SheilaD

Yes a 1099R using plan EIN and it will be rollable. That's why I'm concerned that I might need to do a 5500. Or to be more frank -- looking for an excuse to not do a 5500.

On one of the many PBGC audit's that we've had over the last year - one of my clients is being forced to pay some additional interest to certain participants due to the date they were paid out versus the date their PVAB was calculated. We did a final 5500 for 2010. Now the client must pay $x to around 10 participants and do 1099's. I don't know whether this makes it necessary for us to file a new final 5500 for 2012. I am sure that if we do so, we'll end up with inquiries about where 2011 is. Has anyone had this situation and do you know what we should do? thanks for any thoughts. S

I had some work with a school that has a 403(b) plan. They have lots of problems (just finished filing 8 years of back 5500's for one). The plan calls for mandatory employee contributions of 3% of pay with a "match" of 3% of pay. 1 year wait. I understand that for plan purposes the mandatory employee contributions are actually non-elective and do not count toward maximum deferral limit and are not subject to universal availability rules. However the plan does allow for employee deferrals in excess of 3% of pay which I would think is an elective deferral. As the elective deferral is subject to universal availability - wouldn't they have to allow employees to start deferring immediately and not wait the 1 year? Thank you.

Put in a DC plan where group A is greater than 50% owners and group B is other owners. The partnership (not the individuals) decides that Group A will get a 49,000 contribution and group B will get a 0 contribution. As long as no other employees I think this would work.

I did a lot of research into this in 2006 as I had this situation. In addition the ex-wife had an account balance attributable to her own service. My conculsion was that her portion as a former key was excluded. The amount attributable to the QDRO counted in the tests (and had to be added back in) until 5 years after it was distributed. At this distance in time - I'd have to go to storage to review my notes to say exactly how I am to that conclusion. Hope it helps.

I took and passed and was not surprised -- nervous but not surprised. Good luck.

Deleted because client objected to information being posted. Thank you anyway. S.

Thanks so much. I came to the same conclusion that you did yesterday but just wanted to double check that my understanding is right. Thank you again. According to the ERISA outline book the penalty no longer applies to Money Purchase Plans post 2007. You must correct EPCRS which it seems you are doing but the 5330 does not apply.

1 man plan with life insurance. After 9 years the employer is hiring some employees. He, being a generous soul, does not want to buy life insurance for his employees. He wants to amend the plan so that no future life insurance is purchased (before the new employees become eligible). Just on the face of it this seems discriminatory to me because there will be a benefit available to HCE's only. I can't see anyway to justify this. However, I promised I would inquire. Anyone think that this is possible? Thank you in advance.

Nevermind -- confused client called this morning the plan asset is not mortgaged - he is confused - the mortgage is on HIS house not the plan investment property. Sorry to waste time.

I have a take over 1 man plan whose sole investment is a piece of property with a mortgage that exceeds the current appraisal of that property. We took over the plan in 2009 and the mortgage was not mentioned. He just let it slip this time around. I believe that rental income goes to pay down the mortgage. The owner participant is 69, disabled and seems to have trouble understanding what I am saying. I feel sorry for him and would like to help if possible. (How do I get into these situations?). I'm wondering if there is a way I can fix this for him by distributing the investment property to him with the mortgage. The net value is negative so there would not be a taxable event. I don't know what else we can do for him. Of course I would send him a letter and ask him to sign off on it that we essentially did not create or advise him to create this situation and that we recommend he discuss the situation with an ERISA attorney before he proceeds. Any thoughts?

I dont understand your Q. For plan years from 2002-2008 only Q 1-5 and 8 were to be completed by a 403b plan. See instructions to 2008 5500 P 10. No other questions were answered or schedules submitted. The 2008 5500 is available in paper form and can be altered to indicate use for a prior year. As I recollect the DOL allowed delinquent form 5500 filers to submit all prior years forms at once and pay a max fine of $1500. I dont know if this is still true. I dont see how you can submit the 2010 5500 form for years prior to 2009 since the 403b plan was not required to complete the entire form and the plan is not going to have the information needed. It would be better to have the plan admin complete the 2002-08 forms on paper (since only Q1-5 and 8 are answered) and send them to the DOL along with a completed 2009 form and a check for the appropriate amount. The forms must be filed with EFAST2 as well as with the delinquent filer program. That is why I have to use 2010 forms. I agree that I send a paper copy to the DFVC address. However, I have since heard from someone else (another venue) who had a similar situation and was able to file through EFAST2 all of the prior years on 2010 forms with no errors. thank you.

I have a new case - a 403(b) plan that last filed a 5500 in 2001. I'm being retained to file 2002 - 2009 returns under the DFVC. With EFAST I must file all the forms on a 2010 form. I'm wondering if I am going to have EFAST problems/errors because 2002 - 2008 are information only returns so the participant counts are not completed. Anyone have any experience with this? Thank you.

I would think an amended 5500 would be sufficient. I can't think of penalties that would apply.

[Just heard of an incident of this myself. Anybody else willing to chime in on this issue?. It was subtly addressed in 2011 Blue Book Q&A 5, but isn't this unreasonable? I think it's unreasonable. In my case the plan timely adopted PPA in which it states that an applicable interest rate (...within the regulations) will be used. The plan terminated in 2009 and adopted an pre-termination amendment to select the 3rd month preceding the previous plan year end for the applicable interest rate. The assets were distributed 11.5 months after the amendment. The PBGC, on audit, states that because we distributed earlier then 1 year after the change in the look-back period we must use the greater of the lump sums determined under the prior look-back period and the "new". Our original amendment does not clearly define the look back - referring to not yet published regulations. This is a case in which the owner waived to the extent necessary. I'm still arguing about the lump sums but should they prevail - do you think I remove money out of the owners rollover IRA to give additional funds to the other participants or does the owner have to contribute the amount due? As a side comment - 100% of our PBGC plan terminations in the last year have been audited. Has anyone else had that experience? Thanks

You might consider restating the Money Purchase as a 401(k) to save on expenses.

With regard to the attribution, I presumed the attribution stopped upon the death of the owner. However, the situation has changed. I am now informed that the sons are the beneficiaries and they will be taking over the company. So my question is now, can a beneficiary who is a majority owner waive benefits due to him/her (as opposed to those due to him as a participant). I will poke around the PBGC and see if I can find anything. Thanks for any thoughts.

I have an underfunded PBGC plan where the owner has just passed away. The sons are taking over the business and would like to terminate the plan. The widow would like to waive her benefit to the extent needed to terminate the plan and pay out all others. Although I understand why the family would like to take this approach I'm not sure that it would be allowed. She was never employed by the plan sponsor and will not be an owner in the new situation. Even if they made her a 51% owner, can a beneficiary waive as opposed to an actual participant? On their behalf I will probably write to the PBGC but I wondered if anyone had any thoughts or had encountered this situation. thank you.

There is a penalty tax on non-deductible contributions to a qualified plan.

You could always post a resume on Benefit's Link!

Thank you -- The plan allows a discretionary match. In order to meet the safe harbor ACP test, I wanted to be sure that when testing if the RATE of match is increasing I test the combined SHMAC and discretionary match not the discretionary match alone. Otherwise my discretionary match meets the requirements of not exceeding 4% of pay, being available to all, and not matching any deferrals in excess of 6% of pay. Followup question on whether the discretionary portion must be subject to the safe harbor rules on vesting and distribution restrictions. I think so but would like confirmation. A second followup question on if it is possible to apply the discretionary match for a partial year and remain in ACP safe harbor -- once again I don't think so but the client is asking. Thanks again.

I have an employer who elected and gave notice for a safe harbor match for 2011. They want to increase the match to 100% match up to 6% of pay for 2011 and not lose either their ADP or ACP safe harbor. It is too late to amend the safe harbor for 2011 as that would kick them out of safe harbor. However a discretionary match that does not exceed 4% of pay is generally allowed. Am I correct that since the discretionary is not > 4% and we are not matching above 6% of pay deferrals they are OK for 2011? I've been reading the regulations and I keep getting caught up in the distinctions between fixed formula enhanced match and discretionary enhanced match rules. My concern is that if I look at the match as if it actually comprised of two matches - the safe harbor and the discretionary than I have an increasing match on the discretionary side ... it doesn't kick in until you defer in excess of 3% of pay. Or I may have just over-thunk the scenario. Followup questions are: If I am still safe in ADP and ACP safe harbor land - I presume that the discretionary match would have to be treated as a safe harbor match ? (i.e. 100% vest and limits on distributions). If I am kicked out of ACP safe harbor I still retain my ADP safe harbor and just have to test the total match under ACP? I could then subject the discretionary match to vesting. Any other concerns? In a perfect world they would like to apply the additional match only to contributions made after a certain date. I don't think I could do that with ACP safe harbor retained, but what if I am ACP testing? No matter how 2011 works out they want to amend to a formula fixed match for 2012 which removes the uncertainties of 2011. Any thoughts would be greatly appreciated.

As long as the receiving plan allows rollovers from IRA's ... the IRA you are referring to can rollover into the qualified plan.

If the participant is active - and not a 5% owner - is there a RMD at all? The required beginning date is the later of termination or 70 1/2 for a non owner.

Yes They allow retirement plan but it certainly depend on which facility you are looking for. I worked on a defined benefit plan that was specifically designed to meet both Canadian and US law. There were some provisions that only applied to one group or the other (J&S requirements were different). They had a US approval and the Candian equivalant. Frankly it was a bit of a pain with the conversion of dollar amounts, the different distribution package requirements etc..