Andy the Actuary

I am convinced that SungardRelius did not enter 611 that I must have. From best I can see, it doesn't appear SR even calculates line 38B. My apologies.

Not at office. My apologies. 611 was what showed up in 38b. I rounded my numbers. I'll send you the actual numbers later. Is 38b calculated br Relius or just an errant number that found its way as an entry? I will allow for the possibility that I somehow entered it. Back to you later. Thamks for prompt response. AtA

I'm unsure whether age, government regs, or all have confused me. Facts: 2013 minimum contribution = 390,000 FSCOB applied = 138,000 Net Minimum = 252,000 PV of Contributions made = 254,000 Excess contributions = 2,000 Relius calculation shows 611 on 38(b). I believe the entire 2,000 should be adjusted at MV interest rate. Any comments?

If I submit an SB on EFAST, I include the required exhibits, irrespective of whether or not I'm filing a 5500 or 5500-SF. If you submit without these attachments, EFAST will note as errors.

Just for grins, I pulled up the document for which a couple favorable d-letters was obtained. Here's what it says. "A Year of Benefit Service shall be a Plan Year with respect to which a Participant is credited with at least 1,000 Hours of Service and is employed on the last day of the Plan Year." This is not exactly hidden!!! Likely, the IRS overlooked this provision because it is not discussed in their review manual and checklist? Can anyone point to where. It's not unusual for the IRS to formulate a position and then decline to codify it. By the way, I'm not arguing that this is acceptable. Only that it was done. Before using such a provision, legal counsel should be consulted.

Doubt that you'll find that a plan can specifically not credit service if not employed on the last day. Likely only the absence of saying you can't is what the provision was based on.

Very sophisticated. I used windows folders. Oh, sure it easy to locate documents related to 415. But, what about a document regarding cross-testing and top-heavy plans? Do I put this document in the "cross-testing", "top-heavy," or both files? Probably depends upon how my tea leaves were arranged that morning. What makes it all come together is I have several search tools that assist in locating the document when I can't remember which of the 500 windows folders I put it in.

Maybe. Please see highlighted text below. We're talking about benefit accrual and not vesting.

It's been about 15 years but my recollection is that a period less than 12 months did not constitute a consecutive 12-month period. I.e., the person did not complete the computation period. Though the plan is closed, I still have a copy of the document. It was very clear that no benefit service would be credited if not employed on the last day of the plan year. The plan did have an appropriate add-back provisions if 401(a)(26), 410(b), and 401(a)(4) were not satisfied. Though the fact that the plan received a favorable d-letter as recently as 2008 does not, in itself, support the last-day-of-year rule, nonetheless the IRS reviewer had no problem with it. Let me be the first to admit that I have not seen this elsewhere in a DB plan.

My arbitrator is a d-letter that approved this design for a career-average DB formula. Why would you argue that you can have a last-day-of-year rule with a DC plan but not a DB plan? Can you point to any code, regulations, wall grafitti that supports than you can't with a DB plan? I'm always searching for opportunities to eat crow!!!!!

You could have an active on last day of Plan Year rule for accruing benefits so long as it does not discriminate in favor of HCEs.

When all else fails, reconsider the assumptions. Is the retirement age assumption in line with the Plan Sponsors intended retirement age? This might buy some time, in particular, if the Plan does not grant post-nra accruals (i.e., issues a suspension notice).

Effen, thank you. Noted that original 5500 submission remains posted on EFAST so could always point back to it to demonstrate timely filing despite the revised SB signing date is outside the extended due date of the the year's filing.

Given that the Schedule SB signing date would be the current data well beyond the 2012 extended 5500 filing date, does that present any problems?

Calendar Year Plan 2012 MRC = $0 5500 on extension Plan sponsor contributes $50,000 on August 1, 2013. SB filed August 15, 2013 reporting the $50,000 contribution. Plan sponsor contributes additional $75,000 on September 1, 2013 but fails to communicate to EA until 2014. Plan sponsor deducts $125,000 for 2012 For $75,000 to be deductible for 2012, the IRS informal position is it must be claimed on the 2012 and not 2013 SB. Is it acceptable to amend 2012 SB as of this late date in 2014? If not, how would this situation be corrected? Claim the contribution on the 2013 SB and ignore the destructibility issue since the IRS has only informally stated their position of not being able to deduct a contribution for a tax year than precedes the Plan Year for which the contribution is claimed?

While it's always the client's call, would not urge being too proactive on this one. This is provided client has history of timely filings. IMHO, better to write a letter only if IRS or DOL questions. We've all seen a lot worse than one-day late filings being forgiven upon request where historically client has filed timely.

Second part of question. Suppose Plan has HCEs who are to receive a lump sum distribution in 2015. It would appear irrespective of the Plan's funded status in 2014 (even > 110%), an actuarial valuation would have to be performed in 2015 under the same methods and assumptions in accordance with the Plan under which the 110% test was conducted before the Plan is terminated. At such time, the Plan sponsor could elect to make additional contributions if needed to satisfy the pre-termination restrictions on distributions. Agree or disagree?

Case 1. 2014 AFTAP = 80%. Plan terminated 12/31/2014. Final distributions anticipated in 2016. Assets 12/31/2014 depreciate 25% from 12/31/2013. A NHCE terminates in 2015. Can he receive an unrestricted lump sum distribution prior to the final termination distribution? Case 2. 2014 AFTAP = 78%. Plan liabilities under IRC 430/436 are determined as of 1/1/2015. An AFTAP of 83% is determined and certified. Subsequently, a NHCE terminates in 2015. Can he receive an unrestricted lump sum distribution prior to the final termination distribution? I'm unaware where remeasurement, presumed funding, or AFTAP certifications apply after 12/31/2014. So, unless someone can suggest other guidance, life is fixed until final termination distributions.

You're talking about legally required and not what makes good plan administration practice. At normal retirement age, no notice is required so long as plan provides the greater of the accrued benefit and actuarial equivalent of normal retirement benefit when actual retirement occurs. If only the accrued benefit, then a "suspension of accrued benefits" notice is required. The Plan language will dictate whether or not RMDs are applicable prior to the participant's actual retirement. If so, then the Plan must start them, which means if there are options, the Plan would need to provide the appropriate election forms and notices. Suggestion for more in-depth is to refer to "The ERISA Outline Book", "The Pension Answer Book," or other explanations of applicable pension law.

Sounds as if answer depends upon what Plan says regarding RMDs. But, in general, sounds like "Yes" should be checked, and then you should sit by the phone waiting for a call from your friendly IRS auditor. The same question appears on Schedule H for larger plans. It may be of value to determine what the auditor's procedural manual requires, though the sense is most auditors would not test this condition.

Perhaps it will help if you speak anonymously to the Joint Board as well as the ABCD of the Academy. I seem to recollect an EA some 20 years ago who made up numbers and was disenrolled. The former EA continued to sign Schedule Bs nonetheless. In this former case and your case, it would appear the letter of the law is that the 5500s were not timely filed. If the pretend EA did only the signing and not the work, then perhaps there's no problems with the Schedule Bs other than the signature is invalid. In such case, as a matter of good faith, you may wish to consider amending the filings with a new EA signature and an attachment that explains the circumstances.

Take a look at IRC 6059(b)(4) which requires the actuarial report to provide a statement containing "such other information as may be necessary to fully and fairly disclose the actuarial position of the plan, . . ." Would not this provision allow the EA to attach to the filing a statement to the effect that the Plan is underfunded within the context of IRS Reg. 1.401(a)(26)-1b(3)?

Understood this is the first plan audit but in all likelihood plan sponsor has corporate audit. So someone who debits and credits is already in place.

"You might also recommend they put the plan audit engagement out to bid and not blindly accept whatever the current CPA quotes." Unless there are issues with the current CPA, my vote is not to switch. First, you'll have to issue some form of RFP and then go through a selection process. Not only do you have the turmoil created by bringing in someone new but you don't understand their audit practice. I.e., the new auditor might ask a lot of questions and require client homework whereas the existing auditor may be more or less a red stamp. Presumably, the present audit is painless.

Interesting question but what suggests to you they should when (as you said) Roth contributions are non-deductible and 404(a)(7) pertains to destructibility?