Andy the Actuary

Suggest you send your description to your local bar association and request referrals of council who may be able to assist you.

New perspective: Fricks makes a 1/4 pound jumbo frank. It is a smorgasbord of swine viscera. Anyway, Shop & Save is the only game in town for obtaining this treat. I go over there today and it is packed and I am observing the clientele. They look very old, tired, and beaten-up. They very much look like the 2% FICA rate reduction -- for those who are working -- is a blessing from the Big Guy, himself. I worry that this will be our daughter in 15 years. I remember why I voted for Obama. I feel terminally guilty for feeling the way I did this morning. Nonetheless, I'm inclined to vote Republican next election.

The sustainability of Social Security is at issue so it makes perfect sense to reduce the employee's tax rate from 6.2% to 4.2% for 2011. Hey, and the SS deficit: Just for a thrill, add another "tril!"

Bottom Line: AP was punished for asking!

If the 2009 report is marked final, should the 2010 report be marked "first"? As Jack Benny would have uttered, "Wellllllllllll"

All I can think of is bad things happening to good people. You will have marked the 5500 as final and if the plan is subject to PBGC coverage, the PBGC could eventually come back and inquire why you didn't go through the standard termination process. I envision paper audit trigger reports being generated by the 1,000s and threatening letters being mailed out without a human ever reviewing the facts and circumstances. Perhaps, the biggest question is if you have to show the old EIN on line 4 but amend the 2009 form to show final, what do they use the line 4 information for? Despite electronic this and electronic that, the IRS (I suspicion) will always be looking for the client to provide the paper trail on audit because their rules are too complicated and in flux to program for electronic tracking. a.t.a. (sporting bad attitude of the day)

Question: Was the "automatic extension" box check under Item C on 5500-SF? If so, suggest sending a copy of the form along with a copy of the 5558 and indicate by reason of clerical omission, the 5558 though thought to be submitted was not but that clearly the intent as reported on the 5500-SF was to extend the filing deadline. I'd skip the mea culpas and detailed explanation. (As my old pappy used to say, being honest doesn't mean you have to volunteer unrequested information.) If the IRS is requesting money, then indicate that client has demonstrated a history of submitting forms in a timely manner (assuming this is true) and ask that the penalty be forgiven. I've yet to see the IRS rule disfavorably on such a request. If the "automatic extension" box was not checked, then borrow $750 from Sieve.

Jay, distinguish between prototype and model SEP IRA. I believe you can use a prototype (e.g., Vanguard's*) so long as it is not the model SEP. *This is for illustration. I have no idea whether or not Vanguard provides a prototype SEP IRA.

Thank you. I made the egregious error of looking in the User's Manual and was unsuccessful. Bless you. a.t.a.

Didn't mean to offend. I should have named you [Definite]

Client has an 8/1 -7/31 Plan Year. In October, I got them the PBGC premium payment forms (their auditor reviews). This means I entered the Plan on MYPPA. Now, the client wants to change the Plan Year to a calendar year effective 1/1/2011, so that we have a short plan year 8/1/2010-12/31/2010. I can change the Plan Year ending date on MYPPA but I find no where to prorate the premium by 5/12 and the pro-ration does not appear to apply automatically. Has anyone been through this that can offer some advice before I spend the better part of my life expectancy trying to resolve this with the PBGC?

My understanding was an employer could not sponsor a DB Plan and use "the model SEP" but as "Doubtful" [thought a first name should be given] McGovern indicated could use an individually designed or prototype SEP. Is this not correct? Well, anyway, if you can maintain a SEP-IRA, so be it. Else, maintain a PS plan. If a DB contribution is made, do not contribute more than 6% of compensation to the DC Plan, lest 404(a)(7) will be triggered. For this purpose, 401(k) elective deferrals do not count towards the 6%.

Participant age 65 is getting divorced from 80 year old spouse. Participant started pension 15 years ago on Joint & 100% survivor basis. Monthly amount is $1,000. (1) If QDRO assigns 1/2 monthly pension, then participant gets $500 and spouse gets $500 and the Plan wins because 500 ax + 500 ay < 1000 (ax + ay - axy) (2) If QDRO assigns value, then spouse should get 500 (ax + ay - axy) / ay and member should get 500 (ax + ay -axy) / ax but can this be done without a plan amendment? Comments welcome.

Yes, but then they wouldn't have contracted with me for a $64.25 annuity!!!

Great, where do I get my $34.25 refund?

(1) You could set up a single plan to cover both employees. (You would need to satisfy 401(a)(26)) They could have different benefit formulas since they are both HCEs. However, this may cause the document to have to be individually designed rather than an off-the-shelf prototype. (2) Now, each can salt away up to $49,000 falling off a log backwards and an additional $5,500 in catch-up contributions match through a 401(k)/PS plan. In short, unless the DB plan offers the opportunity to defer substantially more, why do it? (3) Important: A DB plan should be established only if the participants are committed to deferring substantial amounts for a lengthy period and investing conservatively. Else, the benefit/cost ratio doesn't make sense. Also, the DB plan -- as opposed to the PS plan -- offers limited funding flexibility. (4) Suggest your client or prospective client discuss this planning with an EA since the questions you pose and the surrounding issues appear to be outside your scope of expertise.

Please advise -- I'd like my $64.25 back

Create a balance sheet. On the debit (asset side), put "cost of audit." On the credit (liability side), put 401(a)(4), 401(a)(26), 410(b), possible actuary's fees, attorney's fees, administrators fees, employee communication, confusion, miscommunication, doubling up on reporting, etc.

Example, if the Plan paid a lump sum, the amount would exceed the monthly life only amount. Similarly, if the Plan allowed payment in 60 guaranteed monthly installments, such amount would exceed the monthly life amount. In each case, the distribution in excess of the life amount would be prohibited.

That explanation is an example of precisely why I dropped algebra in junior high.

Recall that under the DOL elapsed time servicing credit method, an employee who returns to service within one year was deemed to be continuously employed. Look to the DOL rules under ERISA Sec. 201 as they may provide your comfort. A.t.a. (practicing law these days!)

(1) What is your interest given that you are neither Plan Actuary nor the Company? (2) 417(a)(5) refers to the QJSA. 417(a)(5) has not been amended to include QOSA. However, (from Notice 2008-30) states tha a Plan "must provide to a participant who waives the QJSA an opportunity to elect a qualified optional survivor annuity (“QOSA”). . ." Hence, since under the conditions you stated there is no waiver (or potential waiver) of the QJSA at question, one can conclude that QOSA does not apply. Keep in mind this opinion comes from "Andy the Actuary" and not "Andy the Attorney."

It is interesting: Awhile ago I attempted to seek a definition for "hedge fund" and found it not to be uniquely defined. So, please state the definition you had in mind.

How does plan define "present value?"

What does Plan stipulate?