PensionPro

http://benefitslink.com/boards/index.php?showtopic=32627

Is it a multiemployer plan? It is not uncommon to have a trade association sponsor a multiemployer plan and also participate as a contributing employer, even though the association itself is not union.

1999 IRS Q&A Larry Starr and Criag Hoffman met with Mr. James E. Holland, Jr., Chief, Actuarial Branch 1, and Mr. Richard J. Wickersham, Chief, Projects Branch 3 of the Internal Revenue Service. The meeting took place in Arlington, VA on October 19, 1999. The purpose of the meeting was to provide Mr. Holland and Mr. Wickersham with questions which were submitted by members of ASPPA. It is intended that the responses or deferrals to the questions provide the basis for discussion at the 1999 Pension Actuaries and Consultants Conference during the IRS Question and Answer session. The answers reflected in this presentation are Larry Starr's and Craig Hoffman's interpretation of Mr. Holland's and Mr. Wickersham's responses, and not direct quotes. They are intended to reflect as accurately as possible the statements made by the government representatives. This material does not represent the official position of the Internal Revenue Service, the Treasury Department, or any other government agency; nor has it been reviewed or approved by the Service or Treasury. 82. Man and woman each own a non-affiliated business and they have a child together. Does this mean that their non-controlled group is now controlled under 1563 (e) (6) and will be controlled until that child turns 18? - therefore never have children under 18? That is correct - never have children under the age of 18! [i thought it was supposed to be age 21 not 18, but this is the quote].

You should also consider the impact of state laws regarding community property in your analysis.

An intern could be an employee or not. There are limited exceptions where an employment relationship does not exist. The DOL uses a 6 point test to make a determination. This DOL fact sheet should be helpful: http://www.dol.gov/whd/regs/compliance/whdfs71.pdf

An enrolled actuary is by definition an individual and not a firm, and you must report when the individual is terminated.

Common owners must be individuals, estates, or trusts per IRC §1563(a)(2).

Part of the convoluted regs is that the formula must be available on the same term to all employees. See §1.401(a)(4)-2(b)(4)(vi)(D)(1). Therefore, an hours requirement or last day employment requirement must be uniformly applied to the multiple safe harbor formulas. It could work but the details need to be reviewed.

I believe it meets the safe harbor exemption. See §1.401(a)(4)-2(b)(4)(vi).

A match tiered by service is subject to BRF testing. I don't understand the comment about 411 restriction.

From the ERISA regs, "Requirements concerning trustees. The trustee or trustees referred to in paragraphs (a) and (b) shall be either named in the trust instrument or in the plan instrument described in section 402(a) of the Act, or appointed by a person who is a named fiduciary (within the meaning of section 402(a)(2) of the Act). " Not very helpful. The Tax Code is not any more helpful in defining who a trustee is. However, Rev Ruling 81-114 states the trust must be " a valid trust which is recognized under local law." Bottomline: state law governs unless there exist contravening federal laws.

Only excess contributions and excess aggregate contributions (whether distributable or forfeitable) are subject to the excise tax. See page 11 of instructions to form 5330. Deferrals recharacterized as catch-up are not excess contributions.

My understanding is that the 2007 regs do not apply to governmental entities and that governmental entities should continue to apply a reasonable good faith interpretation based on prior guidance available such as IRS Notice 89-23, various PLRs, language of the Code, Regs, etc. Interested in other views.

Current payments as per the amortization schedule are applied to principal and interest. Any additional payments apply to principal only. Otherwise you end up making interest payments for interest which has not been accrued. Or paying the same amount of interest even though the loan term is shortened. Both of which do not make sense.

I am not 100% sure on this, but I believe bankruptcy does not relieve an employer of the obligation to pay the excise tax. Courts have differed on whether the excise tax should be treated as tax or penalty, but not on whether the employer owes the excise tax. Who is signing the 5500?

The answer seems to be no according to Pub 521.

Refund before 2 1/2 months no excise tax. Refund after 2 1/2 month 10% excise tax. Refund 12 months after plan year end, the plan will fail to meet the requirements of section 401(a)(4) for the plan year for which the excess aggregate contributions were made and all subsequent plan years in which the excess aggregate contributions remain in the trust.

If the refunds are made after 2 1/2 months the excise tax is due.

All plans of the employer are treated as one plan under 72(p).

From the definition of severance of employment in the 415 Regs: A participant in a multiemployer plan (within the meaning of section 414(f)) is not treated as having incurred a severance from employment with the employer maintaining the multiemployer plan for purposes of this section and §§1.415(b)–1, 1.415(b)–2, 1.415©–1, 1.415©–2, 1.415(d)–1, 1.415(f)–1, 1.415(g)–1, and 1.415(j)–1 if the participant continues to be an employee of another employer maintaining the multiemployer plan.

No.

§1.401(a)(9) refers you to IRC §416 which refers you to IRC §318 which deals with stock ownership, attribution, etc.

A partnership depositing employer contributions during the year is not much different from a corporation doing likewise, except there is an increased likelihood of miscalculations. The allocation will need to follow the terms of the plan document. An excise tax will be due on nondeductible contributions if any. There is no special statutory limitation or prohibition on a partnership prefunding employer contributions that I am aware of.

Can the penalty for not taking the full RMD be waived? Yes, the penalty may be waived if the account owner establishes that the shortfall in distributions was due to reasonable error and that reasonable steps are being taken to remedy the shortfall. In order to qualify for this relief, you must file Form 5329 and attach a letter of explanation. See the instructions to Form 5329 for all the rules on how to apply for this waiver. The full article is on the IRS Web site: http://www.irs.gov/retirement/article/0,,id=96989,00.html

That sounds right. With employer contributions there may be allocation issues especially if there are common law employees involved.