Dennis Povloski

Since this is a pretty small plan (12 participants), then I guess what we really need to determine is if it would cost more to bump up the allocation to the three participants that did not get a 2% accrual in the Cash Balance or to just give all the non-keys 5%. Since the three participants not getting enough to satisfy top heavy are pretty old, their contributions would need to be kicked up significantly to get us to that level. This is actually a proposal that we are working on. Is this something that you think is covered with standardized language (that will allow us to use comparability to satisfy top heavy in this manner), or does this typically need special language and a determination letter? Thanks again for all your help!

So if we tried for #4, we couldn't just dump 5% in the DC. We would have to see what DC allocation would bring these people up to the equivalent of the 2% DB?

Good Morning All! If a client has a Cash Balance Plan and a Profit Sharing Plan where the Cash balance provides 2% for almost everyone except for a couple older participants, is it possible to kick up their allocations in the Profit Sharing Plan and thus satisfy top heavy for everyone? Possibly turn the Profit Sharing into a Class Plan? Any help would be most appreciated! Thanks!

So the employer could use the cash in the DB to purchase land, but they couldn't contribute land directly, right? Another question...if they manage to use plan assets to purchase a parcel of land, since the land is not a qualifying asset will it have to covered 100% by a fidelity bond. If the land is covered 100% by the fidelity bond, and it is more than 10% of the total assets does that satisfy the fidelity bond coverage for all plan assets?

I know that one of my TPA clients has a land investment in his DB plan (a restaurant franchise, actually), but one of my full service clients asked if he was allowed to put land in his DB. I told him that I thought he could, but there were some special rules on the valuation, bond coverage, etc. When I went to look that up in the ERISA Outline Book, it appears that land is not allowed in a Pension Plan. Am I understanding correctly? Any help is appreciated! Thanks!

Good Deal! Thank you all for your help!

We have a plan where a participant past his required 70.5 start date died. Since this was a small plan designed around him, the plan terminated. The surviving spouse (who was also a participant in the plan and not yet 70.5), received his distribution and rolled it and her benefit into an IRA when the plan terminated. It's my understanding (and I'm relatively new to the business, so please correct me if I'm wrong), that at this point, she has received a full distribution of his benefit, so she will not be required to take a 70.5 based on his benefit in the plan. She will only be required to start receiving 70.5s when she becomes eligible and the amount will be determined using the IRA rules. The client's CPA says that he went to a conference and was told that she still had to take 70.5s based on his age on the amount she received from him??? Is there something new in effect, or a special provision in the 70.5 rules for deceased participants that I don't know about?