Effen

As FAPinJax points out, if you didn't give them a suspension notice, it doesn't really matter what the document says. If you didn't give them a notice, they need to get an actuarial increase.

DB or DC? I assume DC, but just wanted to make sure. Since the participant got your number from somewhere, who/what gave you the authority to talk to him and who agreed to pay for the cost of that service?

FWIW, I like Malwarebytes as well. Seems to work on most issues we have encountered.

Sorry, no real experience.

Did Dick state on his election package that he was not married, or did the PA just assume he wasn't married when the package was prepared? In other words, did dick lie on his election package by stating he wasn't married, or did the package never ask the question? Seems to me that if he lied on his package then both the plan and his wife could bring suit for forgery and recover the past payments. They should move to collect the entire lump sum if he was improperly paid the lump sum, or the amount of the monthly payments in excess of the J&100. They could probably reduce future payment to recover as well. It doesn't sound like the plan is in any "trouble", assuming they really had no knowledge of his marriage - did she ever come to the Christmas party? Obviously, you need to talk to an ERISA attorney.

Not disagreeing with ATA, but I think a 412(d)(2) election is required. Under the previous law this election only applied to amendments made after the end of the plan year, however PPA made it required for any amendment made after the valuation date. One question would be is checking the box on the Sch. R sufficient to satisify the requirement even though the instructions state it is required for amendments adopted after the end of the plan year? Do you think you would need a PPA type election like those used to add/burn/use PFB/COBs?

Depends on a couple of different things (assuming it is a small plan that only requires 15 days notice). 1) Did they earn any benefit from 1/1/ to 4/12? If so, than I think they would have a TNC. 2) Did they adopt a 412(d)(2) election? If so, they are electing to have the amendment treated like was in effect on the first day of the year and therefore no TNC. I don't think "prorating" would be proper. It is either based on the actual accrual earned, or if no accrual and a 412(d)(2) election then it would be zero. Also, don't forget that the TNC also needs to reflect anticipated administrative expenses, so just because there isn't any accrual, doesn't necessary mean the TNC is zero.

Just to throw something else out there… not everyone agrees with the Gray Book response on this issue and would argue that at the very least the Gray Book answer for "a" should be adjusted to say "assuming the plan provides". A plan cannot pay a form of benefit unless it is in the document. Just because the Gray Book provides a solution, the plan still must provide for the option before it can be paid. If the plan doesn't have any special language providing this alternative benefit form to a restricted HCE, then the HCE’s only choice is to either defer their election, or forgo the lump sum and elect one of the monthly annuity options. So, getting to Merlin's questions, it would seem that someone could probably draft plan language that would address your issues before they occur. I think there would be many possible ways to handle this.

It sounds like you are saying he retired and elected a life annuity because he couldn't get the lump sum. If so, there is nothing to pay the beneficiaries. Why do you say the plan still owes the lump sum?

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?