david rigby

Any qualified plan can be frozen. I think it only requires a duly adopted plan amendment. Should specify that benefits, credited service, benefit accruals, and participation are all frozen as of X date.

I have also seen the following situation: Plan has "deemed distribution" rule so that non-vested participants are deemed to receive a distribution of $0 immediately upon severance of employment. The purpose of this is to make sure that all terminated participants are paid as soon as possible , which is one of the requirements to avoid the "5-year" rule. Then, if the plan terminates, those participants who terminated with less than 100% vesting in the plan year of plan termination are given 100% vesting (because they have not yet incurred a break in service), but any others who terminated in prior plan year (even if less than 12 months earlier) are not given additional vesting. Also, good point from actuarysmith about partial termination.

There absolutely is "an actual deadline for depositing of funds". The deadline for making a contribution to a qualified plan is 8-1/2 months after the end of the plan year. Top heavy status does not change that. With respect to the timing of contributions for purposes of deduction, see first sentence above by John Sample. Note that plan year and company fiscal year can be different.

Not sure I understand your question but here's my 2 cents. The calculation of the CL for 404 purposes must use the same CL interest rate as used under 412 (whether or not that is the maxmimum rate). I have always interpreted the 404 calculation to mean the estimated EOY amount, including CL normal cost, interest at the CL rate, and estimated benefit payments thru the EOY (payments also adjusted with interest). This is then compared to the estimated EOY asset value, including interest at the valuation rate, and estimated benefit payments with interest.

I don't think that amending to 0% is the same as freezing. For example, you could still have new entrants. If the aggregation group is top-heavy, then you might have new entrants entitled to a T-H minimum, even though no other participant gets a benefit. Seems to me that freezing is OK. Note that a frozen plan can later be unfrozen.

Text of Revenue Ruling 2000-27 http://www.benefitslink.com/IRS/revrul2000-27.shtml You might also try a search for issue on the Message Boards, or on BenefitsLink.

In general, amounts that come out of an IRA or a 401(k) plan (or any qualified pension or profit sharing plan) are taxed as ordinary income. That is because they are (with respect to the tax laws) "deferred compensation". However, they are not subject to FICA (Social Security) taxes.

I think this is the thread that Ray is discussing. http://benefitslink.com/boards/index.php?showtopic=10608

Need nore info. Why does sponsor have both plans? Even if sponsor no longer "needs" the MP plan, that does not imply it should be terminated. Perhaps it will be frozen. If so, some advance planning should be done to determined when is the best time to make the amendment for that. Also possible that the plan will continue unchanged.

Briefly, it's all pre-tax money, so all of it is subject to taxation when paid out.

If you are planning to change your plan as suggested by the prior message, don't forget 411(d)(6)!

Another link to the Internal Revenue Code http://www4.law.cornell.edu/uscode/26/

$1000 per month!!!!!!!!!!! Seems very likey that other coverage would be available much less than this.

Are the receipts from the sale recorded on the books of Corp. A? Does A have taxable income from that? Is X performing services? If not, then how does X expect to be paid W-2 income?

Good comments from sdolce. Another planning idea to consider is a cash balance plan, the purpose of which is to "use up" the excess in future years. (This may not be an attractive alternative if the current employees will not be around to participate.)

100 employees (not participants). $5. This is the link to the original text of the act: http://thomas.loc.gov/cgi-bin/query/D?c107...p/~c107BPKgoP:: Scroll down to section 702.

Is that PDF different from the CIGNA summary? http://www.cigna.com/professional/pdf/CPA_iidw0201.PDF

Revenue Ruling 2000-36 states that a plan can be amended to define the default distribution as an IRA, under certain cricumstances. http://www.benefitslink.com/IRS/revrul2000-36.shtml

Flip-flop http://www.benefitslink.com/boards/index.php?showtopic=8211

I don't know the Quantech issues, but you are correct about the 5 years. For any participant who does not have a year of service within the last 5 years, you must exclude that person from the top-heavy test (whether or not paid out).

It seems an actuary was retained by a major airline to do a study on the statistical chances of a bomb being on an airplane. Before the study, this particular actuary never flew on planes due to his personal fear of a bombing. After the study, his associates noticed he now flew everywhere. One of his colleagues asked about this marked change in behavior. The actuary replied that he had determined in his research that the statistical chance of a bomb being on an airplane was very small, though not small enough to relieve his anxiety. But then, he said, he determined that the probability of TWO bombs being on the same airplane was infinitesimal. Hence he's now quite comfortable flying on airplanes, because he makes it a point to always carry along one bomb!

The answer to the eternal question: "Is it better to be a jock or a nerd?" Michael Jordan having "retired," with $40 million in endorsements, he makes $178,100 a day, working or not. If he sleeps 7 hours a night, he makes $52,000 every night while visions of sugarplums dance in his head. If he goes to see a movie, it'll cost him $7.00, but he'll make $18,550 while he's there. If he decides to have a 5-minute egg, he'll make $618 while boiling it. He makes $7,415/hour more than minimum wage. He'll make $3,710 while watching each episode of Friends. If he wanted to save up for a new Acura NSX ($90,000) it would take him a whole 12 hours. If someone were to hand him his salary and endorsement money, they would have to do it at the rate of $2.00 every second. He'll probably pay around $200 for a nice round of golf, but will be reimbursed $33,390 for that round. Assuming he puts the federal maximum of 15% of his income into a tax deferred account (401k), his contributions will hit the federal cap of $10,500 at 8:45am on January 1st. If you were given a penny for every 10 dollars he made, you'd be living comfortably at $65,000 a year. He'll make about $19.60 while watching the 100-meter dash in the Olympics, and about $15,600 during the Boston Marathon. While the common person is spending about $20 for a meal in his trendy Chicago restaurant, he'll pull in about $5600. This year, he'll make more than twice as much as all U.S. past presidents for all of their terms combined. Amazing isn't it? However... If Jordan saves 100% of his income for the next 500 years, he'll still have less than Bill Gates has at this very moment. Game over. Nerd wins.

Usually the application of a plan change is prospective only to avoid problems with IRC 411(d)(6). Probably B-I-S would be the same.

Another similar discussion. http://benefitslink.com/boards/index.php?showtopic=10747

Oops, you are correct about the cite to IRC 404(a)(7). The purpose of this section is to limit the deduction taken for all qualified plans when taken as a whole. I like to think about this issue by using examples. 1. Suppose the DB minimum contibution is 20% of comp, and there is a 10% profit sharing contribution. Then the ER has a total contribution of 30%, but only 25% of it is deductible. 2. Suppose the DB minimum contribution is 12% of comp, but the ER actually contributes 18% to the DB plan [assume otherwise permitted under 404(a)(1)] and the ER also contributes a 10% PS contribution. Then the ER has a total contribution of 28%, but only 25% of it is deductible. I don't necessarily agree with your comment about the repeal of 415(e). From one perspective, it is a good idea to have this 404(a)(7) still there, thus putting a safety valve on the deductions. Note in IRC 404(a)(1)(D), that DB plans with more than 100 participants can deduct the "unfunded current liability". This does not alter or increase the 25% test in 404(a)(7). It is my understanding that there is some ambiguity about the precise manner in which this is modified by EGTRRA.