Draper55

I have a db plan(actually db/dc combo) under audit. The agent is suggesting an amendment is required which would increase the db benefits for two nhces. I strongly disagree with the agent's assertion. Is there any harm in arguing why I think the agent is wrong(in other words is the worst case the IRS will just say we are right and you must amend?).. The plan is a good bit overfunded(350k) so the additional benefits(about 45k in value )would not be a hardship and would not create any current contribution liability but why should the ees get a slight windfall if it is not justified?? It is not really fair to the other ees in the combo.. A second question is whether plan audit related fees are properly payable from the plan or are they settlor type in nature?? thank you for any comments...

in a combo plan, can the stability and or lookback periods be changed without any testing implication under 401(a)(4)?? Could the stability and lookback periods be considered a brf?? any thoughts are appreciated...I am trying to eat up some surplus...

i am retained in this case by the plan participant..my understanding is that everything else has already been "equitably" distributed. so there is no offsetting against other assets at this point. As far as jurisdiction goes my research and that of the participant's general divorce consultant is that there is no on point precedent in this case. However, neither of us are lawyers so we cannot give legal opinions. What alternate payee's counsel has proposed would go against the California Brown decision referred to in MIke's post but this is not a California case. That being said, I am being asked, in a sense, if I think a defined benefit pension plan is earned over a participant's work history..In this case, the cash balance grandfather/transition benefit/formula is identical to the pre cash balance conversion benefit/formula, yet alternate payee counsel is applying a different weighting to these pieces which does not make sense to me..

the benefit is in payment status..so this is a "discussion" over what the shared payment in the QDRO will be. The Actuarial Standards Board statement talks about the allocation method but does not give any blessing on using the time rule or otherwise. Lawyers seem to talk about bright line versus foundational building in terms of whether the marital benefit is really earned over the entire career or just during the marriage. Ultimately, as has been pointed out I guess it comes down to an agreement by the two parties.

i have been asked to weigh in on the following situation: participant is in a contributory career average plan for 20 years(part A). the plan is then amended to a cash balance plan with the pay credits based on a combined age and service schedule. for the first five years of the cash balance plan the participant will accrue under the contributory career average formula if greater(transition benefit)(part B). the participant retires 8 years after the cash balance effective date with three years cash balance accumulation(part D). the benefit is then described as A+B+D(pre cb plus transition plus cb). Note if first five years of cash balance is bigger it is called C. Participant marries five years before the cash balance effective date and divorces shortly after retirement. for simplicity the cutoff date is being deemed the retirement date. When participant went into receipt he was told what A,B, and D are. Counsel for alternative payee proposes marital portion to be (13/28*A) +B+C with spouse to get 50%. I think 13/28(A+B+C)is more fair and equitable. In any event counsel should use 5/20*A+B+C to even have the summation approach make sense. Any thoughts? note:accrued benefit at date of marriage is not known.

basic db/dc combo..er has used cushion to advance fund db..now would like to get out of the arrangement sooner than later..two questions. 1.)currently only lump sum ae is 417(e)..if plan is amended to use greater of 417(e) and some other rate(e.g. 3.5%)..how does one test for nondiscrimination...seems difficult to me... 2.)if the excess funding is transferred to 401(k) replacement plan and allocated over 7 years can this excess be used for any type er money(qnec,matching,prshar etc.)? any thoughts are appreciated...

thanks for your replies...this is a 401(k) with no er contributions ..deferrals only..it is a heavy turnover shop so alot of deferral eligibles are in and out. sounds like for crossing over 120(123 to be exact)one time they will need to go the full 5500 route..they will not be to thrilled about this but it is what it is I guess.

I have a plan that will be just over 120 at boy 2015 and goes back under 100 at eoy 2015 and will remain there for some time in the future. Over half the count is due to people eligible to defer(so we must count them as benefiting yes?)who do not and have no money in the plan. there is a pooled account and also individual brokerage accounts for the deferral money. My question is regarding the change in the value on the brokerage accounts. Can I lump the change due to investments(divs,int,cap gains etc.)onto one line on the schedule H? Surely one is not expected to break out the performance on these individual accounts? This could require scouring multiple individual statements..Your thoughts are appreciated.. THank you..

I did see that you must use 5.7% after I posted this(thank you Mike for confirming this)..interesting that you can use the 4.3 and other integration levels for the entire plan but not for a component plan.. regarding the gateway...do you think that you only have to satisfy the gateway for the cross tested component plan or also the component plan that is tested on a defined contribution basis?

I have a basic profit sharing plan for a group of 10 ees;2 are hces and 8 are nhces. usual cross testing technique doesn't work that well do to demographics.I would like to do the following and hope that it is valid. two component plans with 1 hce and 4 nhces in each. each plan would pass the ratio% test. for 401(a)(4) I want to cross test one component plan A. the only rate group will have one hce and 3 nhces which is >70%(3/8/(1/2))(I am counting those in the other component plan(B) as 0s for this purpose). for the other component plan B I want to allocate as if it were a 401(l) integrated plan using 4.3% and a $41k integration level. the ratio% for B is>70 also. The whole plan satisfies the ratio% test but not the average benefits test. Anything seem off here??

I have a client who is getting divorced and wants to change his pension and profit sharing plan beneficiaries... 1.for the qpsa to be waived pre-divorce what needs to be present to use the legal separation exception...something from the court? 2.is there a legal separation exemption on a profit sharing plan as well?(no j&s in the plan). thanks for any responses

it is the tv that is not being reported on the sf...my only guess here is that the ea and the 5500 preparer are not communicating.

I have reviewed the 5500 SF defined benefit plan filings for the client of a a CPA that I work with for the years 2011-2014. the sb uses a boy val date. there is one active and one tv on the sb each year(participant count and funding target) however, the 5500sf each year only has one participant. in addition there is a benefit statement for the term vested participant each year..can this be anything other than a repeated oversight? appreciate any thoughts...

One additional question relative to this situation. Once again it is owner employee only. Suppose secretary(the only common law employee) becomes eligible on 7/1 and then dos not make it to the year end. No allocation is made for the year. So the 5500 boy count would be one, the eoy count would be one and the number of people with account balances would be one. Yet there was an eligible employee covered during the year. Would this be an EZ filer or not? I think some believe that if your boy count includes a common law eligible you are not allowed to use the EZ.. Is the situation I described different?? thank you..

1.)the 5500 instructions describe who is a participant. for active employees the phrase earning or retaining credited service is used. In the EZ instructions we read that it must cover only and owner and spouse (or partners) and provide benefits only for them. Does earning and retaining credited service equate to covering? Suppose a historically one person profit sharing plan now has a common law employee for 2014 but no contribution is made for 2014. Can an EZ be filed for 2014? The newly eligible ee is not retaining or crediting service and has no benefit. separate question.. 2.)an IRS notice is received by plan sponsor querying the absence of a 2013 5500 filing..in reality a 2012 return was also not filed but no corresponding notice has been received. Is it likely that a 2012 notice will come at a later date or was the 2012 unfiled return not picked up...any guesses or thoughts?

I am wondering if it is known for certain whether all partnership interests(limited or general) are to be counted for scheduled I item 3(a) or perhaps just the non publicly traded partnership interests?

two person db plan(h&w) that is underfunded..plan is invested in cash so funding is deteriorating. Suppose the plan is terminated 4/30/2015. There is no accrual for 2015 so the 2015 min is just a prorata amortization of the unfunded(using ppa mechanics of course), 1/3 if i understand it correct. Val date could logically be 4/30, date of asset distribution or 12/31. No more auto switch to term date so I think it is the later of the date of asset distribution and 12/31? If the val date is the date of distribution is the unfunded determined on that date prior to distribution? If this is this case then client should distribute assets asap so that the prorata amortization is minimized due to deteriorating funding? If the assets have not been distributed by eoy, then the final minimum due is the prorata charge based on the eoy asset and liability amounts. Sound correct? Thanks for any thoughts..

I don't do many boy vals and generally do not advocate pfcb creation but here is my question: Client has no minimum required contribution for 2014 but contributes 100k during 2014. During 2014 client loses 35% in asset value even with the 100k cont due to risky stock losses. no credit balance as of 1/1/14. I do the 1/1/15 val and req min now about 250k and AFTAP>60 but <80. If client elects to create pfcb by making an election before 9/15/15 to use the excess 14 conts, then should or must i redo the 1/1/15 val(maybe just reflect it when i do the '15 SB?) and must i redo the 2015 AFTAP or only if it moves out of the 60-80 range? Sorry if this is too basic for you boyers. plan has two participants, one hce and one nhce.... thanks for any responses...

I am assuming the incident happened due to an employee acting on their own and and employee at the brokerage firm just robotically processing the rollover request. I had this happen several years ago with several hces on an account..plan administrator had to fire the brokerage firm due to the impermissible distributions...Whatever the cause here I am going to tell the sponsor/administrator they need to get the money rolled back into the plan as clearly there can be no premature inservice distributions of k money. thanks much for your imput...

medium size 401(k)(preapproved document..no fdl) had two operational errors in 2014: 1.)allowed one person(nhce) to defer before eligible...appears that the rev proc allows an amendment to bring the person in for the applicable time period..would it be reasonable to also return the deferral with earnings and 1099R the person.in this case is the person in the 2014 adp test or not and would the 1099r be 2014 or 2015? 2.)active nhce rolled over his deferral account(self directed brokerage account).. . what would be a reasonable attempt to get this money back into the plan ..give the ee 60 days and then issue a 1099r for a taxable premature distribution if not returned? Seems to me there has to be some penalty to the employee ..i.e., cannot just..notify the ee and then do nothing if no response.. any comments are appreciated...

thanks for your responses..in this case the stability period is the plan quarter and the lookback is the second calendar month before the stability period...no problem with the interest rates...I do think that 2015 mortality is required though...Actually from an administrative standpoint there were two other issues here...participant was given the paperwork for 2/1/2015 asd in January 2015 so no 30-180 window and only absolute values were shown..no relative values which why I was engaged to see how much of a loss in value would occur by taking the lump sum versus the subsidized early annuity...

I was reviewing a benefit calculation for an individual and I had two questions: 1)the plan is a integrated excess plan. for covered comp the calculation showed the covered comp for someone turning 62 in 2014..every covered comp excess formula I have seen used participant specific covered comp based on year of birth. 401(l) reg is quite difficult to read regarding single integration $ amounts so I am wondering if that is ok or someone doing the calc picked up the wrong amount. 2)the lump sum amount payable as of 2/1/15 uses the 2014 applicable table. I reviewed the IRS guide and it seems that you must use the mortality table relevant to the applicable stability period(i.e., 2015 table in this instance)

thanks guys for your responses; I was able to obtain from the brokerage firm a 'in' IRA transaction listing showing dollarized amounts.I was able to total these amounts in Excel and report the correct rollover amount on the 1099R. .thanks again for your help...

I have a client who rolls her 401(k) account into to her IRA in 2014. She has multiple positions(about 30 stocks and 15 bonds) that are transferred in kind. On the final statement no values are shown on the day the positions are journaled; only number of shares and bond face amounts. Given that there is no tax effect associated with the precision of the valuation, is it bad practice to just use the previous statement value of the portfolio or is it good practice in that I can't justify billing the client for the date of journaling calculation given that it is has no tax effect on her.

I have a small business combo plan..husband and wife and a few common law ees. there are children on the payroll who are 18 but not 21. Can I have them be eligible for the profit sharing plan and not the db plan?. ..i.e.,reduce the ps eligibility age to 18 but not the db). My goal would be to improve the rate group testing by having them eligible but not benefit ..but I do not want to boost the count for 401(a)(26) and have more db participants. I do not need to include them for 401(a)(26) even though they are in the 410(b)/401(a)(4) testing..correct?