Young Curmudgeon

That is a fair point if you believe that is the sponsor's intent. What is unfortunate is that it generates a 25% increase in benefit costs in a year where revenue is already down. The part that seems nefarious to me is in this case, the regulation backs a plan sponsor into a corner because of an unforseen business downturn.

So just to confirm, since my DB benefit based on past average compensation is 110% when tested against the current 415©(3) compensation, I'm immediately pushed to the 7.5% gateway requirement. Is this viewed as a mistake in the way the code was written or nefarious intent by the IRS?

Is it accepatable to use average compensation for this? I have a DB/DC combo where the current year compensation if far less than the average on which the DB benefit is based. If I have to use current year compensation for testing, my gateway requirment is going to jump from 5% to 7.5%.

I would like to, but can we do that and still satisfy the requirement to us 415©(3) compensation. Our basic definition does, so would our average compensation satisfy it?

This is an ongoing plan for which we have always satisfied the gateway test with a 6% DC contribution. This year, the owner's compensation went from 250k down to 35k. The DB benefit is based on a historical high 3 compensation. Our system is throwing a 197% combined benefit rate as it's compariing the current year additional accrued benefit (based on 246K average) to the current year $35k compensation. I understand the gateway test has to be run using 415©(3) compenstion, but does it really have to compare a high 3 average benefit to a single year's compensation?

A owns LLC1, a mining type operation, there are no employees. A sponsors a plan for LLC1. A has decided to start a coffee house on the side. A is starting this from nothing, not buying it from someone else. Does the transition period apply since this is not an acquisition?

We have a client with 100+ individual Fidelity accounts. We advised them to aske Fidelity what they would be providing for 408(b)(2). Fidelity's representative's position was that they are not subject to 408(b)(2) on these individual account arrangements and the fee information for 404(a)(5) was provided when the account was established. one-day later... We now have a letter from a different client, from Fidelity that they are subject to 408(b)(2). It seems the representative above is ignorant to the policies of the company.

We recently had a seminar with the DOL and afterwards the agent said they "don't like these arrangements and want them to go away". FWIW, the DOL agent speaking had nothing constructive to offer as far as solutions. That said, can we not define a set of core options for which we provide information and lean on that for compliance? Activity outside of the core options wouldn't have to be covered?

To avoid a prohibited transaction, is there any official (or semi-official) guidance on the amount of time that must pass between the sale of an asset to a third party (B) from an individual (A) and then the sale of that asset to the individual (A)'s retirement plan?

What if I want to be pbgc covered so I can skirt the combined plan limit? Is there code that prohibits this? It seems too good to be true and if allowed, everybody would do it. Thoughts?

It's an election form produced by Datair. Title: Funding Election Form 430(f/h) Then, six numbered elections regarding the following. 1. Applicable Month (Sch SB line 21b) - 1st, 2nd, 3rd, or 4th mont prior 2. Interest Rates (Sch SB line 21a) - segment rates or yield curve 3. Plan Assets (Sch B line 2b) - fair market versus averag 4. Voluntary Reduction of Carryover and Prefunding Balance (Sch SB line 12) - reduce or not reduce 5. Apply Reduction to Minimum Required Contribution (Sch SB line 35) - use of the carryover or prefunding balance for contribution 6. Increase Prefunding Balance for Next Plan Year - what amount if any is to be used to increase the PFB for the following year

For 2010, was the election form required? I have one actuary saying it was optional and elections weren't required (he didn't attach them) and another saying it was required and we were out of compliance on the plans for which it wasn't completed. I can't find anything definitive. Was it required for 2010?

I have a "non-professional" small floor offset plan where only the owner's benefits aren't 100% offset by the defined contribution plan. Do I have to provide the annual funding notice? Do I have to give the "offset" participants the notice and a certificate showing zero accrued benefit for the defined benefit plan?

I just want to make sure I'm understanding this correctly. Brother-sister controlled groups don’t have the separate “controlled group for 415” rules. Parent-subsidiary does have the additional 415 rules. You just substitute “more than 50%” for “80% or more”. The proposed regs had this applying to both types, the comments the IRS received prompted them to clarify the issue in the final regs. I don’t understand why “one guy” who owns 100% of A and 75% of B doesn’t get viewed as a parent of both. It seems odd that if he made A own B he’d have one 415 limit, but he just owns A&B as an individual he gets two 415 limits. Am I interpreting this correctly?

My document requires the offset be "by the Participant's monthly benefit provided from the Profit Sharing Plan non-elective accounts attributable to contributions and associated earnings for plan years beginning on or after January 1, 2010" So I use account balances to calculate the offset, no problem. Does this also dictate the testing methodolgy? For future years, to avoid exposure to bad investing on the PS side, could I still operationally test for non-discrimination based on current year accruals & contributions only?

The deferral elections were a dollar amount per month so we did use the actual period deferrals. We prorated the K1 also. Seemed like the most logical way to go. Had the deferral election been a percentage and not been deposited, I think I would have given them nothing on the grounds the deferrals weren't actually for the relevant period.

Background Information -A calendar year plan suspends it's safe harbor match effective March 31. A partner's K1 is $50,000 and their salary deferral is $9,000. Question For the purpose of calculating the partner's contribution, what is the appropriate methodology for determining applicable compensation and deferrals subject to the safe harbor match? Should both amounts be prorated for the three-month period, or are both the compensation and deferral deemed to be earned/made on the last day of the year providing a zero match for the partner?

I'm correcting a failed adp from calendar year 2008 using the one to one correction method. The 5330 I provided previously was never filed. What's the requirement now for the 5330? I'm past the due date already so do I file one for 2009 and roll up the return amount plus interest or is there some other requirement to file the 2008 form late and an additional form for 2009?

My understanding is that for a management ASG, the management service provider must derive more than 50% of its revenues from just one recipient organization, and if so the ASG is composed of just that recipient and provider organizations. Since the I would think there would be no management ASG unless of those 4 recipients, those that provide on a combined basis more than 50% of the management service provider's revenues are themselves a controlled group or ASG.

Only the paper tables, which appear to be more favorable than SLA equivalent.

My understanding is that if the QJSA options are the actuarial equivalent of the SLA and the 100% form is the normal form of benefit, if you already offer the 50% option, you don't need to add anything. Is the incorrect?

My plan already offers a 50% & 100% J&S option for which we have printed tables. J&S 50 is the normal form. My problem is that the records are so old, nobody seems to know where the tables originated. They don't match any standard tables so it seems long ago an in-house actuary developed them. Rather than spend a pile of money to have someone recreate, can I just amend the normal form to J&S 100 and leave things as they are?

A corrective distribution from a DB plan for many years of missed installment and 401(a)(9) distributions. The total distribution is comprised of $25,000 in principal and an additional $10,000 of income for "loss of use" for a total of $35,000. The $10,000 portion of the distribution would seem to eligible for rollover based on Q-6 of the 1.402©-2 Q&A as it could be treated as an "independent payment". It's too large to be considered a supplemental payment however would it be reasonable to consider it under the "Administrative error or delay" exemption and not consider it rollable? The example seems to imply a delay due to administrative processing, not a case where the participant was not correctly placed in pay status. I can argue this one either way. If I were receiving the payment, I'd roll it and fight with the IRS if they challenged, but it is easier to call it non-rollable for administrative purposes. Anyone have an opinion or better yet a PLR that addresses this?

As a correction under VCP: Say you missed making twenty years of minimum distributions and you were going to make a single lump sum payment, with interest (to make the ppt. whole) to bring the plan forward. So your total back distributions are $20k, and you have interest of $7k for a total payment of $27k. Is the $7k portion of the distribution rollable or does it inherit the charactaristics of the 401(a)(9) distribution?

I believe you amend by the last day of the first plan year after 01/01/09, operate in compliance for distributions with annuity starting dates in plan years beginning after 12/31/07. There's a decent Q&A in Notice 2008-30.