mwyatt

Just wondering before I set out post 10/15 on a database coding quest: does anyone have any recommendations out there for canned packages to monitor Client contact info Plan details Processing data (last valuation, key provisions, asset size, characteristics, etc.) Fee data for historical and projected purposes How and what do you all use to manage about 600-1000 plans out there for business/tracking purposes? Don't expect I can walk out to CompUSA to buy it, but if there is something out there that is killer a recommendation would be great before I start scrubbing a bunch of disparate spreadsheets and databases. Any comments, recommendations would be greatly appreciated!

The one thing I would be careful of (especially if other employees in the mix) is ensuring that IRC 416 TH minimum accruals are adequately provided for. Someone better check and be sure that you're in compliance (or surprise, surprise, you need a Schedule B and a side fund).

Don't even remind of those stupid Teenage Mutant Ninja Turtle shoelaces Roger wore when he was carried off horizontally... Now Dave Stewart (who owned Roger) and that bunch knew how to win (and we certainly can't forget the early 70's group Catfish et al). Fortunately none of that tradition has worn off on this new team (soon to start taking some serious free agent broadsides to the goodship Moneyball).

Hey Andy: at least Gail and Laura used names this time (instead of their usual Sins of the City approach). You know, I watched the end of the game and am still not quite sure what Oakland was so upset about with Lowe's motions. Didn't look like anything more than him pumping his fist in celebration to Vtek. I guess Tejada was pissed off (and maybe he should be, for batting .067 "in the clutch" can't exactly help his market value on the free agency market this winter), but I think it's more the fact that this bunch of A's haven't yet (9 straight and counting) felt what it's like to actually win a series, and therefore don't understand that it is ok to get a little excited when you actually WIN.

In the immortal words of Joey Ramone HEY HO LET'S GO!!!!

A ha, a Braves fan in the mix, Pax. I only have one comment about that fabled sports town, 'Lanta. I was down visiting friends in 1987 for the Valvoline runoffs @ Road Atlanta during the World Series. That Saturday night (having a vested interest in the Twins, and my friend in the Cards), Atlanta TV DIDN'T SHOW the WS game as it was preempted for the Bulldogs college football game! Hey Andy, heard the Henry comments all over today in Boston (including the Globe, WBZ, and Peter Gammons on WEEI). Anything to get Petey more psyched. Here's actually a funnier link to what happened to Hudson yesterday... (shades of Larry Bird back in '85): Hudson out drinkin' and brawlin' Friday night...

You know, the more I think about this (at least coming from the small plan market) this whole thing sounds fairly benign to me. Money coming from plan wasn't being thrown into some scheme to make money on the float (a little laughable anyway given current interest rates), but rather a mechanical solution to the disbursement of funds. If anything, given a hypothetical charge of $5 per transaction, this scenario saved the plan $5*70*12=$4200 a year in expenses. Money is transferred from plan and then immediately disbursed using a corporate checking account. On what grounds does this qualify as a PT? I'm sure that there are all sorts of cites out there, but this sure doesn't seem to me to be a nefarious scheme...

Petey, you da man... I did think it humorous reading the Boston Herald this morning (Steve Buckley's column) to see: Late yesterday afternoon, in the delirium that was the Red Sox clubhouse at Fenway Park, principal owner John Henry approached the locker of Pedro Martinez and delivered a simple message: ``Don't forget that Barry Zito is the guy who took the Cy Young Award away from you last year.'' The Red Sox had just claimed an improbable 5-4 victory over the Oakland A's in Game 4 of this never-to-be-forgotten American League Division Series. The park, the city, was going wild. It was a day in which Manny Ramirez and David Ortiz decided to be sluggers again, a day in which third baseman Billy Mueller made two sparkling defensive plays, a day in which Scott Williamson proved, again, that he is this team's closer. And now the two teams were getting ready to head back west, to the Bay Area, to Network Associates Coliseum, for today's for-all-the-marbles Game 5 Steel Cage Match. Pedro Martinez will be on the mound. After all these seasons with the Red Sox, after all that happened this year, after everything that came down yesterday at the old Kenmore ballyard, could he possibly need any additional inspiration? A victory sends the Red Sox hurtling back east, to the American League Championship Series. That, all by itself, is enough. Right? Yet there was Henry, tossing in that comment, that Zito zinger. It was the cool lefty from Oakland who claimed the Cy Young Award from Martinez last year, came the verbal interoffice memo from John Henry. It was 1) Zito, 2) Martinez and 3) Derek Lowe, and the guy who came in second wasn't crazy about the results. So Henry, leaving nothing to chance, absolutely nothing, decided to create a Zito subplot. ``I'm glad he reminded me of that,'' Martinez said later, as media types started to empty out of the busy clubhouse. ``I'm glad he put that there for me. I don't blame Zito for what happened last year. I really don't. But it's good that (Henry) told me that.'' ``I think it gives him a little more incentive,'' Henry said, confirming his conversation with Martinez. ``I feel pretty good about Pedro Martinez pitching Game 5. How could anybody not feel that way?''

A little confused - you said that the Plan was originally writing an (aggregate) check to the corporation. Practice discontinued when plan opened up a checking account. How did they write checks before opening up the checking account?

Reviewing a proposal on a 412(i) plan (not prepared by us) and it appears that the salary figures used in the proposal were based on compensation excluding bonuses rather than total compensation. Is it allowed in a 412(i) plan to use a non-safe harbor definition of compensation? Obviously this lowers costs for everyone but the owners (who are both well over 200k).

Like pulling teeth, depending. I do know, however, if in year 1 I have 1 doctor and 2 nurses in a plan that requires 1000 hours for benefit accrual, and next year 1 of the nurses quits with 700 hours (let's see, year 2, my ratio if no failsafe language is 1/2=50%), that I: 1) Wouldn't want to say that I'm fine for year 2 since I passed in year 1, or 2) Say that at the end of year 2, my ratio is now 1NHCE/1NHCE present on snapshot testing. I think I'd have a hard time keeping a straight face in front of an IRS agent by arguing that it was too difficult to pull data on 3 people to use point 1, and snapshot testing under 93-42 seems to gut the whole premise of ratio testing if I can just blow out people who left during the year and use 77% as a threshold instead of 70%.

I've always been a might uncomfortable relying on 3-year testing for a small plan (or "snapshot" testing for that matter) under 93-42. Might be one thing to argue that data collection for 14 divisions and 10,000 employees is too much, but I'd have a hard time arguing the case of 1 doctor and 2 nurses is too difficult to do real testing each year...

I remember that example from the boards. Definitely a valid legal argument (in a twisted sense of logic), but I don't remember the Code Section that stated small plans only had to comply with the Code once every three years .

Considering your doctor will take it on the chin if this investment craters and others will get what's coming to them under the terms of the plan, one would think that it wouldn't be such a big deal, as compared to a PS plan where if tanks, all involved are hurt. However, what is the rational here? As Pax points out, there are prohibited transaction issues potentially floating around (what exactly is your doctor's rational for this "great" investment?). Also, have to consider your end game (and there will be one, considering this is a small DB plan with a limited life expectancy). What happens with this investment when the plan terminates? Doctor can't buy it (PT) and certainly can't roll it over to an IRA. Where do you go from here...

Uh oh, Effen, might be waking up the sleeping bear...

Ah, the horror stories... I remember one local investment advisory firm (who shall remain nameless) who were loading up their client's qualified plans back in the early 80s with oil and gas limited partnerships (let's see, an investment that has as its sole purpose the ability to generate huge phantom tax losses sounds like a great fit in a tax-exempt vehicle to me). Another great one is putting municipal bonds in qualified plans (let's see, we'll pay you lower interest since you don't have to pay taxes on the earnings - oh right, again, maybe this doesn't make sense either since you're not paying taxes in the trust). And we won't even go into the hummel collections (honest), land deals previously mentioned, and vacation homes. All time greatest investment though had to be a scheme during the mid-80s boom where the fine doctor would contribute the downpayment for a rapidly appreciating personal home, and then the plan and the homeowner would split the gains 50/50 upon sale. Sounded great, until I was valuing this takeover plan in 1991 after the bubble burst and the first mortgage was 30% higher than the current appraised value. From a practical standpoint, only conclusion was a big fat $0 valuation for this original $400k scheme...

Might also want to take a look at the trust agreement of the plan, which should outline the statutory requirements of what the plan can invest in. As Belgarath points out, you also need to consider the circumstances of the plan as this can also govern as to what would be considered a "reasonable" investment.

Well we know why FASB did this (a little surprising, since I wouldn't think that FASB would collapse from a potential drop in publication charges). I agree, annoying that they didn't have the amended versions out there; just wanted to offer as a secondary source for the statements if you were away from the paper version (which I would venture for many small plan actuaries are equally outdated).

Here's a helpful little link from FASB's website that allows you to get .pdf files of the statements: FAS Statement in PDF format Saw this mentioned previously on BL, but this is a godsend if you need to get ahold of a statement for reference if you're away from your office (probably should have remembered this in the first place...)

Thanks Pax for correcting my ommission - that entry only comes into play if ABO > Assets (basically if that situation exists, the Additional Charge is the balance item with other items to ensure that the unfunded liability goes on the books). Of course, we won't talk about the fact that ABO has actually nothing to do with the actual termination liability facing the plan. How exactly did we let accountants get ahold of pension accounting anyway? I remember back in the late 80s talking to a friend fresh out of Tuck who was working for Shearson Lehman in M&A; they were trolling for takeover candidates (obviously pre 50% excise tax) with overfunded plans. Had to let him know that the numbers contained in the financial statement weren't exactly "reliable" for his nefareous purposes .

It's Friday night, and the work computer is far away. However, the adjustment is basically a "balance" item to make sure that the costs to the employer equals the difference between assets and ABO.

I would stand your ground; possibly bump this up over the agent's head (he isn't your friend anyway, don't worry about hard feelings). Your client is entirely in the right here. MBozek has provided the clear reference that there isn't any problem here whatsoever. I'll add this following link on an issue where the IRS reviewer was in the wrong - don't be scared to stand your ground: Interest Rates

Hey GBurns: What I understood from the original post was that the plan was adopted prior to October 31, XXXX with an effective date of November 1, XXXX-1. I took this to mean that the plan year was November 1 to October 31 and that the plan was adopted prior to the end of the initial plan year, which didn't seem to be a problem to me given that this was a DB plan. In a 401(k) plan, you can't do a "retroactive" effective date for deferrals, but that didn't seem to be the point. I didn't see anything in the original post to indicate that the sponsoring entity wasn't in existence as of the effective date, November 1, XXXX-1, nor that the fiscal year of the sponsoring entity differed from 11/1-10/31. Now if that is the case, (ie, let's say the entity itself didn't come into existence until after the effective date), I could see where there would be problems. Maybe we should have some clarification on that point as to plan year, fiscal year, and date of existence of the sponsoring entity. If that is the case, the DB thread currently around would add some guidance to this issue.

Even more fun for her, tiny handwriting (I'll be darned if I was going to recopy everything if she didn't have a prayer of understanding it anyway ).

GBurns, the employee contributions issue (ie 401(k) deferrals) is an apt reference for late year adoption of a plan. In this case, however, we're talking a DB plan adopted during the year so this issue is moot (or should be in the eyes of the auditor). This may be why this particular agent is harping (mistakenly) on this DB audit. I just went through an audit of a longstanding doctor DB plan. Agent was nice enough, but I felt like I was teaching DB plans 101 to her. She wanted to be able to calculate every accrued benefit and to demonstrate to her my calculations. Not so bad with the rank and file people, although a little maddening having this occur right before 4/15. Finally we came to the doctor, which included IRC 415 calculations back to TEFRA (including a switch in NRA in the 80s, several transitional calcs for TEFRA, IRC 416, and TRA '86). Real fun explaining the details of 83-10 and combined plan IRC 415(e) calcs. She finally gave up and we got a clean bill of health letter after I sent in 12 pages of calculations (which I'm assuming she regretted asking for...).