum option, why not make it so it is only available at NRD/ERD? That way they can't blow their money until they are old enough to make their own decisions.

I was discussing an amortization extension with a fairly high up IRS representative and they reminded me that the Trustees are not allowed to increase benefits to ANY plan during the extension period. In other words, if during the period of the extension the union negotiates a higher contribution rate for the defined contribution plan, they have violated the terms of the extension. I knew they couldn't increase benefits in the db plan, but I didn't know it applied to ANY plan. Just thought I would throw this out there for the group’s consideration.

Thank you, but now I'm really confused (referring to GMK's link). Where does it say in the Code or Regs that pre-87 employee contributions can be taken without taxation? Found it: Pg. 26 of IRS Publication 575 says "If you roll over only part of a distribution that includes both taxable and nontaxable amounts, the amount you roll over is treated as coming first from the taxable part of the distribution" So doesn't that mean if I rollover $80K of my $100K distribution it will be treated as the taxable portion, and therefore, the $20K remaining will be non-taxable? ... Or is this the contradiction/error referenced in the linked post because the language in Publication 575 contradicts 72(e)(8)(B)?

SoCal, I know I am going way back, but what did you mean by this? Let say my lump sum from a contributory db plan is $100,000. Of this $20,000 is the sum of my post tax employee contributions (no interest, just the amount I put in). If I elect to take $20,000 in cash and rollover the other $80,000 into an IRA do I owe any tax on the $20K? I'm thinking 80% of the 20K is still taxable, but I can't find anything that states this clearly. Is IRS Section 72(e)(8) my best site? I was pretty confident until I read this old post and now you have me wondering if I am correct?

Can you be more specific about what you are trying to do? Are you preparing a Notice of Plan Benefits, are you trying to calculate a lump sum, are you preparing distribution election forms, are you gathering information for an insurance company quote? Actual retirement date is always an unknown future date. If you are determining a lump sum for someone beyond NRD, you determine the monthly benefit as of the lump sum payment date, then figure out the amount of the lump sum. If the termination delays the actual payout date, you just need to recalc everything as of a new date. There is no deferral period once they are past NRD. If the plan is terminating, and you are offering a lump sum, the participant should be given the choice of an immediate lump sum, an immediate annuity (with options), or continued deferral (which must be purchased by an insurance company). OR, are you saying your plan only pays a benefit after separation from service and since they haven't terminated, they aren't entitled to a benefit under the terms of the plan? If that is true, you can amend the plan to allow for immediate payment on the termination date, or buy an annuity that will pay the benefits once they separate from service (insurance companies generally don't like this type of provision because they will need to track the participants status).

I still don't understand the question. The benefits are calculated as the the benefit commencement date. I don't think the plan termination date has any relavence. If the benefit is going to commence after NRD, it would need to be actuarially increased to reflect the missed payments, unless you gave the participant a suspension of benefits notice at their NRD. You wouldn't stop the rollup just because the plan terminated.

Many people argue that the at-risk liability is equal to the sum of the cash balance accounts, therefore a contribution to bring the assets up to the at-risk liability would be deductible. However, the at-risk liability only includes vested benefits, therefore for a non-vested participant, technically you would still need to project and discount at least a few years to account for the vesting.

A lot of people complained last year about the timing and their response was that the meetings are set almost 10 years in advance. I assume when they scheduled it, they were more concerned about Easter on April 4th. I know the timing sucks, but not even the meeting committee could have anticipated the idiocy of PPA. Although I am one of those that likes the EA meetings, there are lots of other good meetings later in the year. I hear the ACOPA and Conference meetings are very good.

This question may show my ignorance --- but why are you allocating a funding deficiency. To whom are your trying to allocate it, and why? Are you talking about the excise tax on the deficiency? If so, aren't they in Critical status so the excise tax shouldn't apply?

I don't do any floor offsets for a multitude of reasons, most have already been stated. I do work with attorneys who draft them and they are telling it has gotten very difficult for them to get a floor offset document through IRS approval process. So much so that some documents that were approved on the last go round aren't getting approved this time. The IRS has even forced them to retroactively "fix" documents they previously approved. I'm just throwing it out there. To me, floor offsets just aren't worth the aggravation.

Not disagreeing with anything that has been said so far, I would argue the valuation is "due" whenever the client wants it. If your freind would like to know how much he should contribute for 2009 and the actuary hasn't told him yet, he needs to ask the actuary why. It might be an EOY valuation as we mentioned, it might be he never gave the actuary what he needs to do the calculations, it might be the actuary just didn't get to it yet. It use to be that most small plans were EOY. PPA made this virtually impossible so many have swithed to BOY. Personally, only my small cash balance clients are still EOY.

Although multi-employer "annuity" plans may look/feel like a 401(k) plan, 99% of the time they are not. Assuming the contribution rate is negotiated, it is considered employer money and not subject to testing. Even if it really was a 401(k) and each participant decided how much they wanted to defer, do you have any HCE's in the group?

i think you heard right