Calavera

If this a new business that started in 2017 or 2018, he will not be considered a 5% owner. If business started before 2017, he will be considered a 5% owner. Either way, when he terminate his plan in 2021 and take full lump sum of his benefits in 2021, he will need only 1 year of RMD for 2021. Under the account method you will divide his full lump sum by the appropriate distribution period from 1.401(a)(9)-9.

When did the owner turned 70 1/2?

Interesting enough, the proposed 1.430(a)-1 did not have this -1(b)(5) section.

Thanks Mike. Looks like another absolutely stupid idea but what do I know.

If assets have not been distributed and you didn't change plan year, then in this case I agree that the filing due date does not change. I am not aware of this guidance. Can anybody provide a reference to this guidance?

Not correct. The due date is 4/30/2018 unless extended until 7/15/2018

Nobody said it is a good option. However sometimes it is the only option.

I agree with Kristina. We had this situation several times over last 3 years. It was exactly as she described.

I am not aware of any official guidance. Hope this will help: https://www.actuary.org/files/publications/PC_PPAIssues_FINAL.pdf

Yes-ish. See Q25 of https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/faqs/efast2-form-5500-processing.pdf

I agree that this is a plan document question. Generally, termination due to death, disability, or retirement means termination when eligible for death benefit, disability benefit, or retirement benefit.

... the term required beginning date means April 1 of the calendar year following the later of the calendar year in which the employee attains age 70½ or the calendar year in which the employee retires from employment ... This question keeps popping up, and I think most of us (if not all) agreed that an employee "retires" on 12/31/2017.

Yes I am not aware of anything regarding the testing on a contribution basis. The testing on a benefit basis described in many materials. So from that perspective, the approach for testing on a contribution basis makes sense.

What Effen described would be the testing of a Cash Balance plan on a benefit basis. It seems that original question is about the testing of a DB plan on a contribution basis. Therefore: {CB account / immediate QJSA factor (plan AE) * immediate QJSA (standard factor 8.5/up84) / testing compensation} > (normal rate) should give you the most valuable rate

Client definitely get deduction for 2016. And yes it is a PT. However, there are different opinions on this board regarding whether this particular PT needs to be corrected, and regarding the excise taxes. See prior discussions regarding this matter. http://benefitslink.com/boards/index.php?showtopic=38796 http://benefitslink.com/boards/index.php?showtopic=36434 http://benefitslink.com/boards/index.php?showtopic=28518 http://benefitslink.com/boards/index.php?showtopic=26763 http://benefitslink.com/boards/index.php?showtopic=19745 http://benefitslink.com/boards/index.php?showtopic=11880

Yes. The method is well known. See also Gray Book 2011-7.

I would side with Belgarath on this one, and will go back to Plan Sponsor for clarification. If they would want to make a case, they can change the date of termination in their systems to 12/31.

"The mistakes made by Congress wouldn't be so bad if the next Congress didn't keep trying to correct them." - - Cullen Hightower. "When buying and selling are controlled by legislation, the first things to be bought and sold are legislators" .- -P. J. O'Rourke "The only difference between death and taxes is that death doesn't get worse every time Congress meets.” - - Will Rogers

I thought you cannot go over 100% of comp. Would it make answer $12,400?

I am not aware of any new guidance except the ones already mentioned, IRS examination guide and the discussion: https://www.asppa.org/News/Article/ArticleID/5037 https://www.irs.gov/pub/irs-tege/2013cpe_db-floor-offset-arrangements.pdf

As I recall from one of the EA meetings, the IRS' opinion was that this design violate 133% rule. The suggestion was to grant only portion of the prior year. I do not have any more details. Also note that this design essentially switches 1st year and 2nd year contribution requirements, (i.e. you gain extra 50% of target liability deduction in 1st year and lose it in the 2nd year), so you will get the same deduction over 2 years period.

I like this point. I personally prefer not to count APs on Schedule SB. The 5500 instruction is silent regarding the Schedule SB, so I was trying to see what others would do. Well, the 5500 instruction says that “alternate payees” are not to be counted as participants. There are no reference on alive or deceased participant. This is different from a PBGC instruction where it says: "However, a deceased participant will continue to be counted as a participant if there are one or more beneficiaries or alternate payees who are receiving or have a right to receive benefits earned by the participant."

I agree with everything above. We just have some different opinions in our office regarding the count on Schedule SB. So here are 2 scenarios: 1. Participant and AP are both alive and receiving benefits. 5500 count is 1, PBGC count is 1. Do you show 1 or 2 on Schedule SB? 2. Participant is deceased but AP is still alive and receiving benefits. 5500 count is 0, PBGC count is 1. Do you show 0 or 1 on Schedule SB?

Line 7 instruction to 5500 clearly says: "For pension benefit plans, “alternate payees” entitled to benefits under a qualified domestic relations order are not to be counted as participants for this line." (emphasis mine). What about Schedule SB Line 3 Column (1): Funding Target/Participant Count Breakdown—Enter the number of participants, including beneficiaries of deceased participants, who are or who will be entitled to benefits under the plan? There are no mentioning of "alternate payees" here. Do you include them in the count?

...but plan is covered by PBGC then all is well