Dan

Your plan sounds like it can work. If your document was written correctly, you will be fine. Many advisor-provided plan documents I reviewed over the years had problems. They manage money, not write plan provisions. Hopefully you will be one of the lucky ones. And hopefully Morgan Stanley provided an updated plan document 3 years ago. If not, you will want to fix that.

I currently use Datair and used Relius for daily valuation until 2012. Datair, (being rebranded as CalcAir, after Datair was sold) runs on a dedicated server on Windows. It looks clunky and is menu based. Below is a Pension System image for a plan. Datair is fine for compliance testing. Compared to Relius, Datair is faster since it is not transaction based. Changing from one system to another is a lot of work. Plus, you lose the ability to access to historical system access. Asset tracking is different, census history is different, and plan specs are different. It works fine, but probably not be an easy transition.

Thanks for your replies.

A client is instituting a match for the first time. They requested the plan implement a quarterly vesting schedule. I have never heard of quarterly vesting. I asked a few colleagues and no one has heard of it. Has anyone here heard of this before? If you have, can you explain how it works or where I could learn more about it. The plan is currently being restated on a pre-approved document, which offers the standard vesting options. I expect a quarterly vesting structure would be permissible on a custom document. So, we could modify the pre-approved document and treat it like a custom document going forward. Any thoughts about that?

I don't think the old plan will have 140 participants the effective date of the change. There isn't a "later in the day" on the effect. It is effect is immediate, so think 12:00 AM. On that basis, the old plan will have 70 participants and the new plan will also have 70 participants on January 1. So they should be able to avoid the audit requirement. As for two plans in the same investment trust, that would constitute a Master Trust and an additional 5500 filing for the MT as a Direct Filing Entity. No designation as a MT is required, just more than one plan in a single trust. It seems to me that employers who use this strategy don't find it beneficial in the long run. It saves money for a year or two. But they have operational problems managing two plans. If the company continues to grow, they will have the same problem in a few years. This setup becomes too much of a burden to continue. So they bite the bullet and return to having a single plan.

I appreciate all feedback. BFlash, we looked into Pension Pal several years ago. It didn't meet my firm's security requirements at the time, so we didn't move forward with it. Perhaps we need to look into it again and see if something has changed. Thanks for the suggestion.

We are considering a change in systems. I would appreciate any feedback on the software options that other professionals use. Our clients have standard DC plans: 401(k) plans, 403(b) plans, 457 plans and also ESOPs. Some of our ESOPs are very complicated. Please let me know about your experiences with your vendor. How responsive are they about questions? Also, what is the one thing you wish your vendor did better. We are also considering Pension Pro. I would appreciate feedback about your experience with PP and how well it works with each vendor's system. Thanks for any comments.

If the K-1 reports earned income and/or guaranteed payments, that is generally included as plan compensation.

It would make sense to talk with a financial planner about your distribution options. There will be a cost, but you should have some comfort in speaking with someone who can help you get started on the right track. the cost would be far less than making decisions that in hind-sight were bad ones and could have been avoided. Don't talk with someone who will advise for free and/or wants to sell something to you. Go to a fee-only financial planner.

Yes. The plan would satisfy ADP with the 3% safe harbor for the year but would need to ACP test the discretionary match.

Yes, these participants would have a choice to receive matching contributions in company stock or cash. I am concerned about the disclosures as well, among a number is related issues. Always more to learn. Thanks for your responses.

A client is considering beginning to contribute a match. However, they are considering different ways to fund it. They have asked about offering the option of receiving the match in cash or in privately held company stock. The administrative complication is obvious. But would this funding arrangement be permissible?

I had the same question and learned that Form 5471 needs to be filed. If there was no 990 filed previously, one must now be filed so the 5471 can be attached.

A client is considering a merger with another client. Each firm has a DB plan and each plan would be fully funded prior to the merger. After the merger, a significant minimum funding contribution would be required. The question is ‘who would be entitled to claim the deduction for that minimum funding contribution?’ Would the successor firm be entitled to deduct the contribution or would that deduction need to flow back to the pre-merger firms? It seems to me that the successor firm should get the deduction. That seems to make sense but its important to be certain and I would like to provide some documentation to support my conclusion. Is my thinking correct and could anyone suggest documentation? Is there a certain way that the merger of the firms and their plans should be structured so the successor firm would indeed be able to claim the deduction? Thanks for any help.

The client received a deferral election from a participant and commenced withholding and remitting deferrals. But treated them as pre-tax when they should have been Roth. This went on for several years. The ideal correction is to create corrected W-2s for all involved years. Is there any simpler option, even if it is not as clean?

I am doing some research on ethics issues in retirement plans. I would appreciate hearing some examples of client requests or other plan matters that caused you to consider the ethics of how to respond. If possible, please provide a story where real names are not used. Or if you can refer me to a source of this kind of information, that would be helpful too. I would appreciate any help.

An HCE has requested a full distribution of his benefit to an IRA. He also deferred wages for 2012. His deferral rate assures he will need a refund of ADP and ACP for 2012. If his entire balance is rolled over now, will the plan sponsor's obligation to refund ADP/ACP failures be satisfied by sending correspondence to the IRA custodian when that time comes in 2013?

The new shareholders are all more than 2% owners. They have stopped deferring as of 1/1/09.

I have a cafeteria plan client that uses a fiscal plan year. As of 1/1/09, several employees were given ownership in the S-corporation so they are no longer eligible to defer. My question is what happens to the pre-tax deferrals that these new owners did not use prior to 1/1/09? Can they continue to submit claims for reimbursement or do they lose their remaining balances? Thanks for any help.

I was at a seminar on Safe Harbor plans several years ago. Stephen Forbes of Corbel made a statement about truing up safe harbor match. He said a plan can use the payroll period matching on a safe harbor plan and not do an annual true-up. However if any mistakes were made on those payroll period contributions, then you have to true-up all participants. I had never heard that before nor since. He said it in passing and gave no reference. I have never been able to find any reference regarding that statement. Does this sound familiar to anyone? Thanks for any help.

Sorry for the confusion. There is nothing in the regs that permits contribution changes not specified in the plan document; ie mistake of fact, etc. Refunding to the company (or owners in this case) for any reason is simply not permitted. That requirementis one of qualfied plan's biggest rules, almost like QP's version of the '10 commandments.' If their document does not allow this type of change/refund/forfeiture, I would have to say to the accountant, "nice try, but that ain't gonna work." If he insists, then I would request support from a reliable source for his position. If he can not produce any and still insists, I would get a PYA letter (protect your assets) letter to the owners telling them why this may blow up in their face and that you strongly advise against it; but what do they want you to do? I wasn't really speaking about the change in contributions. I was speaking more to the change in compensation and it's ramifications. Unless the owners have subsequent and valid elections changing to the new results, dated before the first deferrals were made, you are correct in that they can't retroactively change deferrals below the 415 limits.

I don't think there is too much to worry about here. There are any number of reasons why this change was made. But determining correct results, wages in this case, is his job. And if mistakes were made through the year, corrections would be in order. The loss of earnings could simply be extra expenses not previously accounted for. Since the correction was made so close to December 31, it seems even less likely to be of any questionable origin. At least to me. That or he doesn't have very much to do. Besides, the reduced wages causes the HCEs to lose benefits, not gain them. Afterall, you can discriminate against HCEs with no fear of repercussion. As long as you have written documentation as to what the final compensation amounts, it sounds like refunds should be made for the deferrals and forfeitures of their match.

Thanks for the replies. I understand the complicated nature of the computations and the lack of safe guards in Relius. I think that answers my question. Relius is capable but by no means fool-proof... But then nothing is fool-proof for a sufficiently talented fool, as I have proven on more than one occassion. Thanks again.

We have gotten serious interest in a Cash balance plan to be added to the DC plan for an existing client. My question is about software. We use Relius for our daily plans. I am interested in adding the DB function to administer Cash Balance plans. How well does Relius work on Cash Balance Plans? Are there any issues or limitations to look out for? Thanks for any feedback.

They missed their smalled division which has about 15 people who defer in it. They missed one June payroll withholding and it was corrected the following February.