SheilaD

On terminations where we have filed a form 501 with the PBGC within the last 3 months they are asking for: 1) A copy of the current plan document; and 2) Proof (cancelled checks) of each distribution Does anyone know why this is happening or why there is no announcement? Thank you.

Thank you for the guidance. I think he will not believe me - but at least it will have been said.

I have a potential client that own two companies - a New York law firm and an NJ accounting firm. He is insisting that by STATE law they cannot sponsor the same plan. He quotes the below. My thoughts are that both sections seem to exclude Profit Sharing or retirement plans and wouldn't ERISA pre-empt anyway? But hey -- he's a lawyer -- maybe he know stuff I don't. Any thoughts? The underlining below is from me -- not the original source. Thank you " EC 3-8 Since a lawyer should not aid or encourage a non-lawyer to practice law, the lawyer should not practice law in association with a non-lawyer or otherwise share legal fees with a non-lawyer. This does not mean, however, that the pecuniary value of the interest of a deceased lawyer in a firm or practice may not be paid to the lawyer's estate or specified persons such as the lawyer's spouse or heirs. In like manner, profit-sharing compensation or retirement plans of a lawyer or law firmwhich include non-lawyer office employees are not improper. These limited exceptions to the rule against sharing legal fees with non-lawyers are permissible since they do not aid or encourage non-lawyers to practice law. DR 3-102 [1200.17] DIVIDING LEGAL FEES WITH A NON-LAWYER. A. A lawyer or law firm shall not share legal fees with a non-lawyer, except that: 1. An agreement by a lawyer with his or her firm, partner, or associate may provide for the payment of money, over a reasonable period of time after the lawyer's death, to the lawyer's estate or to one or more specified persons. 2. A lawyer who undertakes to complete unfinished legal business of a deceased lawyer may pay to the estate of the deceased lawyer that proportion of the total compensation which fairly represents the services rendered by the deceased lawyer. 3. A lawyer or law firm may compensate a non-lawyer employee, or include a non-lawyer employee in a retirement plan, based in whole or in part on a profit-sharing arrangement. DR 3-103 [1200.18] FORMING A PARTNERSHIP WITH A NON-LAWYER. A. A lawyer shall not form a partnership with a non-lawyer if any of the activities of the partnership consist of the practice of law. DR 3-103 [1200.18] FORMING A PARTNERSHIP WITH A NON-LAWYER. A. A lawyer shall not form a partnership with a non-lawyer if any of the activities of the partnership consist of the practice of law"

I know of at least 2 companies that will take small rollovers. It didn't feel right to do their advertising for them -- but feel free to send me an email and I will send you their information. sdott@northeastprofessional.com

000 is correct - that is the three digit number to be used for a PSA. See instructions for the Schedule D.

Where's my spell check when I need it most? Thanks.

This is a new one for me. Companies A & B and companies A & C are controlled groups (B&C and A&B&C are not controlled). Company A is the General Partner of company D only 1 % ownership but looks to be clearly a management group for company D. D has no employees. Company D owns 100% of company E and 55% of company F. Currently they have a multiple employer plan. A,B,C operate a single plan. D and E are adopters of that plan. They share the 5500 but test seperately. What they want...is to have all the companies under a single plan. I don't know of any rule that lets you tie togeather companies with a combination of controlled and affiliated groups. As I see it D and E are adopters of the ABC plan and should have seperate 5500's and seperate testing. With AB&C do they have to do two sets of tests as well? One for A&B and one for B&C? I'd appreciate any input.

I have one plan that allows a post distribution change in form. The lower paid participants keep selecting annuities of $ 10, $ 20, $25 per month and then discover they would prefer a lump sum after a few months of tiny checks. The employer likes when they switch to a lump sum because the cost of processing those checks outweighs the higher lump sum payout. However, in our case we don't purchase annuities - so we are taking into account GATT and 415. I would hope that the plan sponsor would purchase an annuity that would follow the terms of the plan (whether change is allowed or not).

I have an LLP with many partners who have not deposited their deferrals yet. They have all elected to maximum defer and they all will have net comp over 250K (which makes calculations easier). There are HCE's that are NOT partners but are receiveing W-2's. The ADP test will fail. I see three ways to deal with this and am not sure what is correct. 1) Have the partners contribute the net amount (maximum deferral minus refund) note that this wil NOT cause the ADP test to pass - it is taking the two transactions contribution and refund and combining them into one. I am not comfortable with this but see that it has been done in that manner in a prior year. 2) Have the partners make the maximum deferral per their election and then do a refund properly 1099'd in 2013. 3) Calculate the amount the partners would have to reduce their deferrals by in order to pass the test - which means their net deferral will be less than (2). I am interested to hear any opinions. Thank you. Edited to add a followup question -- if contribution and refund (2) is the way to go -- can the partners's take their refunds now (to avoid penalties) although they have not contributed yet?

If the sponsor is otherwise a word for word adopter of a volume submitter plan - will the IRS accept the filing? I suppose the amendment takes it out of the word for word adopter category.

Thanks.

I have a similar question. I have a client with "real" partners and "contract" partners. The contract partner is described to me as follows: They receive a guaranteed payment regardless of profits and losses. They receive the income in the form of a K1 (no W2). They have no equity ownership of COMD. They have no voting rights. Unlike other employees, they can assign/attest to client tax returns. Since the person has no equity ownership and does not share in profits my first instinct is that he is NOT HCE (first year of employment so no compensation last year). I'm just antsy about the whole K1 form which seems to imply some type of membership in the partnership - which if over 5% would make him an HCE. Given the size of the client I am recommending that they get a legal opinion but wondered what you'all thought. Thank you.

I have a really fun one today. The client received two notices both from the IRS and both with the same date. The first confirmed the extension to 10/15. The second said the form was received late and assessed a penalty. The form is on EFAST as accepted 9/15. (I checked and all notices had the same EIN, Plan Number etc..). Luckily my client has a sense of humor.

My client says they did this with a prior administration firm in the past. (of course) This is a totally participant directed plan and the trustees are going to make a "special" investment of Trust assets in a piece of foreign property. A notice is to go to all active participants stating that they have a one time option to invest in this property with lots of notes about how highly speculative, aggressive etc this investment is. Any participant may elect to direct some of their account into this investment. (Assumption being that they have enough owners who want to be in this investment that they can cover the purchase price). Once in the investment it will be treated like a pooled fund - with annual valuations. Participants with a share of this investment can only get out of it in the month following the annual appraisal. Once in a participant can only get out of it entirely (i.e. if their share is 10,000 they can transfer out the total but not 50% of it). I've not seen this before and would welcome any thoughts. My initial concerns regard the fact that it is a directed and yet pooled investment. How does this effect fee disclosure, quarterly valuations, etc.. Would this be similar to allowing participants to keep some of their assets in a trustee directed fund? Thank you in advance. (edited to add more information). I am now informed that one participant wants to borrow money from the plan to invest as an individual as well.

We supply a supplemental notice that states in part ... We have attached your most recent valuation statement (as of December 31, 2010) that contains data on the following as applicable: Account balances of accounts that you do not control the investments of; and/or Life insurance cash values. This statement may also contain vesting information as of December 31, 2010. If you do not have an account balance, you will not receive a statement." We have the plan sponsor distribute it quarterly.

My expereince has been that Relius automatically enters them immediately.

We have been successful in contacting the rollover account holder (i.e. bank or investment company) and explaining that it is an ineligible rollover made by error. They have always returned the money.

My question on this subject is not whether the original loan transaction is prohibited. Rather, by failing to meet the requirements that the loan must meet in order to be not a prohibited transaction, does it become a prohibited transaction in the year that the default occurs. The owner of the corporation now has a transaction with the plan that is not exempt from the prohibited transaction rules.

I don't have a cite handy - but I will say that we always treat the loan on death as taxable to the participant's estate. The beneficiaries are no part of the loan agreement between the plan and the participant. I can't see how you can tax them on a debt they did not create. I'm interested to hear what others say.

Since we will remove the plan from coverage for 2013 (as no pro-rata premium allowed for 2012) - it is POSSIBLE that they can take the 25% for 2012. I lean towards it being OK. Would you agree that if unincorporated and we change all ownership to one of the two spouses it is a PBGC insured plan? (I said it wrong in my first post).

Once covered, always covered. But under PBGC regs about premiums it specifically refers to a situation where the coverage ceases but not due to plan termination (noting that there is no pro-rata reduction in premium). I love it if they are still covered -- can you point me in the direction of where this is in the reg's? thanks.

I have a small organization (not proessional service) - just 2 owners (husband and wife each own 50%) and 1 participant. The plan is PBGC covered. The only participant who is not an owner terminates in 2010 and is due a benefit. He is finally paid out in February, 2012. Technically the plan is no longer a PBGC insured plan effective march 1, 2012. For a portion of 2012 the plan is PBGC covered so do you think I can still get the 25% of pay maximum PSP for 2012? I know I can't for 2013. (presume DB cost is far over the 25%.) Followup question - the company is incorporated and I am pretty sure that each spouse own's 50%. But if one spouse own's 100% and the other only owe's through attribution - then the plan remains PBGC insured? I might talk to them about changing the ownership in that case. thank you.

We have been quite pleased with Ft. William - especially their support services. They have been particularly helpful with IRS questions on cash balance submissions.

So I passed my tests and received my ERPA designation certificate and card etc... the only problem is that my name is misspelled on everything. Instead of Sheila I am Shelia! Everything else I have including my application have the correct spelling. I've already sent a request (2 weeks ago) to have it fixed but have heard nothing. My question is.... can I use the designation or need I wait until they can spell my name correctly?