nancy

We have a plan that failed the ADP test for 2011. Corrective distributions were made by 12/31/2012. However, we discovered today that there was a miscalculation in the earnings portion of the corrections. Therefore one HCE needs to receive an additional $109. The other HCE actually received $3 too much. We are going to distribute the $109 immediately, but now the question is, did we fail to make the corrections within the first 12 month period. It seems very punitive to have to make a one-to-one contribution for this minor error (which would result in less than $2/participant) and it also seems a little over board to go to VCP for $109. To make matters worse, the client is moving to another TPA and this was discovered as we were reviewing the takeover files being sent. Any suggestions?

We have a client where the CPA has converted all the earned income reported on the Schedule C to capital gains and he therefore has no earned income. Does this prevent him from receiving a year of participation for 415 purposes?

That may help. Thanks for the reference. Looks like the plan needs to have the language, I'll need to talk to the attorney.

I have a plan that is terminating that has never paid lump sums. They have now decided to offer lump sums to all participants including the retirees. I'm finding that when I caluclate the lump sums on retirees over the age of 80 (and there are several) that the present value of the plan benefit at 417(e) is greater than the 415 100% of pay limit at 5.5%. When I discovered this on one retiree that I actually had enough data to calculate, I was quite surprised. Of course, this was a takeover plan and many of these participants retired before we took over the plan. I'm now trying to find enough data to verify I'm not over paying anyone. This seems like an unintended consequence, those affected by 415 are not the HCEs, but older retirees. Any thoughts?

If a Plan Year begins 12/31/11 when must the 2011 AFTAP be signed? September 1, September 30 or October 1?

I have a plan that already has a certified AFTAP for 2012. In order to get the AFTAP to 80% on the original AFTAP, there was a deemed reduction in the carryover/prefunding balances. Can the plan sponsor elect to use MAP-21 on a retroactive basis and have the balances restored if the election is made by year end and a new AFTAP is signed by 12/31/12?

If a plan is in termination process, resolution adopted but payouts have not occurred must they provide the participant fee disclosure notices? At what point does this end?

I have a plan that is a nonamender for GUST and also failed 401(a)(4) for 2008. Should their be two VCP submissions - one for each failure with it's own sanction and filed together? Or or the two independent of each other?

We also had a very positive experience using FT William. I too was a bit skeptical about the web based nature. The system is very easy to use and the status reports were invaluable.

I actually gave the client of their premium payments along with the calculation we had done for both the alternative and general methods. We had done both methods and because it was a frozen plan they saved $50,000 in premiums. They were satsified and did not contact the company.

I have a client that terminated their DB plan in 2007. They have been approached by a consulting firm claiming they have a strategy to recover portions of past PBGC premiums. Has anyone else run into this and know what the strategy might be ? Of course, they take a percentage of the recovered premiums. This also seems a little strange to me.

Can FICA Replacement plans under Section 3121 have loan and/or hardship provisions? I can see that if the plan is a money purchase plan that hardships would not be allowed but what about loans?

If an employer has a 401(a) plan that allows for the employee contributions to be picked up do these employee contributions count against the 402(g) limit or are they totally considered employer contributions?

We have a 403(b) plan that is sponsored by a hospital. They were recently notified by the IRS that their 501©(3) status is being revoked. It appears that under IRC 1.403(b)-10(a)(2) that they can amend the plan to discontinue contributions and "freeze" the plan. If this is the decision they make, can participant loan payments still be made to the plan? Can new loans be made to participants? Alternatively, the plan could be terminated and all the loans would become taxable.

If my 1/1/2009 AFTAP is above 94% but the FTAP is below 80%, am I required to burn enough of the carryover balance as of 1/1/2009 to get the FTAP to 80% for 430 purposes?

When preparing a cash balance val should the projection rate be the same as the actual crediting rate for the year? For example, a 12/31/09 val credits at the 30 year treasury from the prior November (4%), but when the val is completed you know the November, 2009 30 year treasury is 4.31%. Can you use 4.31% in the val for your projection?

I have a plan that signed a standing election to apply the carryover/prefunding balance to the extent necessary to meet minimum funding. The election was signed on September 3, 2009. As of what date do I apply this election to the carryover balance for the 2009 valuation and the reduction in the balance - 1/1/09, 9/3/09 or 9/15/2010?

Does the 1st 6% of compensation contributed to a 401(k) plan reduce the earned income of a sole proprietor for deductibility purposes?

We took over a cash balance plan and the valuations had not been done for 2007 and 2008. As I worked through them, I discovered that they did not pass 401(a)(4) for either year. Therefore, I need to prepare an amendment and go through VCP. My question is - for purposes of the 2007 and 2008 Schedules B and SB, should this amendment be reflected ? I'm thinking that since the amendment was not adopted within 2 1/2 months after pye, I should not reflect on the Schedule B. If that's the case, it's actually also too late for 2009. Will these amendments be reflected in the 2010 funding target?

Was there any input from the IRS at the ACOPA meeting regarding these questions? Should the carryover balance be subtracted in order to determine the FTAP and AFTAP?

The plan has always paid them in the past. I'm really trying to detemine what expenses need to be added to the TNC.

Would investment management expenses need to be added to the TNC for 2009?

I have a plan where an HCE who is terminated has arranged an IRA account that will serve as escrow for the restricted amounts under the plan. If he is below the normal retirement age in the plan is his unrestricted amount the age 65 benefit payable as a straight life annuity (12 payments) or is the age 65 benefit actuarially reduced to his current age?

I have a client who has a preliminary FTAP as of 1/1/09 of less than 94%. If I recommend that they make an addtional contribution to get the FTAP to 94% how does this contribution get reported on the 2008 Schedule B? Does it make a difference if it goes to the prefunding balance or should it be designated to directly increase the assets and not be counted in the prefunding balance?

I have a client who has one contract with an insurance company that covers LTD, AD&D and Life. The insurance company sent one Schedule A with the premiums broken out. Can this be filed on one Form 5500 or should a separate return be filed for each benefit?