Calavera

I don't think it is a DB related (I just work with DB plans). IRC 402©(2) as amended by JCWAA 411(q): "In the case of a transfer described in subparagraph (A) or (B), the amount transferred shall be treated as consisting first of the portion of such distribution that is includible in gross income (determined without regard to paragraph (1))." I have an old printout from ERISA Outline book by Sal Tripodi that has an example in Chapter 7 Section 3 (Taxation Rules). Not sure what would be the section in the newest book. So statement above: "non-taxable portion goes first to lump sum amount payable to participant" was not quite correct. The proper statement would be that the taxable portion goes first to the IRA.

Here is another discussion: http://benefitslink.com/boards/index.php?/topic/41342-cash-balance-plan/

Don’t have anything legal to refer but from my personal cash balance plan experience: According to the IRS the “last day rule” is not allowed for defined benefit plans. When I discussed it with Carolyn Zimmerman (the IRS actuary) during the Enrolled Actuaries conference, she said that this provision is often missed by the IRS reviewers during the determination letter process. She suggested amending the plan to remove this provision. She also suggested using the relief under IRC 7805(b) so it would be allowed to amend this provision prospectively without going back and recalculating account balances for employees who terminated their employment before this amendment.

In dealing with distributions from a DB plan, it depends how the employee elects to receive his benefits. If it is a full lump sum with partial rollover, non-taxable portion goes first to lump sum amount payable to participant. But if it is annuity with partial rollover, the non-taxable portion is split between annuity amount and rollover amount.

I agree that it is not a CG for pensions. I don't know what is the difference between pension and accounting. Can you explain why it is a CG for accounting?

It was long time ago but out of suggested readings for EA1 outlined in http://www.irs.gov/pub/irs-utl/EA%20Program%20Booklet%20Jan%202014.pdf, I would definetely recommend Parmenter's "The Theory of Interest..." and Brown's "Introduction to Mathematics of Demography"

If you are not pursuing ASA/FSA designations I would think passing EA1 is much easier then passing other 2.

402©(2) was amended by the Job Creation and Worker Assistance Act of 2002 as: "In the case of a transfer described in subparagraph (A) or (B), the amount transferred shall be treated as consisting first of the portion of such distribution that is includible in gross income (determined without regard to paragraph (1))." So in the case of a full lump sum election with partial rollover, the taxable portion first goes to an IRA. See also ERISA outline book that has a big section on "effect of basis recovery calculations on application of rollover rules"

Full lump sum rollover - financial institution should confirm the ability to hold a non-taxable portion in a rollover account. Partial lump sum rollover + cash to participant - cash to participant is coming from the non-taxable portion first. Partial lump sum + partial annuity - the non-taxable portion will be split between an annuity and a lump sum.

Yes, that was another thing I was trying to figure out by starting this discussion. The 1.430(f)-1(b)(3)(i) says that the actual rate of return on plan assets is determined on the basis of fair market value and must include the amount and timing of all contributions. In absence of the IRS regulations, I guess if you read it as cash basis or if you read it as accrual basis, you may say it is respectfully required, but if you read it as it is not clear, both methods could be considered reasonable and acceptable. It is just hard for me mentally to accept that the "actual rate of return on plan assets" is not 0% in my example above.

Definetely accrual basis for AVA, but some people think that it also should be used for adjusting the credit balances. The 1.430(f)-1(b)(3)(i) says that for the credit balances adjustment for investment experience, the actual rate of return on plan assets is determined on the basis of fair market value and must include the amount and timing of all contributions. The fair market value is not clearly defined and some people think that it should include the accrued contributions (i.e.Option A). I like Option B myself, since it makes more sense to me, and trying to argue that since it said "must include amount and timing of all contributions", this should be the actual amount and the actual timing of all contributions whether it is for the prior plan year or not and not the discounted amount as of the end of the prior plan year. Thanks to both of you for the support of common sense and 0% asset return.

Assuming the following: 1/1/13 trust statement asset - 100 1/1/14 trust statement asset - 200 7/1/13 contribution made for 2012 plan years – 100 2012 effective rate – 5% What is the rate of return during the 2013 year for the purpose of the credit balances adjustment: Option A: Since the contribution was made for the prior plan year, include it in the beginning of the year value discounted with the 2012 effective rate. Therefore the rate of return is 200 / (100 + 100 / (1.05^0.5)) = 1.22% Option B: Account for the timing of the contribution disregarding the fact that it was made for the prior plan year as: 100 * (1+i) + 100 * (1+i)^0.5 = 200 . Which gives you 0%. Other - ?

Not sure but I think the transition rule of 410(b)(6)© may apply until end of 2014 year where both LLC do not need to recognize each other for the coverage purposes.

Looks like this situation should be covered in tax treaties. I just Googled "rollover to foreign ira" and the following article may give you an idea how to recearch it further: http://www.aicpa.org/publications/taxadviser/2013/august/pages/tax-clinic-story-04.aspx Here are couple more that may be useful: http://www.ehow.com/how_6192812_roll-ira-account-foreign-bank.html http://www.brighthub.com/money/investing/articles/111453.aspx

Usefull links: Determining alien status of a non-U.S. citizen http://www.irs.gov/Individuals/International-Taxpayers/Determining-Alien-Tax-Status Form W-8 BEN - http://www.irs.gov/uac/Form-W-8BEN,-Certificate-of-Foreign-Status-of-Beneficial-Owner-for-United-States-Tax-Withholding Tax treaties - http://www.irs.gov/Businesses/International-Businesses/United-States-Income-Tax-Treaties---A-to-Z U.S. citizen (even if resides outside the United States) or other U.S. person (including a resident alien individual may need to fill out Form W-9 - http://www.irs.gov/pub/irs-pdf/fw9.pdf

Or amend the lump sum rates as 417(e) rates or some arbitrary rate whichever provide the greater lump sum.

Ouch. Well, PBGC's people are very smart and reasonable. It may be worthwhile to try to resolve the issue by contacting them and asking to waive the 4071 penalties based on facts and circumstances before engaging the attorney. The questions to consider would be: Is this one participant an owner? If yes, what year the last filing was done, and when it becomes an owner only plan. Does this company have a defined contribution plan? If yes, was any employer contribution made to this defined contribution plan that would be different if this plan wouldn't be covered by PBGC.

Seems too high for 1 person plan where a variable premium is only $5. "The late payment penalty charge is established by us, subject to ERISA's restriction that the penalty not exceed 100 percent of the unpaid premium amount." - http://www.pbgc.gov/prac/prem/late-payment-charges.html. The waivers and how to contact PBGC are under the PBGC Penalty Waivers section. Also see Past Due Filing Notices section at the bottom of this web page. It could be that the last filing was done when there were more participants, and PBGC is estimating the penalty and interest based on the higher annual premium. I suggest to contact them and have an open discussion.

Just wanted to clarify that for S-corp the contribution is calculated based on W2 income but is made from the income of the corporation that includes K-1 portion.

There may be multiple reasonable allocation methodologies. ATA suggested one of them. Here is another: 1. Record NC per participant 2. Allocate any +/- adjustment to total NC by participant's target liability so sum of 1.+ sum of 2. = minimum required contribution 3. Allocate excess of actual contribution over the minimum required contribution (if any) by particpant's target liability Additionally, I suggest to disclose that your desribed methodology is one of the reasonable methodologies but it is up to an accountant to decide if it is acceptable for tax purposes.

Plan is covered for the 2013 year (no premium proration). You will need to send email to PBGC providing EIN/PN, describing the situation, and requesting to remove the coverage effective 6/13/13. After receiving the PBGC's blessing, you mark your 2013 filing as the final filing.

I assume you meant 6th owner. Then I agree with Lou S. with minor correction that doesn't change the controlled group determination - MW & MCDC = 80% co, 70% io = bscg. Therefore they can have a single employer plan for MW/RW/TR, but they can not have a single-employer plan for all 4 companies . I believe they may have a multiple employers plan, but I am not familiar with this type of plans.

Who owns the missing 9% of MW?

I agree that 415 cite does not mandate what needs to happen with non-415 limited benefits. I have seen it was used as guidance when the plan document does not make clear distinction between pre- and post- retirement mortality.

I believe the legality of not using the pre-retirement mortality when the death benefit is 100% of the present value of the accrued benefit is coming from 415 regulations. See 1.415(b)-1(d)(2).