chc93

Aggregate the 2 plans for all compliance testing... (Plan A - owner only, Plan B - staff only) Plan A SAR goes to only the owner. We actually have a couple of cases like this.

When I briefly read an article on that case, I thought one comment was that while a participant cannot sue the actuary, the employer surely can sue the actuary for errors.

So... I guess the audit report will show $200 at 12/31/12. With 0 participants at 01/01/13, no audit report is required for 2013. Would the auditor agree to including a "reconciliation to Form 5500" section (which we've seen in various audit reports) in the 2012 report, disclosing $200 as of 12/31/12, with explanation that $200 was paid as administrative fees prior to filing the final 2012 5500? Otherwise, seems like your option of a 2013 5500 with 0 participants at beginning and end is the only way to go...

I agree. We've done exactly this in the past.

We actually had a situation going from union to non-union (same plan, turns out). If I recall correctly, participant was eligible for a contribution, and we only used non-union comp, again based on plan attorney. Also appears to be in line with Tom's post.

We've had DB plans go both ways. One was the 417e lump sum equivalent of the subsidized early retirement benefit at the current (early retirement) age, and another was the 417e lump sum equivalent at current age of the accrued benefit at NRA. Plan documents were different.

We had a similar situation. In our case, a participant transferred from non-union (eligible class) to union (excluded class) during the plan year. The plan provides for profit sharing contributions with 1000 hours and last day of employment. The participant had 1000 hours as non-union, and was "employed" on the last day of the plan year. The ERISA attorney for the plan told us that since he wasn't employed on the last day of the plan year in an eligible class (non-union) so was not eligible for the contribution. So, as underlined in RCline's post above, it ended up to be the class the participant was at "allocation time". FWIW

I don't know much about QSLOB's or its rules... but we have a Company A that owns Company B, and Company A was split into 2 plans, and Company B was also split into 2 plans, so 4 plans total... all to keep each plan under 100 participants. ERISA attorney set this all up.

FWIW... in the few times we had this happened for us, the independent audit report provided the schedule... along with schedule of assets and schedule of reportable transactions. We attached those schedules without modifications.

see this link... http://benefitslink.com/boards/index.php?/topic/52276-ok-to-file-a-5500-under-dfvcp-with-missing-plan-information/ Basically, the DOL wants good information for 3 years... older that should at least be a best guess estimate. But they do want all missing forms filed.

JAY21... thanks, and will be interested in the outcome. I discussed this further in our office, and the general thought was that the 5310-A was really for mergers/aqusitions and spinoffs. So shouldn't apply to DB excess assets transferring to DC plans.

JAY21... your experience is interesting. You say that the IRS "is proposing" a late filing penalty. Was the penalty paid? If so, is the IRS therefore saying that the 5310-A was required in cases like this where excess assets from terminated DB plans are transferred to DC plans?

We had this situation a couple of years ago. We (along with the attorney for the plan) reviewed 5310-A, and decided that this form is for a transfer of assets with associated benefits. Excess assets from a DB plan is really an employer reversion, but the excise tax is waived if at least 25% of the excess is "transferred" to a DC plan. In our case, 100% of the excess assets were transferred to the DC plan, and allocated there (we didn't work with the DC plan). So we didn't file a 5310-A. Note that the plan got an IRS DL for the plan termination and successfully completed the PBGC audit.

We have seen similar situations like this. One (not quite the same in this case), the plan was audited after the personal tax return was audited by the IRS and a deduction was questioned. Another (exact situation), somehow the IRS found that the EZ wasn't filed for 2010 and 2011 (assets less than $250K in prior years, but over beginning in 2010). Based on the first situation above, I assumed that this was probably "caught" on audit of the personal tax return. Plan sponsor filed 2010 and 2011 with explanation that no one told him, IRS accepted and no penaities. So, yes, the IRS can find out.

FWIW... the Schedule SB is signed on the first page, but we are supposed to scan all 3 pages with the signature on the first page and attach to the electronic filing... and have been doing so since the beginning.

"Then coverage would fail and you would have to put in a corrective amendment, and at that point apply some type of vesting because otherwise there is no substance." But as you mentioned above, Tom, if the plan had fail safe language, you won't need a corrective amendment, so substance wouldn't be necessary, correct?

Thanks PensionPro...

Participant is >1% owner (<5%). 2009 comp $190,000, so key employee in 2009. 2010 comp $130,000, 2011 comp $110,000, so "former key employee" in 2010 and 2011. In this case, I understand that this participant is excluded from top heavy determination (both numerator and denominator) 2012 comp $170,000. Is this participant now a "key employee" again and included in the top heavy determination? Or are "former key employees" forever excluded from top heavy determination. Thanks...

I read somewhere that this could be a "double-edged sword". First, it's a plan administrator decision. Use MAP-21, and the HCE can get paid, but the plan probably gets more underfunded. Don't use MAP-21, HCE is restricted, HCE complains, and the plan could be subject go DOL investigation. Do I have it right?

The participant count as of the beginning of the plan year dictates the requirement for an audit. We've done that in the past with a final 5500 filing.

Maybe JH expects the plan to have a plan trust checking account in which such refunds can flow through (and still remain a plan asset). But also assuming that the company is the trustee, so JH writes a check to the plan trustee instead of the company? I don't recall if it was JH, but years ago I seem to recall a plan we had that had a separate plan trust checking account for such purposes.

I thought that Line 10e was intended to "replace" the Schedule A insurance information... in which Schedule A would not report mutual fund revenue sharing?

Interesting... I haven't found a reference, but I've always thought that the top 20% was always the next highest percent, and that's what I've been doing. So in your case, it would be 3 in the top paid group.

Thank you.

Suppose there were no in-service distributions. Has it been agreed that the actuarial equivalent increase from age 65 to 66 is or is not in the target normal cost?