chc93

Thank you very much for the quick responses. In the "earlier discussion", looks like the IRS has opined in ASPPA Q&A... that 12 in my example is the correct response.

Has there been any recent discussions on the participant counts at the end of one year and the participant counts at the beginning of the next year for the Form 5500. For example, calendar year, 12/31/2014 participant count of 10. 2014 Form 5500 shows 10 for participants on last day of plan year. Two new participants with entry dates of 01/01/2015. On the 2015 Form 5500, how many participants at the beginning of the plan year... 10 or 12. Way back, I recall using 10 so that the end of one year equals the beginning of the next. Our 5500 software does this. But I'm inclined to use 12. Will using 12 instead of 10 for the 2015 Form 5500 cause any problems? Any recent experience? Same issue for active participant counts. Also, will impact plans that may go over 120 (assuming filing 5500-SF in prior year). Thanks...

I think all participants that were annuitized would be reported Code D. For Code A, the SSA will send a letter (when SS benefits are applied for) that generally states that you may have benefits in Plan X, of which Plan X has already discharged their liability, so the participant doesn't have any benefits in Plan X. I think the company that has the group deferred annuity contract is responsible for contacting the participant at the proper time.

Sounds like you're stuck with purchasing the annuities. And wow... fraudulent notary?

Have a co-worker friend call the participant. That has been working for us. I heard a suggestion to arrange to meet the participant to get the distribution forms signed.

shERPA... I would very much appreciate it if you could keep us updated with this issue.

I don't think I heard of this... but if you stop filing a 5500-SF electronically and switch to a paper EZ filing directly with the IRS, will the DOL/EFAST send a letter of late filing or non-filing?

I don't think this is possible. The spouse is not a participant in the plan, so cannot have an account in the plan.

One other note... Since in the prior years there was another participant, I assume you were electronically filing the 5500. For one of the plan we have, the 5500 was electronically filed while there was the other participant. When the other participant terminated and we only had the owner/spouse, we continued to file the 5500 electronically, but with the "one-participant plan" box checked.... which essentially makes the 5500 an EZ (many 5500 questions are not required, and the 5500 is not on the public efast website). We did this since we thought that if we stopped electronic filing, a flag would be raised somewhere that the 5500 was not filed (or timely filed), even if the EZ was filed directly with the IRS, and we might have to spend time getting this straightened out. We haven't had a problem with this yet.

We have other plan documents that specify that if the plan is top heavy, the compensation used for the 3% safe harbor will be the total plan year compensation, regardless of actual date of participation (not eligible to defer). Only downside is that the 3% safe harbor on the pre-participation compensation is now fully vested.

An ERISA attorney told us that while you can add the 401k and SHNEC as of Jan 1 and begin 401k deferrals July 1... the SHNEC only considers compensation from July 1, since the participant could not defer prior to July 1... also assuming the plan document specifies that beginning July 1, participants can elect 401k salary deferrals. Prior to July 1, participants technically were not eligible to elect 401k deferrals hence not eligible for SHNEC. What about doing an additional regular PS discretionary contribution to get where you want.

That is what we do too, but because so many providers will indicate "Recordkeeper" I was hoping the DOL clarified in a more "obvious" manner. Almost all of them indicate their service provider role as the relationship. We have always entered "None" in this element ©. We never had a service provider that had such relationships as noted in the instructions. Also, element (b) provides codes for the services rendered.

From my way back days, I thought only the IRS could put a lien on a participant's benefit. But maybe that was a lien and not an in-service distribution to satisfy some IRS tax/penalty... ?

From My2cents response, and re-reading the OP, it seems like the participant is having an attorney draft a petition to the plan to allow an in-service distribution, which doesn't have to specifically be for a divorce settlement. Maybe the plan can be amended to allow in-service distribution? Or does this open other issues for the plan.

Well... in the past, the IRS took much time to enter the 5558 info into their data base. So 5500 filings just after the original due date generated late filing letters. And the best recourse was the IRS letter acknowledging the 5558 receipt and extended due date. Now, if the PN's are all 000, maybe this will cause late filing letters since the 5500 has a different PN. But I think the EFAST acknowledgement ID should be OK too. But still a hassle...

Yes, I understand. Company feels that a plan that has a "defined" contribution, as opposed to a "discretionary" contribution, helps, even knowing that the "defined" contribution can be amended at any time. At least the "defined" contribution can be communicated to employees as a company committment that is written into the plan, and not a "discretionary" contribution that the company can change its mind every year. (one company's viewpoint).

We have one employer (only one, all others have merged MPPP into 401k/PS) that keeps his MPPP along with his 401k plan. Reason is that the MPPP contributions are mandatory, whereas a PS contribution is discretionary. Better for employer/employee relations that company is committed to an employer contribution.

Unless I'm missing something... Plan A. Including or excluding is not relevant. Total account balance for key employees is used. Plan B. Owner and husband are key employees. I don't think the owner's step-son is a key employee, and his account balance is included with all other non-key employees.

Just curious... assume plan sponsor closes the business (also terminated the plan). Who, then, keeps the records "forever". Does the plan sponsor still have to keep records "forever"? And what about plan sponsors that close their business, retires and/or eventually dies. How long is "forever"?

One thing that we have found is that if a 945 is filed for one year, but 945's are not filed for a few subsequent years, the IRS "terminates" the TIN. So when we go to file a withholding through EFTPS a few years later, we need to apply for a new TIN. For the past few years, we have always filed a "zero" 945 each year once a 945 is filed.

In one case that we had where the company went into bankruptcy, the bankrutpcy trustee decided to return the settlement checks. Used DOL Field Assistance Bulletin 2006-1 for some guidance... which basically mentioned using prudence, weighing cost and ultimate benefit. Checks totalled about $1,500... plan assets that were distributed were about $17 million to 400+ participants. Checks received about a year after all plan assets were distributed.

In a case that we had a few years ago, the bankruptcy trustee, appointed by the court, paid all necessary fees related to the plan. I think the backruptcy process got all company assets so he had funds to pay such fees. However, if I recall, there were "timing" issues with bankruptcy filing, our service period, and our invoice "date". So one invoice for services prior to the bankruptcy filing ended up as a "creditor in line" which we didn't get paid. But all of the plan termination fees, including our fees and I think the auditors fees were paid by the bankruptcy trustee. All 5500's with audit reports were filed timely.

I agree. If I recall... the participant actually delays the RMD for 1 year. For example, plan terminates in 2015, rollover in 2015 (still employed, no RMD from plan). IRA receives RMD in 2015, but IRA value at end of 2014 is zero, so 2015 RMD from IRA is zero. RMD's from IRA start in 2016.

A few years ago, we terminated DB plan. My recollection is that the plan's attorney said that plan termination is not employment termination/retirement, so plan termination does not trigger an RMD, and the full distribution amount can be rolled over to an IRA.

We actually had that situation. Filed 2012 SF as "regular" in Feb 2013. Filed 2013 SF as "one-participant" in Mar 2014. Filed 2014 SF as "one-participant" in Mar 2015. Haven't heard from the IRS or DOL/EFAST... yet. All 5500-SF's before 2012 filed as "regular".