Bird

That's interesting. The form itself says "Contributions received or receivable..." in 7, but the instructions do say "..received...during the plan year." I think we'll continue to report on an accrual basis for both lines.

I agree, make absolutely certain that these aren't IRA accounts, although all indications are that they are indeed some sort of plan account. The fact that Fidelity hasn't returned the docs doesn't mean anything in particular; they're probably just sitting in storage. To state the obvious, given the results that we are looking at, Fidelity is NOT providing any compliance assistance, so they're not going to do anything if they get their documents back late. Decisions have to be made about the non-filings and late amendment.

First, recognize that Fidelity's goal is to plug things into their system so everything is automated. So, they created these "inherited profit sharing" accounts, presumably with each beneficiary's social security number assigned, so that when a payout occurs it flows through their system and generates a 1099-R with no further fuss. It's not a different "plan" it's just an account titling convention. Does this still qualify as a "one-man" plan, where the deceased father is the participant? I think so. So they may or may not have had filing requirements, depending on the amount of assets in the plan. Was an EGTRRA document signed in 2009, or maybe 2008? If so, then they're probably OK on all counts, unless assets were over $250,000 and an EZ filing was required. Of course, now that non-spouse rollovers are permitted, they should roll their respective accounts out to IRAs and be done with the hassle of maintaining a plan.

Well...it sounds like your employer has done two separate things: 1) reduced your salary, and 2) made a company contribution to a SEP that just happens to be the amount that your pay was reduced by. It appears that he wants to get a juicy SEP contribution for himself without it costing anything. A SEP is a perfectly legitimate retirement plan, funded entirely by company contributions. It seems that any problems would be associated with item #1 - do you have an employment contract, did he tell you he was reducing your pay, does he have to tell you he is reducing your pay, etc., etc.? Those questions and answers have to do with employment law and I can't help there at all. Good luck. BTW, SARSEPs weren't outlawed, you just can't establish new ones. But it's not a SARSEP so that's not really relevant. Also, FWIW, it sounds like the calender year/fiscal year thing is just a red herring to confuse the issue.

Yes. Just check the box. In theory, the extension will be in "the system" and everything will tie out. Obviously, you should keep a copy of the extension and proof of mailing just in case.

Yes. We put them all together, with a cover letter listing the plans. The copy of the cover letter and the receipt are kept together in our files.

What's the basis for requiring spousal consent if the plan doesn't require it? (!)

Amen. Google "springing cash value" while you're at it.

Thanks Bill. I know you've posted it before...you will probably have to remind me again in 5 years, when it comes up again. But I kinda sorta had a feeling that was the case.

So if a participant doesn't pay it out of their pocket they don't get paid? No good; that's an impediment to getting their rightfully owned plan money (or some such term). I think you have to have a contingency plan to take money from their account. I know certain platforms will allow the TPA to tell them to forfeit money from the participant account, then allow a payment from the forfeiture account to the TPA. Not very convenient, I know! And if you say "pay us, otherwise we'll take the money from the account," no one will pay directly.

Is the ILIT a subtrust of the plan (i.e. within the plan) or is it separate? If separate, the insured would first have to buy the policy from the plan, then give it to the trust. A couple of things to consider: -generally, life insurance premiums can't exceed 50% of cumulative contributions for whole life (25% for term and universal). I'm honestly not sure if rollovers count as contributions for this purpose. The theory I've seen is that rollover money could be withdrawn, therefore all of it should be available to buy life insurance...my question in response to that is "if you're using the provision that says you can withdraw it, then aren't you withdrawing it...and don't you have to pay tax on it?" -determining fmv is a key factor, if you get past other hurdles. It's not $0, or whatever the (low) cash surrender value is!!! (Actually, with a single premium policv, it shouldn't be that low anyway.) It's pretty close to the single premium. So it doesn't make any sense whatsoever to a) rollover $x from IRA to plan, b) buy a policy for $x in the plan, c) take other money and buy the policy from the plan for $x. If he already has $x outside the IRA, just buy the da*n policy with that money! Sounds like the agent has just enough knowledge to be dangerous.

I don't think it was extended. For most people, there was no marginal benefit when compared to simply taking a regular distribution and then donating the same amount to charity (i.e. the deduction wipes out the income). There could have been some cases where doing the direct transfer might have avoided a phase-out of some credit or other, but I'll bet 95% (or more) of the people who used this could have accomplished the same end by taking a distribution and then making a donation as a two step process.

They don't recognize income, or at least they don't have to pay taxes on it. Since it's a non-person bene, it's not eligible for rollover and therefore they can waive withholding.

Agree, a return is not required and any questions should go away with minor correspondence. I know some TPAs prepare/file EZs no matter what, but we don't.

I believe the rule is that pre-1987 money, which most after-tax money is, but not necessarily, can be taken on a first-in first-out basis, so you can effectively take the tax-free part out at any time with no tax consequences. In this case, I don't think it matters, because it is a total distribution, so the participant can just roll the taxable part and keep the tax-free part.

That should be an EZ filing. Just use the 2009 form and change the from/to dates at the top if the 2010 form is not available.

Exactly. As I see it: 1) We're all trained to put the minimum into official employee communications. Putting anything more in exposes you to comments/criticism/complaints/government action. 2) Nobody reads the SPD anyway, and anyway, most people can't quite comprehend what it means to have 3% or 5% or whatever of pay contributed to a plan. Explaining payroll tax benefits of a retirement plan involves a couple of steps of thought/comparison and will only be met with blank stares.

"forfeiture will be disposed of in the PY in which the forfeiture occurs" has to mean "forfeiture will be allocated in the PY in which the forfeiture occurs" which means you do the calcs in 2011 using 2010 data. (Does the doc really say "disposed of?") As to the investment company's dumb, made-up rule about allocating at the point of forfeiture, you're either going to 1-best) convince them to leave the money in the participant's account until you can allocate it in the following year (or be passive/aggressive and refuse to provide them with allocation info and see what they do about it), or 2-lousy) move the money to a temporary holding account, probably a checking account at bank.

Could be, I'm not sure. If they were deposited on Dec 31 2009, they would not be "late" for SH purposes, but would be 2009 additions, not 2008. So the correction might apply to 2009, but I dunno. I try hard to avoid these situations and am no expert on correction issues.

Look for an ASPPA asap tonight...informal guidance is that the 2009 filing won't be due until the 2010 Form 5500 due date.

I would treat the first $20,000 as SH match, and the next $40,000 as PS...assuming that the investments are pooled; if they are self-directed and the money already went to PS I might reconsider, but then lots of questions come up about how it was allocated. The overdeduction is someone else's problem. I guess if you really wanted to, you could treat the $60,000 as PS and put in the $20,000 as SH match now, as a self-correction, with interest. But I wouldn't go there; now you have to deal with contributions being made in different limitation years and potential 415 violations. And no matter what you do, you can't make the full $80,000 legitimately deductible, so what's the point? No matter what you do now, you can't fix the overdeduction. There's no nondeductible contribution penalty; that would be if they put in too much and some of it was not deductible.

I think yes, if the plan permits a type of contribution, that feature should be included. Having said that, we have a lot of plans that permit matching contributions and I don't think I've used 2K on all of them, and am not especially worried about it. I think if a plan had a source that was used in the past but is no longer permitted...(wait for the coin flip)...mmm, I guess I would not include that code. Yes, both 2A and 2E for a profit sharing plan that uses age, service or a grouping allocation.

We've being reporting identifiable fees. So for John Hancock, we use the contract admin charge on the income statement they provide. For American Funds, if recordkeeping fees are waived, we don't report anything. Don't report payments by the sponsor to a service provider; it says fees paid by the plan.

Yes, buy an annuity for whatever the lump sum will buy. Get at least 2 quotes from sound companies; they'll be pretty close anyway. We actually did one of these early last year.

Well, the easy thing to do is to make an Individual Retirement Annuity and not have this be an issue - why isn't it an IRA? Having said that, I think you can (still) buy (or in this case retitle) a Tax Qualified Annuity, where the transfer from plan to annuity is not a taxable event. This used to be done commonly before IRA rollovers were generally allowed. (Hard to believe that hasn't always been the case.) As long as the ins co properly codes it with 0 basis they will make all distributions as taxable events.