Madison71

Thanks Sieve - I appreciate your thoughts on this.

What is the recourse if a participant requests a hardship from their plan and submits that appropriate proof that later turns out proved to be fraudalent. Participant already received the money. I believe this is correctable under SCP with the participant required to pay the money back. What if the employee is terminated because of this act? Still have to pay the money back? How do you get it from them? They now have a separation from service and are requesting a distribution. Can you hold it up until the repay?

Thanks for your time - I was hoping someone could provide a bit of direction in the area. He is not a client - one of his children is a client. I was hoping to provide at least a little direction since his son is a valued client.

I have a question that came up on a defined benefit plan holds a life insurance policy. The participant is 90 years old. He has been advised by his financial advisor that it would be good to get that policy out of the plan before it "matures." I received this voicemail and was hoping someone could direct me to appropriate sections dealing with life insurance held in a DB plan as I have no experience with it. He will have to contact his attorney about this, but was hoping to somewhat intelligently answer some questions for him off the clock. I don't know anything about this plan other than what was provided in the voicemail.

Last question...I promise on this....what is more common...BOY or EOY...

....also...sorry, you said if it was a beginning of the year valuation (1/1/2009) that the owner should have already received the numbers. If that is the case, then the 2009 valuation would have been done 8.5 months after this....so the valuation would have been done by August 15, 2009. Thank you for your time.

Very helpful - owner said he believed the val. was a beginning of the year, but maybe he is wrong. Any reason to have a beginning of the year valuation versus an end of the year valuation? Any pluses and minuses to either or is it whatever the actuary decides. THANK YOU!

No role in this plan....friend of mine asked me if I knew any actuaries because he is unhappy with the level of service. I asked him the issues he was having and then he listed a bunch of issues including that he doesn't know what amount he can contribute yet b/c his actuary hasn't gotten him the calculation for 2009. I thought it had to be done by Sept. 2009 and I also recalled that you have up to five years to be later than September if it is a new plan. Any help would be appreciated.

When is a defined benefit valuation required to be completed? For example, a 2009 valuation with a calendar year plan year end is due when? Is there a 5 year rule where for the first 5 years you do not have to meet this date? Does it matter if it is a sole proprietor plan with a Schedule C? The reason I ask is the actuary is requiring Schedule C income for 2009 before preparing the valuation. I thought the val. was due in Sept. of 2009. Thank you.

Not sure we are outsourcing it - Corbel maybe?

Individually designed money purchase plan currently permits 10% after tax employee contributions. Plan received a d-letter in 2002. I am putting this plan on a prototype document and the only selections for employee contributions are "no" or "formerly allowed." Did the law change to now not permit after-tax contributions? If not, then why doesn't the prototype document providers allow them? I don't even know if there are any after-tax employee contributions made. It is an owner/wife only plan. Thanks.

I'm filing a request for determination for an individually designed 401(k) plan. Its a 12/31 year-end. In reviewing, the restatement effective date says 1/1/2008, but it wasn't signed until 10/10/09. The plan is a Cycle D filer with a required submission to IRS by 1/31 to stay on-cycle. I basically understand the rules of discretionary amendments needing to be signed by end of plan year and required by due date of tax return plus extensions. I also remember the old GUST restatements where you could go back several years as long as operational. There were no changes requiring a restatement as of 1/1/08. Not sure why it wasn't 1/1/09, but in any case do I have to do an amendment to the plan?

Thanks David - wrong phrasing...understand the deduction rules, but concerned about the source of the money. Wanted to make sure. Thanks again.

I would definitely try to get the audit interview scheduled off-site. Keep the answers short. They will ask open ended questions. Only answer what is asked. If your processes and procedures are tight, you should be ok. Good luck

Thanks Lou

I have a DB plan with a sole proprietor. He earned way over the max. comp. limits for the year. He contributed much of his income into the stock market this year and wants to take the money he contributed (paying taxes on any gains) and contribute it to his defined benefit plan. Any issues with this? I know if it was money contributed from prior years you would have issues, but this is money he earned duing the year and instead of putting hit into a bank account he invested the money. I have an actuary telling me it is ok....I'm not sure.

Understand. I had to go back and get a refresher course on this stuff. Its been a few years and like with anything you don't use it you lose it. Thanks again.

I have been through several of these on our plans. This last time around we got a law firm involved. I think it makes sense as you can then have it off-site in a controlled environment. Normally they request the documents and review them on-site. This can last a day or a longer depending on what they are looking for. They will then have the hour or two interview. It has the potential for being much more serious when the DOL gets involved and you want to keep the initial probing questions to a minimum and addressed by an ERISA attorney who knows what they are looking for. You will have to most likely be required to be present for a in-person interview at the end of their initial review, but you will have an attorney present who can council you before you go in. Highly recommended at least from my experience. The DOL finds issues in the majority of their audits.

I found it - it is in the green zone.

Without seeing the report it is hard to say. Each plan has its own statement format for delivering information required by the PPA. What zone is this plan in? If it is yellow or red, the contribution schedule may be what is required by the Funding Improvment Plan or the Rehabilitaiton Plan. The withdrawal liability amount for the contributing employer may be the estimate of withdrawal liability for that employer for a 2009 withdrawal. If this is a calendar year plan, that amount is only valid for 2009 withdrawals. The information for 2010 withdrawals will most likely not be available until spring or summer. I'm not sure if I know what you mean by zone - I believe it is in the Central by the name of the Fund. It says Summary Plan Information on top of this report and says this is a new report required by PPA and will be issued annually in the futre. Thank you.

Without seeing the report it is hard to say. Each plan has its own statement format for delivering information required by the PPA. What zone is this plan in? If it is yellow or red, the contribution schedule may be what is required by the Funding Improvment Plan or the Rehabilitaiton Plan. The withdrawal liability amount for the contributing employer may be the estimate of withdrawal liability for that employer for a 2009 withdrawal. If this is a calendar year plan, that amount is only valid for 2009 withdrawals. The information for 2010 withdrawals will most likely not be available until spring or summer. I'm not sure if I know what you mean by zone - I believe it is in the Central by the name of the Fund. It says Summary Plan Information on top of this report and says this is a new report required by PPA and will be issued annually in the futre. Thank you.

I received this Summary Plan Information which said it is a new report being supplied pursuant to PPA. It talks about the contribution schedule and benefit formula. On the second page it has contribution information for the past several years and then a "withdrawal liability pool" and the withdrawal liability amount of the contributing employer if they were to withdraw from the plan. Is this the Withdrawal Liability Statement. If not, does anyone have a sample or could tell me what this Statement should contain? Thank you.

One last question if you are still available to respond. What happens to the participants involved in a complete withdrawal of an employer? Are they paid out? Do they stay in the plan? I know it is portable and they can stay in if they go to another employer within the Fund, but what normally happens...or is it driven again by what the plan document says. Thanks again!

Thanks Bill - very helpful

Just trying to get my arms around this thing. From the PBGC website: "An employer’s share of withdrawal liability is based on its allocated share of the plan’s unfunded vested benefits (UVBs)." Lets say the plan is underfunded. Disregarding the sale issue, let say the employer is selling the business and this results in a complete withdrawal. None of the participants in his company are vested. 1. Does the terminating employer have to pay withdrawal liability based on its share? 2. Withdrawal Liability statement was not provided. Is this easy to get? 3. What happens to the participants in employer's employ if goes out of business after the sale? Are they fully vested in all benefits up to that point even if they weren't vested before? Thank you very much!!!