12AX7

How does the IRS discover during the audit that the SH Notice was not distributed? All I've ever had to do was show a copy to the examiner, if requested.

I agree with Kevin regarding QNECs after the end of the plan year will not change the TH ratio of the plan. Actual account balances as of 12/31/10 should be used to the best of my knowledge.

It appears the notice requirment was not met if it did not go to all eligible employees for the year. The SH contribution is still due to all eligible employees, regardless of whom may not have received the notice. I am not addressing correction of the notice failure in this reply, because I'm not sure how exactly to do this. I do however recall at an ASPPA conference that the IRS may have mentioned to provide the notice when the failure was discovered, but I'm just relying on memory. Perhaps Tom or Quirky can find that info quicker than I can at this point.

Did the participant sign a loan agreement and other paperwork to initiate the loan? Did the participant take constructive receipt of the funds (deposit to an account outside of the plan)? Was an amortization schedule and other information delivered to the participant? Under all these circumstances, the participant has a loan, right? I don't see how you can "undo" a loan that has occurred. The fact that he doesn't need the money presently would not change the rules. That's the way I see it if this was my client. Might be best to repay for now according to schedule as you suggest.

From Rev. Proc. 2008-50, this also exemplifies the same point: © Demographic Failure. The term "Demographic Failure" means a failure to satisfy the requirements of § 401(a)(4), 401(a)(26), or 410(b) that is not an Operational Failure or an Employer Eligibility Failure. The correction of a Demographic Failure generally requires a corrective amendment to the plan adding more benefits or increasing existing benefits (cf. § 1.401(a)(4)-11(g)).

You could do that, but then have no distributable event for the MPP accounts. It depends on the client's objectives.

The loan restriction is most likely a plan provision, or perhaps a plan recordkeeper restriction (reflected in a plan provision). If the participant never consented to a distribution of their account, then the loan still exists in the plan. Where the account balance was distributed, including the offset for the loan, then it's no longer part of the plan and perhaps not subject to any restrictions.

Do you mean the Form 5500-EZ? No to that form, yes to the others, except for the Form 8955-SSA and Form 5558. I'm not really sure what you are asking, but have done my best to answer your question.

When you say file as a small plan, I take that to mean that you can prepare a form 5500-SF for each of the plans, and I agree.

In light of the announcement that we can use the current Form 5558 for requesting an extension to file Form 5500 and Form 8955-SSA, does it seem feasible to use a single Form 5588 to request an extension to file the 2009 and 2010 Form 8955-SSA?

QNPG - I would say yes (possibly) to the extent that an individual partner (in a partnership) would decide on the amount to be allocated to their nonelective account. This issue is much broader than the answer I am giving you, and has been discussed here before.

I'm with Mr. Powers on this one. I don't recall the regs necessarily prohibiting what they want to do in this situation. If they can adopt their own plan, then why not the existing plan.

Your situation is a little hard for me to pick apart, but just to perhaps simplify this, does the plan allow for each eligible participant to be in their own allocation group? I could ask a lot more questions, but let's start with this one.

This may be jumping ahead a little, but if it is two plans and there are coverage issues, be mindful that the plans must have the same plan year to be aggregated for coverage purposes.

Generally, you would have 180 days from the end of the plan year in which the amended provision takes effect, to distribute a new SMM. However, in the interest of promoting good plan administrator practices, I would notify the participants as soon as possible either with an SMM or by memo.

Eligibility is not a protected right in a plan. It is possible to turn a previously eligible employee into an ineligible employee through a plan amendment.

Makes sense. I lost track of the facts in the original post where most of these individuals employed two years ago had <1 YOS.

Austin, if you're referring to Copy A, then you can order as many as you like from the IRS (must call on the phone to place the order). I rip the Copy A from the formset and print using Relius software. Not sure if this will allign properly with FT software, but this is how I do it, without using a typewriter. You also need to file the red Form 1096 transmittal.

Assuming the Plan Doc does not take these matters into consideration, then take a look at EPCRS for more detail, but there are basically two options: 1. Amend plan doc to include the ineligible participant 2. Refund the amount with earnings If the plan takes the EPCRS route, then look more into the details of these alternatives before implementing the process.

I think something like that would still clock the plan in with over 100 participants, unless Tom you have something else in mind that I'm not thinking of at the moment.

With a small group of participants with account balances, the cost of doing so may well favor the elimnation of the audit requirement. Good catch, Sieve!

I do recall reading about the Schedule R attachment. Here is the appropriate excerpt from the FAQ, but not very explanative: Q7: Which version of the Form 5500 should be filed? The plan administrator shall file either: The most current Form 5500 Annual Return/Report form issued (and indicate in the appropriate space on the first page of the Form 5500 the plan year for which the annual return/report is being filed if different from the most current Form 5500), or The Form 5500 Series Annual Return/Report form issued for the plan year for which the relief is sought (but not a Form 5500-R if the filing is for a 1998 plan year or a prior year).

Take them to a barn dance? I don't know, but unless there's a distributable event for these participants where you can get rid of them, you will count them for 5500 purposes.

I need to prepare a 2008 Form 5500 under DFVCP. I understand that I will be using the current form (2010) for the E-Filing. Do I also need to prepare the paper version of the 2008 forms and attach to the E-File? The current FAQ appears to allow just the current year form to be completed, although last year I thought I read that the applicable paper year form was also required to be attached. It seems the current FAQ makes this easier for us? Thanks.

I agree.