Below Ground

Unbelievable!

You MUST be kidding. This is too much. How did you find this Andy?

No takers on this?

I agree with BG5150. I think use of "forfeiture account" is just semantics, and has no real impact. Of course, our world is a world where words do matter.

Jim, I am having a hard time finding it. For example, I read through the entire amendment for the PT Exemption and no luck. Do you have a link that you could provide? Thanks, I always appreciate your postings.

Plan deposited deferrals late and wishes to correct by providing interest and filing Form 5330. A "VFCP Filing" is not desired. I understand there is also a notice that needs to be distributed to members discussing the late deferrals and related correction. Is there available any guidance on the content of that notice? Thanks.

okay. thanks.

My position, for what little it may be worth, is identical to what I believe to be held by Bird. I find that when you report remedial distributions as a payable (as I used to do 20 years ago), you simply "muddy up the accounting". While I agree that there is a valid argument that supports reporting them as a payable, I simply don't agree with that position. I can tell you that having had many plans successfully go through IRS and DOL Audits, not once was I told to report these distributions as a payable. I suggest that a "governmental EP/EO person" should know this topic. This may not, however, be the case for the person doing the accountant's opinion for the 5500. (I am NOT saying that this is always or typically the case.) For example, I have needed to explain how an Integrated Allocation works (you know, 5.7% of TWB) to the auditor doing the "5500 Opinion". I have never had to explain something like that to an IRS or DOL Auditor. Perhaps getting that "directive" in writing from the auditor after showing him/her the instructions that say "paid during the year" may be the best course Alex. Again, my opinion, which I expect is not worth all that much.

Show in year of payment as corrective distribution. Assuming plan year is calendar, it is not reported on 2008 Form. I note that some TPAs will list as a payable for 2008. I don't see any benefit to that approach.

Bird - Sorry for the confusion. I was trying to find a discussion that could provide insight toward the problem at hand. This was the closest to the topic that I found, so I guessed that related posters would be most likely have an understanding of the problem. To put this problem in context, getting something like a prior valuation has proven to be impossible. What I have are financial account statements and an ADP/ACP Test. From these it appears that this policy was held for the owner as would be typical to the "side fund/life policy scenerio" described by Bird. My concern that perhaps this is something else was due to the apparent omission of the premium payment under allocations of the plan. I can see the deferral allocation via testing and deposits, I can see the match allocation via testing and deposits, I can't see the premium payment being accounted for anywhere. I only know that the firm paid and deducted these monies. This made me think that perhaps this policy is something like "Key Man", a topic that is "rusty" for me. I should also note that this policy is held in a pooled fund for which there does not appear to be any allocation or reconciliation between members. Yes, as clean-up work I will be trying to recreate a valuation. (I know -- good luck on determining a starting point.) :angry: Given the insights already provided I am coming to the conclusion that I have that "different mess" that Bird alludes too. Having been in this business for a few years I am not surprised. Disappointed, but not surprised. Again, thanks to everyone. Of course, additional comments would also be appreciated.

Bird - I don't know if policy is whole, term or universal. (I am having some problems getting information. It is a takeover plan.) I do know that the policy owner is the trust and the insured is the firm's owner. No other policy is held for any other person under the Plan. The fund holding this policy is a pooled fund. Related "investment experience" of the policy appears to have allocated under the pool as prorata to member balances which are held under the pool. The firm paid an annual premium of $1,000 which does not look like it was applied to any employer contribution allocation. (The Plan allows for deferrals and the firm does a simple 25% Match.) I was looking to see if this was a form of "Key Man Insurance", and if so was the premium payment a deductible expense instead of an employer contribution. Honestly, I have not seen use of Key Man Insurance in well over a decade, so I am on shakey ground. Any insight would be appreciated.

Thanks Bill. In this case there was a $1,000 premium that was paid by the firm. I am wondering how this $1,000 is accounted for under the Plan. Again, thanks for your reply.

If I understand the preceding discussion, this means that a Plan could use as an investment a life policy on the life of a key person; which is not specifically attributed to that person's account/benefit under the Plan. In otherwords, the policy is simply an asset of the trust and applies to all member accounts. Is that correct? If yes and premium is not part of a specific person's account, how are premium payments accounted for under the Plan? If they are a deductible contribution to whose account are these monies allocated?

Sorry, but I can't research this right now for you. I have several projects that are demanding my time. I do think that if you review multiple employer plans you will that it also has different rules from other plans. I do not think that the selection of "Multiple Employer Filing Status" means that the Plan is no longer a multiemployer plan. (Please note use of "think" as opposed to "know".) I am fairly certain that 2 5500 Forms would not be correct. In post #4, I said that I was not 100% sure about the impact on 5500 Filing Status. With this qualification I can only say that until I look deeper into this issue, I can only say that the Multiple Employer Filing Status makes the most sense to me. It seems to best describe the entire plan. I am glad that my other comments were "very helpful". Let me know what you determine on the 5500 Filing Status as it is interesting. I wish I had a bit more time available for that topic. Good Luck.

No separate schedules for 5500. I seem to recall that there was separate Schedule T's years ago for multiple employer, but no more. I'm not sure on the designation between multi and multiple for the 5500. That was the one issue I was not 100% confident with, so I didn't address in my first reply. I would most likely use multiple employer as the 5500 instructions seems to indicate that multiple employer is the right choice. (I think you might be able to select both. I would need to review in more depth to make a solid decision.) I include the the instructions for that box below. Emphasis added is mine. Box A(3). Multiple-Employer Plan. Check this box if the Form 5500 is being filed for a multiple-employer plan. A multiple-employer plan is a plan that is maintained by more than one employer and is not one of the plans already described. Multiple-employer plans can be collectively bargained and collectively funded, but if covered by PBGC termination insurance, must have properly elected before September 27, 1981, not to be treated as a multiemployer plan under Code section 414(f)(5) or ERISA sections 3(37)(E) and 4001(a)(3). Participating employers do not file individually for this type of plan. Do not check this box if the employers maintaining the plan are members of the same controlled group.

One document. Separate Adoptions. Single 5500. Separate ADP/ACP & Top Heavy Testing. Consolidated for 415 Limits. Full portability between adopting entities.

Perfect! Thanks.

BG5150 - Sounds like a good plan to me!

Years ago, finding a plan document that addressed PW was somewhat hard. I find that the documents from the nearly all reputable vendors seem to cover this fairly well now. With respect to your OP, look at the "addendum" or the ability to add one, allowing for the flexibility you want. Good luck!

I must respectfully disagree with Mr. Burns on the need to use separate plans. Most good documents allow for different vesting and eligiblity. In fact, using separate plans would typically increase operating costs for little, if any, value. Of course, there are times when use of separate plans makes sense, but I did not get that sense from the OP. If I read that right the question was can Prevailing Wage Provisons be applied differently to different units of the firm. That "problem" is simply addressed by how the document defines application of related provisions. That would NOT require use of a separate document, just care when writing the document. Mr. Burns would be correct, however, if the added cost is justified by a benefit that may be obtain from separate plans. Those reasons could include a unit being a separate line of business (regardless of being an actual QSLOB) that would benefit from such separation. Note that if not a QSLOB, Coverage Testing could still be an important consideration.

Davis Bacon Allocations would almost always pass Coverage Testing given the composition of benefitting employees, so without even touching on "concepts" of Davis Bacon Allocations, I think it is safe to say you will be fine. Just look at standard coverage testing to see if there could be a problem.

Our agreement uses a 60 day notice. We also have a clause that says if we are not paid (or have been paid), we are not responsiblity for anything not done under any circumstance. A comprehensive agreement when engaged for service is important IMHO. We have been down this road too. Our counsel told us that (regardless of our agreement) we are not liable to provide any service for which payment was not received. (As a business we are not responsible if not compensated for service.) We were told that simply writing a letter now saying no further service would be provided given lack of past payment was enough. Many of us try to help out others in distress. There does come a point when enough is enough. If you have reached that point, I suggest that you check with your counsel and then end the relationship.

Wow! As I said -- messy. These are great comments. Thanks to all. We do have an order that says "pay to either"! It does seem to give preference to the estate of the Participant, but that seems to "violate" the designation of the daughter as the beneficiary. We are checking with the document vendor. I will let everyone know what they say.

Getting messy? I would say a little. Anyway... My logic in Post #6 was that since the Plan allows the Beneficiary to make a designation of beneficiary, the Beneficiary in de facto becomes the Participant at this point (for this concern). If so, that would mean (I think) that you apply the Plan terms on what to do when no beneficary is named; leading to spouse, children, estate. Does this make sense? I too am concerned about having "minor" mean under age 21. I can't find anything that uses 18, however. It seems that every thing that addresses "minor children" (eg. ownership attribution) uses age 21. Comments here would be very welcomed. In one way I suppose this is a moot point. Going to her estate means the children. Of course, there may be tax ramifications that I don't know about.

The exact language for definition of beneficiary is "person(s) entitled to receive benefits... upon the Participant's death." The Plan also allows the Beneficiary to designate a beneficiary. (That did not happen prior to her death.) It then goes on to say when there is no beneficiary that the order is spouse, children (equal shares), estate. I guess that since daughter was valid beneficary, and there was no beneficiary designated for her, and she is not married, then children are the beneficiaries. Plan terms say that since they are minors (one is 18 and the other 17), then payment is made to court appointed legal guardian. Why messy? Well, if I am right in the preceding then there is not a simple "pay to beneficiary who is...". I just like things direct and "clean cut", without potential for dispute. Of course, that is not the real world. Thanks for all your comments.