Madison71

....I guess the other question is if there is an asset sale, is the buyer subject to the withdrawal liability? My thought is no because there is no withdrawal as long as the seller does not perform work in the craft or geographical area.

Employer in construction industry participates in a multiemployer plan and has a large unfunded vested benefit of around 2 million. Employer also owns 3 other businesses related to construction (one is a realty company that leases property back to the union shop), but the employees who do not participate in the multiemployer plan. Employer is in the construction industry and wants to close down his union business and possibly all three. Owner has been offered opportunity to take a salaried position at one of his competitors. He wants to sell the property and other assets to his competitor (arms length unrelated), but does not want to trigger withdrawal liability. If owner/employer shuts down his business and sells the building and equipment to an unrelated employer and ends up working for him, will this trigger a complete withdrawal resulting in withdrawal liability payments? The competitor is in the same state (maryland. THANKS!

Thanks guys! Makes sense to me. I was concerned upon filing that I would get an error based on the message, but must be an error in the system like you said.

I apologize for the elementary question, but I am preparing Form 5500-SF and its coming up as an error when checking. Total number of participants on 5b is 55. Total number with account balances on 5c is 48. The error is saying that the number on 5c cannot be less than the number of 5b. It is a 401(k) plan that offers a match. I am counting all participants who are eligible whether deferring or not to come up with 55. When I count the number of participants with account balances it is 48. Should I put 55 on 5c? The instructions on S-F are unclear but the 5500 instructions I believe say the numbers should be the same. Thank you

Thank you guys....even though I didn't post the original question, I appreciate everyone spending their valuable time answering questions and offering insight.

3% non-elective counts towards 5% gateway. Minimum gateway is the lesser of 5% or 1/3 of the highest allocation provided to an HCE).

....thanks.

A great option if the employer is not concerned about the termination triggering 100% vesting. Thanks all - dumb question, but what is FWIW?

I'm sorry....I need to restate those facts a bit. There is a Money Purchase Plan and a separate 401(k) Plan with discretionary profit sharing plan already in place. Company was contributing to the MPP and the 401(k) plan, but is now looking to merge in.

.....additional facts include - the company wants to stop making mandatory contributions to a money purchase plan, is establishing a profit sharing plan and wants to merge the money purchase plan. Do I need to freeze the plan prior to the merger? Thanks!

If I am merging a money purchase plan into a profit sharing plan (Believe it or not....there are still some out there), do you typically freeze it first and then merge?

MEWA plan subject to state law in MD. Can they invest in mutual funds and more specifically ETFs as long as under 5%? Thanks!

I would agree with all the points above and if you bring on an RIA who signs on as a co-fiduciary then you focus on selection and monitoring of the RIA and leave the investment selections to him/her.

Have a situation where we have a one person money purchase plan set-up in the 80's. Plan has never been amended. Participant dies leaving behind his wife as beneficiary. Issue is the plan has never been amended and missed a year of RMD's prior to death. Anyone have any experience with a plan with defects that is orphaned? If you correct under VCP, do you update the plan document? Who signs? Thank you!

Money Purchase Pension Plan - how do you correct an RMD if participant was required to begin receiving and never received. This happened in 2007. In late 2008, he passed away and the plan has been sitting ever since. I understand it is an orphan plan and you go under VCP - but what about the RMD? I know you can correct RMDs under VCP, but not sure how to go about it in this case. Thank you!

I emailed you privately. Thank you.

J-Simmons. I will check out the 7th Circuit cases. Thank you. Any other circuits you know of with similar results?

So during due diligence in an asset purchase, you want to pay particular attention to an underfunded DB plan and take that into consideration in purchasing the company? Should Company B increase its purchase price to cover this? I would argue that Company A should have been aware that Company B's purchase price was too low to cover making up the funding shortfalls upon termination. Thanks for your help!

This is purely hypothetical but I want to make sure I have this right if it ever comes up in the future. Company A sponsors a DB plan that is underfunded. They are looking to sell their company. Company B offers to buy Company A through asset purchase. Upon review of Company A's plans, Company B realizes that Company A's defined benefit plan is significantly underfunded. Company B goes through with the asset purchase with language in the agreement making it clear that they are not assuming any plans. Company A proceeds to begin termination of the DB plan and files with PBGC upon the asset sale to Company B. Company A does not have enough money to meet the undefunded obligation. What risk if any does Company B have? Thank you!

Thanks - would be interested to know what Tom thinks. I agree with you and I'm not saying its right, but not sure how the IRS is going to discover this. If there is something clearly out there from the IRS prohibiting this, then obviously you would advise client not to do it whether IRS would discover or not.

Thank you Tom. Plan does permit irrevocable elections. I got a bit lost (not a big surprise). So, if irrevocably elect out they are never considered eligible for ADP or ACP Test, right? They would be considered eligible not benefitting for 401(k), (m) and (a)(4) coverage. Could be an issue if enough people elect out. It is a new plan and they are going to increase compensation if elect out. Any issue with it being considered a CODA b/c the employer is increasing comp. if elect out? THANK YOU!!!

Can someone explain this to me a little more in detail? If an employee irrevocably elects not to participate in the plan by signing some sort of waiver, how are they treated for nondiscrimination purposes, etc? Would they be included in an ADP Test, 410(b)? Why would someone irrevocably elect not to participate? Employer wants to give participant the option of participating in the plan or giving more money. Not sure why an employer would want to do that considering tax ramifications unless compensation increase is less than the benefit? Any insight would be greatly appreciated! Thank you!

I'm Sorry this is in wrong section...meant 401(k)/Profit Sharing. Going to move it there.

Can someone explain this to me a little more in detail? If an employee irrevocably elects not to participate in the plan by signing some sort of waiver, how are they treated for nondiscrimination purposes, etc? Would they be included in an ADP Test, 410(b)? Why would someone irrevocably elect not to participate? Employer wants to give participant the option of participating in the plan or giving more money. Not sure why an employer would want to do that considering tax ramifications unless compensation increase is less than the benefit? Any insight would be greatly appreciated! Thank you!

J Simmons - oh my gosh....thank you, thank you. I forgot and I can't believe it b/c I am dealing with a MEWA issue that is under review with the maryland department of insurance. - non-admitted investments falling under the 6% bucket/basket. I think I am just trying to put it out of my mind. I would much rather set-up as a separate plan.